1981 (4) TMI 258 - HC - VAT and Sales Tax

Summary

Issues:
Appeal against revisional order under Karnataka Sales Tax Act - Penalty imposition under section 12-B(2) - Justification of penalty amount - Commissioner's interference with appellate order - Discretion of appellate authority - Reasonable cause for delay in tax payment - Maximum imposable penalty under section 12-B(2).

Analysis:
The judgment delivered by the Karnataka High Court involved an appeal against a revisional order under the Karnataka Sales Tax Act. The case concerned the imposition of a penalty under section 12-B(2) of the Act. The appellant, a dealer in tyres and tubes, faced a penalty for delay in paying monthly taxes for the assessment period. The Assistant Commissioner initially imposed a penalty of Rs. 15,000, which was later reduced to Rs. 1,000 by the Deputy Commissioner. The appellate authority justified the reduced penalty based on the genuine reasons provided by the appellant, citing a previous court decision and the ends of justice. The Commissioner, however, disagreed with the appellate order and issued a notice under section 22A to set it aside.

The appellant argued that the delay in tax payment was due to credit sales and delayed receipt of sale price from customers, with no mens rea involved. The Commissioner upheld the Assistant Commissioner's decision of imposing a penalty of Rs. 15,000, stating that the Deputy Commissioner had no justification to interfere. The appellant contended that there was no ground for the Commissioner to overturn the appellate order.

The High Court analyzed the case and found that the appellate authority's discretion in levying a penalty of Rs. 1,000 was sound and based on factual pleas presented by the appellant. The court noted that the appellant's reasons for the delay in tax payment were genuine and not disputed by any authority. The Commissioner's interference with the appellate authority's decision was deemed unwarranted, as the exercise of discretion was not arbitrary or perverse. The court emphasized that the maximum imposable penalty under section 12-B(2) was 1.5 times the tax amount, and the appellant had a reasonable opportunity to show cause against the penalty.

In conclusion, the High Court allowed the appeal, setting aside the Commissioner's order dated 23rd August 1977. The judgment highlighted the importance of considering genuine reasons for delay in tax payment and respecting the discretion exercised by the appellate authority in penalty imposition cases under the Karnataka Sales Tax Act.