1990 (1) TMI 281 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Imposition of penalty under section 36(3) for non-payment of tax as per rule 29(1A).
2. Requirement of notice in form 26 under section 38(4) for levying penalty.
3. Application of Bombay Sales Tax Act penalty provisions to the Central Sales Tax Act.
4. Consideration of reasonable cause for non-payment of tax and remission of penalty.

Detailed Analysis:

1. Imposition of Penalty Under Section 36(3) for Non-Payment of Tax as per Rule 29(1A):
The Tribunal held that the dealer was not liable for penalty under section 36(3) for non-payment of tax as per rule 29(1A). Rule 29(1A) required monthly payments of tax if the dealer's turnover exceeded Rs. 10 lakhs. The Tribunal found that section 36(3) penal provisions are attracted only if tax is not paid within the prescribed time, which necessitates a notice under section 38(4). As the dealer did not receive such notice, the penalty under section 36(3) was not applicable.

2. Requirement of Notice in Form 26 Under Section 38(4) for Levying Penalty:
The Court emphasized that for penalties under section 36(3) to be applicable, a notice under section 38(4) must be issued. The form of such notice is form 26, which specifies the sum payable and the consequences of non-payment. The Court concluded that without this notice, the penal provisions of section 36(3) cannot be enforced. This interpretation was supported by previous judgments, including those from the Gujarat High Court and the Supreme Court, which stressed the necessity of a notice of demand before treating an assessee as a defaulter.

3. Application of Bombay Sales Tax Act Penalty Provisions to the Central Sales Tax Act:
Under section 9(2) of the Central Sales Tax Act, penalties under the Bombay Sales Tax Act can be levied and collected. Section 9(2A), added retrospectively, reinforced this by applying all penalty provisions of the State's general sales tax law to the Central Sales Tax Act. However, in this case, no notice under section 38(4) was issued, thus penalties under section 36(3) of the Bombay Sales Tax Act, read with section 9(2A) of the Central Sales Tax Act, could not be levied.

4. Consideration of Reasonable Cause for Non-Payment of Tax and Remission of Penalty:
Given the Court's decision on the necessity of a notice under section 38(4), it was deemed unnecessary to address the issues of reasonable cause for non-payment of tax or the remission of penalties. The Court did not delve into whether the financial difficulties faced by the assessee constituted a reasonable cause or whether remission of penalty was warranted under the proviso to section 36(3).

Conclusion:
The Court answered the State's question in the affirmative, supporting the Tribunal's decision that no penalty under section 36(3) was imposable without a notice under section 38(4). The assessee's first question was answered in the negative, favoring the assessee, while the remaining questions were not addressed due to the conclusions drawn on the necessity of notice. The references were answered accordingly, with no order as to costs.