1985 (8) TMI 357 - HC - VAT and Sales Tax

Summary

Issues:
- Whether penalty under section 16(1)(e) of the Rajasthan Sales Tax Act could be legally levied upon the assessee in the circumstances of the case.

Analysis:
The case involved an application seeking a reference under section 15(2)(b) of the Rajasthan Sales Tax Act, 1954, treated as a revision petition under the amended provisions of the Act. The dispute centered on the imposition of a penalty under section 16(1)(e) of the Act on an assessee, M/s. Rajasthan Roller & Flour Mills Private Ltd., for not paying sales tax on the sale of wheat flour, maida, suji, etc., despite purchasing wheat at different tax rates. The assessing authority held that sales tax was payable at 2% on these commodities. The penalty was imposed for furnishing inaccurate particulars in the return. The Appellate Assistant Commissioner reduced the penalty, but the Board of Revenue later allowed the revision petition, stating no deliberate intention to evade tax was proven.

The core issue revolved around the interpretation of the notification under section 5 of the Act, specifying the taxable commodities. The notification categorized cereals and pulses, including atta, maida, suji, and bran, with different tax rates for specific items. The department argued that atta, maida, and suji were distinct taxable commodities from wheat, thus taxable at 2%. Conversely, the assessee contended that sales tax should only apply once, either on the sale of wheat or its derivatives, if the wheat purchase was already taxed. Reference was made to a Division Bench decision in a similar case supporting the assessee's stance, emphasizing the phrase "in all forms" in the notification. The Board of Revenue's reliance on a Supreme Court decision regarding the interpretation of similar phrases in a different context further supported the assessee's position.

The judgment clarified that the revision petition did not aim to determine the correctness of the assessee's understanding regarding the tax status of wheat and its products. It highlighted the pending special appeal on the quantum matter before the Division Bench of the Board of Revenue. The court refrained from expressing an opinion on the tax liability aspect but acknowledged the conflicting interpretations possible. Ultimately, the court concurred with the Board of Revenue's decision, emphasizing the absence of deliberate intent by the assessee to evade tax. Consequently, the revision petition was dismissed, and each party was directed to bear its costs.

In conclusion, the judgment provided a detailed analysis of the legal provisions, notifications, and precedents to resolve the issue of penalty imposition under the Rajasthan Sales Tax Act. It underscored the importance of statutory interpretation and the absence of deliberate misconduct in tax compliance, leading to the dismissal of the revision petition.