1981 (10) TMI 158 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of penalty levied under rule 8(2) of the Central Sales Tax (Orissa) Rules, 1957 for the quarter ending 31st March, 1967.
2. Interpretation of the provisions of section 9 of the Central Sales Tax (Amendment) Act 103 of 1976.

Detailed Analysis:
The case involved the question of whether the penalty imposed under rule 8(2) of the Central Sales Tax (Orissa) Rules, 1957 for the quarter ending 31st March, 1967 was correctly annulled by the Member, Additional Sales Tax Tribunal. The assessee, a registered dealer under the Central Sales Tax Act, failed to file a return, resulting in a penalty of Rs. 192 imposed by the assessing officer. The Tribunal, in the second appeal, referred to a Supreme Court case stating that in the absence of a substantive provision under the Central Sales Tax Act, no penalty could be levied for not filing the return. However, the Central Act 103 of 1976, with a validating provision in section 9, retrospectively validated actions taken, including the imposition of penalties. The High Court held that the validating statute upheld the levy of penalty, and the imposition of penalty could not be challenged based on the retrospective application of the provision.

The substantive provision of section 9 of the Central Sales Tax (Amendment) Act 103 of 1976 was crucial in this case. The provision was interpreted to have retrospective effect, deeming all penalties imposed under the general sales tax law of any State in pursuance of section 9 as valid and effective. Despite the absence of a clear provision authorizing the imposition of penalties for delayed returns, the validating statute aimed to uphold such levies. The High Court relied on the validating provision to conclude that the imposition of penalty in this case was not open to challenge, as it was deemed valid and effective by the retrospective application of section 9.

In conclusion, the High Court answered the reference in favor of the revenue, holding that the penalty imposed under rule 8(2) of the Central Sales Tax (Orissa) Rules, 1957 for the quarter ending 31st March, 1967 was valid and could not be annulled based on the provisions of section 9 of the Central Sales Tax (Amendment) Act 103 of 1976. The retrospective validation provided by the statute upheld the imposition of penalties, rendering them immune to challenge. The judgment emphasized the significance of statutory provisions in determining the validity of penalties imposed under tax laws.