1987 (9) TMI 398 - HC - VAT and Sales Tax

Summary

Issues:
Validity of penalty imposed under rule 8(2) of the Central Sales Tax (Orissa) Rules, 1957 for not filing annual return within prescribed period.
Effect of amendment by Central Sales Tax (Amendment) Act, 1976 on orders imposing penalty.

Analysis:
The case involved a reference under section 24(1) of the Orissa Sales Tax Act regarding the correctness of annulling the penalty imposed under rule 8(2) of the Central Sales Tax (Orissa) Rules, 1957. The dealer, a registered dealer under the Act, was penalized for not filing annual returns for the assessment years 1968-69 and 1969-70. The Tribunal accepted the dealer's argument that no penalty could be imposed for not filing the return under the Central Sales Tax Act, citing a Supreme Court decision. Subsequently, the Central Sales Tax Act was amended in 1976 to legalize the imposition of penalties by State Governments, addressing the issue highlighted by the Supreme Court. This led to references being made to the High Court for consideration.

The main question was the impact of the amendment on the penalty orders. The amendment validated penalties imposed even before its enactment, ensuring the applicability of provisions related to offenses and penalties under general sales tax laws of each State. The retrospective effect of the amendment, including the insertion of sub-section (2A), aimed to uphold penalties that were previously considered invalid due to the Supreme Court's decision. High Courts in other cases, such as Commissioner of Sales Tax v. Bombay Commercial Traders and Pannalal Kankariya and Sons v. Additional Assistant Commissioner of Sales Tax, had upheld penalties imposed before the amendment, supporting the legal position change.

Ultimately, the Court held in favor of the Revenue and against the dealer, emphasizing that the amendment effectively saved and protected the penalty orders. The judgment was unanimous, with both judges concurring. The reference was answered in the negative, implying that the penalty imposition was lawful and valid under the amended provisions.