1986 (9) TMI 398 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Imposition of penalty under section 15-A(1)(c) of the U.P. Sales Tax Act.
2. Basis for calculating the penalty - actual concealment found vs. difference between returned turnover and assessed turnover.
3. Interpretation of the amended section 15-A(1)(c) and its impact on penalty calculation.

Detailed Analysis:

1. Imposition of Penalty under Section 15-A(1)(c) of the U.P. Sales Tax Act:
The case arises from proceedings under section 15-A(1)(c) of the U.P. Sales Tax Act, where a penalty of Rs. 8,000 was initially imposed by the assessing authority for the assessment year 1982-83. The Assistant Commissioner (Judicial), Sales Tax, reduced this penalty to Rs. 1,000 on appeal. However, the Sales Tax Tribunal restored the original penalty of Rs. 8,000, leading to the present revision.

2. Basis for Calculating the Penalty - Actual Concealment Found vs. Difference Between Returned Turnover and Assessed Turnover:
The core issue is whether the penalty should be based on the actual concealment found or the difference between the returned turnover and the assessed turnover. The applicant argued that post-amendment, the penalty should be based solely on the actual concealment found, emphasizing the word "thereby" in section 15-A(1)(r)(ii). Conversely, the department contended that there was no significant change between the unamended and amended sections, and the penalty should still be based on the difference between the returned and assessed turnover.

3. Interpretation of the Amended Section 15-A(1)(c) and Its Impact on Penalty Calculation:
The unamended section 15-A(1)(a), (b), and (c) provided for penalties based on the turnover as filed and the actual turnover assessed. The amended section 15-A(1)(c), (d), (1), (m), and (r)(ii) removed the words "as returned by such dealer," which the applicant argued indicated a shift to penalties based on actual concealment. However, the court noted that the amended section expanded the scope to cover other sub-clauses, some unrelated to turnover, such as false declarations or documents.

The court found that the removal of the words "as returned by such dealer" was deliberate, as the amended section encompassed broader scenarios where gross turnover might not change, but tax liability would increase due to false declarations or documents. It emphasized that the word "avoided" in clause (r)(ii) applies to various sub-clauses, indicating that the penalty should reflect the difference between the tax returned and the tax assessed, even in cases of concealment.

The court referenced the case of Mansukhlal & Brothers v. Commissioner of Income-tax [1969] 73 ITR 546 (SC), where the Supreme Court interpreted "avoided" to mean "escaped" rather than "evaded," supporting the broader interpretation of tax liability.

Conclusion:
The court concluded that in cases of concealment of turnover, the penalty should be based on the difference between the tax returned and the tax assessed, consistent with both the unamended and amended sections. The Sales Tax Tribunal did not err in its decision to restore the original penalty, and the revision was dismissed. The question of law raised by the applicant was answered in favor of the department, affirming that the penalty calculation method remains unchanged post-amendment. The petition was dismissed.