1984 (12) TMI 271 - HC - VAT and Sales Tax

Issues Involved:
1. Interpretation of the phrase "the total amount of tax paid by the dealer for any year" in the explanation to section 36(2)(c) of the Bombay Sales Tax Act, 1959.
2. Whether the amount paid by an assessee after filing of the returns but before passing of the assessment order should be included in the total amount of tax paid for the purpose of penalty imposition under section 36(2)(c).

Issue-wise Detailed Analysis:

1. Interpretation of the phrase "the total amount of tax paid by the dealer for any year" in the explanation to section 36(2)(c) of the Bombay Sales Tax Act, 1959:

The primary issue revolves around the interpretation of the phrase "the total amount of tax paid by the dealer for any year" used in the explanation to section 36(2)(c). The applicant-firm contended that the amount of Rs. 5,934.25 paid on 4th July, 1973, before the assessment order on 17th July, 1973, should be included in the total tax paid. This would mean that the tax paid by the dealer would not be less than eighty percent of the assessed tax, thus avoiding the penalty under section 36(2)(c).

The court examined the relevant provisions of the Bombay Sales Tax Act, 1959, including sections 32, 33, 36, and 38, and rules 22 and 29 of the Bombay Sales Tax Rules, 1959. It was noted that section 36 deals with the imposition of penalties and the explanation to section 36(2)(c) raises a presumption of concealment if the tax paid is less than eighty percent of the assessed tax.

The court emphasized that in a taxing statute, the language used must be interpreted plainly and grammatically. Referring to the dictum of Rowlatt, J., in Cape Brandy Syndicate v. Inland Revenue Commissioners, the court stated, "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."

The court also referred to the Supreme Court's observation in Commissioner of Income-tax, West Bengal v. Vegetable Products Ltd., which stated that if two reasonable constructions of a taxing provision are possible, the one that favors the assessee should be adopted, especially in penalty provisions.

2. Whether the amount paid by an assessee after filing of the returns but before passing of the assessment order should be included in the total amount of tax paid for the purpose of penalty imposition under section 36(2)(c):

The court examined whether the amount paid after filing the returns but before the assessment order should be included in the total tax paid. The State contended that the phrase "the total amount of tax paid" should mean the amount paid within the time provided by the Act, and allowing payments made before the assessment order would render the explanation meaningless.

However, the court rejected this contention, stating that the plain language of the explanation indicates that "the total amount of tax paid" should include any payments made up to the date of the assessment order. The court held, "The phrase must then mean the total amount of tax paid till that time." The court further noted that stretching the plain words of the explanation to include only payments made within the prescribed time was not permissible.

The court concluded that interpreting the phrase as suggested by the applicant does not render the explanation meaningless. The presumption of concealment would still be raised if the tax paid up to the date of assessment is less than eighty percent of the assessed tax. The court emphasized that the department could still prove concealment or inaccurate particulars to impose a penalty, even if the presumption is not raised.

The court also referred to Commissioner of Sales Tax v. Empico Traders, where it was held that "tax paid" includes set-off amounts, suggesting that the phrase cannot be restricted to amounts paid within the prescribed time.

Conclusion:

The court answered the reference in the negative and in favor of the dealer, stating that the amount paid by the assessee after filing the returns but before the assessment order should be included in the total amount of tax paid for the purpose of section 36(2)(c). The respondent was ordered to pay the costs of the reference, and the amount of Rs. 100 deposited by the applicant with the Sales Tax Tribunal was to be refunded to the applicant.

← Previous Next →