1990 (1) TMI 285 - HC - VAT and Sales Tax

Summary

Issues:
Registration of branch office, filing of returns, payment of tax, levy of penalty under section 36(3) of the Bombay Sales Tax Act, 1959.

Analysis:
The judgment pertains to the registration, filing of returns, and payment of tax by M/s. Avery India Limited under the Bombay Sales Tax Act, 1959. The company had a head office in Bombay and opened a sales office in Pune. Despite a delay in registering the Pune office, the registration was eventually granted with retrospective effect. The company included Pune branch turnover in their Bombay returns, which was regularized for a specific period. However, during an assessment for a subsequent period, the turnover of the Pune branch was excluded, leading to a refund. Subsequently, a penalty was levied by the Sales Tax Officer in Pune for failure to pay tax promptly, which was reduced on appeal to the Assistant Commissioner of Sales Tax and further appealed to the Sales Tax Tribunal.

The Tribunal acknowledged technical issues leading to the delay in payment but granted only partial remission of the penalty. The matter was then referred to the High Court to determine the justification of upholding the penalty under section 36(3) of the Act. The Court analyzed the relevant legal provisions, including section 36(3) and the requirement to pay tax as per returns before filing. Citing precedents from the Supreme Court and the Bombay High Court, the Court emphasized that penalty provisions are attracted only if tax is not paid within the prescribed time.

Referring to previous judgments, the Court highlighted that payment made in anticipation of an assessment does not fall under the purview of section 36(3). The Court further stressed that penalty should not be imposed unless there is deliberate defiance of the law or contumacious conduct. In the present case, the Court found that the delay in payment was due to technicalities, and there was no mala fide intention to evade tax. Consequently, the Court held that the Tribunal should have remitted the entire penalty, ruling in favor of the assessee and ordering a refund of the penalty amount.

In conclusion, the High Court answered the reference in the negative, favoring the assessee and directing a refund of the penalty amount. The Court emphasized that there was a reasonable cause for the delay in payment, and the penalty provisions were not applicable in the circumstances of the case. The judgment underscores the importance of considering the specific facts and intentions of the taxpayer before imposing penalties under tax laws.