1982 (11) TMI 155 - HC - VAT and Sales Tax

Summary

Issues: Limitation period for levying penalty u/s 14 of A.P. General Sales Tax Act.

The High Court of Andhra Pradesh considered a tax revision case concerning the limitation period for levying penalty under sub-section (2) of section 14 of the A.P. General Sales Tax Act. The assessment year in question was 1964-65, and a best judgment assessment was made initially, followed by the imposition of a penalty. Various appeals and orders were passed leading to a final penalty imposition on 7th November, 1975. The main contention was whether the penalty imposed was within the prescribed limitation period.

The learned Government Pleader argued that sub-section (2) does not specify a limitation period for levying penalty, and the period u/s 14(1) cannot be applied to sub-section (2). However, the Court referred to a previous decision where it was held that penalty proceedings are dependent on the assessment findings and are not independent. The power to levy penalty is ancillary to the power to levy tax, and when the assessment is barred, the penalty levy is also barred. This principle was upheld by a Full Bench of the Court.

The Government Pleader further contended that a Supreme Court decision from a different state nullifies the principle of the Court's decision. The Supreme Court decision stated that a period of limitation cannot be inferred by analogy. However, the High Court maintained that the principle of the Court's decision remains valid, as penalty proceedings are ancillary to assessment proceedings. Therefore, the limitation period for making the assessment equally applies to the levying of penalty.

The Court concluded that the penalty imposed on 7th November, 1975, was barred by limitation based on the principles discussed. The tax revision case was dismissed, and no costs were awarded.