1979 (10) TMI 213 - HC - VAT and Sales Tax

Summary

Issues:
Imposition of penalty for late submission of quarterly returns and late payment of tax.

Analysis:
The case involved a reference under section 44 of the Madhya Pradesh General Sales Tax Act, 1958, regarding the imposition of a penalty on the assessee for late submission of quarterly returns and late payment of tax. The Sales Tax Officer had imposed a penalty of Rs. 2,35,000 on the assessee for delays in submitting quarterly returns ranging from one year to ten months and corresponding late payments of tax. The penalty was reduced to Rs. 1,17,386 by the Board of Revenue in the second appeal. The question referred to the High Court was whether the imposition of the penalty was legal, proper, and justified based on the facts and circumstances of the case.

The relevant provision in question was section 17(3) of the Act, which was amended by the Madhya Pradesh General Sales Tax (Amendment and Validation) Act, 1971. The amendment allowed for the imposition of penalties on dealers for failing to comply with notice requirements, late submission of returns, or failure to furnish returns. The amendment was made retrospective in effect by section 10 of the Act. Prior to the amendment, it was held by the Court that no penalty was imposable for delays in filing returns and tax payments.

The counsel for the assessee argued that imposing a penalty based on the amended provision violated Article 20 of the Constitution, which prohibits retroactive punishment harsher than what was allowed at the time of the offense. However, the Court rejected this argument, stating that the vires of a statute cannot be challenged before a tribunal created by that statute. The Court emphasized that the law must be taken as it stands, and in this case, the amended section 17(3) authorized the penalty when the default occurred. The Court distinguished a Supreme Court decision cited by the counsel, stating that it was not applicable to the present case.

Ultimately, the Court held that the Sales Tax Officer did not commit an error of law in imposing the penalty on the assessee for the delays in filing returns and tax payments. Therefore, the Court answered the reference in the affirmative, ruling against the assessee. No costs were awarded in the reference.

In conclusion, the High Court upheld the imposition of the penalty on the assessee for late submission of quarterly returns and late payment of tax based on the amended provision of section 17(3) of the Act, which allowed for penalties in such cases.