1990 (5) TMI 219 - AT - VAT and Sales Tax

Issues Involved
1. Imposition of penalty under Section 11(1) of the Bengal Finance (Sales Tax) Act, 1941 (BFST Act).
2. Charging of interest under Section 10A of the BFST Act.
3. Maintainability of the writ application under Article 226 of the Constitution of India.

Issue-wise Detailed Analysis

1. Imposition of Penalty under Section 11(1) of the BFST Act:

The applicant challenged the imposition of a penalty amounting to Rs. 2 lakhs under Section 11(1) of the BFST Act, 1941. The penalty was imposed because the return filed by the dealer was found not to be a valid return. The applicant argued that at the time of filing the returns for the impugned year, the notification dated April 1, 1975, stood quashed by the Calcutta High Court, and an appeal was pending. The applicant had obtained an interim order to file returns claiming exemption under rule 3(28) of the Rules. The Tribunal found that the default, if any, was made with reasonable cause as contemplated by Section 11(1) of the BFST Act. The Tribunal held that the penalty could only be imposed for contumacious conduct or wilful disregard of statutory obligations, which was not the case here. Therefore, the order imposing the penalty was set aside.

2. Charging of Interest under Section 10A of the BFST Act:

The applicant contested the charging of interest under Section 10A of the BFST Act, 1941. The assessing authority's basis for levying interest was that the dealer admitted liability to pay tax on woollen carpets as per a revised statement in the form of a return. The applicant argued that it had not filed any revised return admitting liability to pay tax for the sale of woollen carpets. The Tribunal noted that the liability to pay interest as provided in Section 10A was introduced with effect from October 1, 1983. The Tribunal found that the applicant had filed its returns showing sales of woollen carpets but claimed exemption based on the interim order of the High Court. The Tribunal concluded that the statement furnished by the applicant showing the break-up of sales could not be treated as a revised return, as it was not filed within the time prescribed by Section 10(4) of the BFST Act. Consequently, the Tribunal held that neither sub-section (1) nor sub-section (2) of Section 10A was attracted, and there was no question of levying interest under those sub-sections. The order charging interest was thus set aside.

3. Maintainability of the Writ Application under Article 226 of the Constitution:

The respondents raised a preliminary objection regarding the maintainability of the writ application, arguing that the applicant should pursue the appeals filed against the impugned orders and should not invoke the extraordinary jurisdiction under Article 226 of the Constitution. The Tribunal, however, noted that the issues involved did not relate to any disputed question of fact but to the jurisdiction of the authorities to levy interest and penalty. The Tribunal referred to several judicial decisions, including those of the Supreme Court, which supported the view that a writ application could be entertained in special circumstances where the alternative remedy available was not adequate and was a mere formality. The Tribunal held that the writ application was maintainable and proceeded to decide the case on merits.

Conclusion

The Tribunal allowed the application in part, setting aside the orders imposing penalty and charging interest under the BFST Act, 1941. The Tribunal clarified that its findings were confined to the demands for interest and penalty relating to the BFST Act, 1941, and refrained from making any observations regarding the demands under the Central Sales Tax Act, 1956. The applicant was advised to pursue the claims relating to the Central Sales Tax Act before the appropriate forum. The parties were directed to bear their own costs.

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