1991 (6) TMI 224 - HC - VAT and Sales Tax

Issues Involved:
1. Imposition of penalty under section 45(6) of the Gujarat Sales Tax Act, 1969, despite prosecution under the Gujarat Sales Tax Rules, 1970.
2. Applicability of the Supreme Court judgment in Commissioner of Sales Tax v. Radhakisan to the present case.
3. Invocation of section 45(6) for penalty imposition despite payment of tax for the first three quarters before assessment.
4. Applicability of the first proviso to section 45(6) for restricting the penalty period.
5. Consideration of financial stringency as a reasonable cause for non-payment of tax.

Detailed Analysis:

Issue 1: Imposition of Penalty Despite Prosecution
The Tribunal held that the remedy of imposing a penalty under section 45(6) of the Gujarat Sales Tax Act, 1969, was available to the sales tax authorities even though prosecution had been launched under the Gujarat Sales Tax Rules, 1970, for contravention of rule 31. This decision was based on the precedent set by the Gujarat High Court in Shri Laxminivas Brijlal Rungta v. O.C. Shah, where it was concluded that both prosecution and penalty could be pursued simultaneously for contravention of the provisions of the rules and the Act.

Issue 2: Applicability of Supreme Court Judgment
The Tribunal distinguished the Supreme Court's decision in Commissioner of Sales Tax v. Radhakisan, noting that the case involved the constitutional validity of provisions allowing discretionary prosecution or penalty imposition by the Commissioner without guidelines. The Gujarat High Court found that in the present case, the facts were different, and the decision in Shri Laxminivas Brijlal Rungta was more relevant. The Tribunal's reasoning was upheld as it correctly differentiated the two cases.

Issue 3: Invocation of Section 45(6) Despite Payment
The Tribunal rejected the assessee's contention that penalty under section 45(6) could not be invoked since the tax for the first three quarters was paid before assessment. The Tribunal referred to the provisions of section 45(6) and section 47(2), which required the whole amount of tax to be paid as per the returns. Since the assessee failed to comply with section 47(2) by not paying the tax due according to the returns, the provisions of section 45(6) were applicable, justifying the penalty imposition.

Issue 4: Applicability of First Proviso to Section 45(6)
The Tribunal held that the first proviso to section 45(6) was not applicable to the assessee's case. The proviso applies when the tax assessed exceeds the amount already paid by more than 20%. In this case, the penalty was imposed due to the failure to pay tax on the due date, not because the assessed tax exceeded the paid amount by more than 20%. Therefore, the Tribunal correctly determined that the benefit of the first proviso was not available to the assessee.

Issue 5: Financial Stringency as Reasonable Cause
The Tribunal concluded that financial stringency was not a reasonable cause for non-payment of tax. The Tribunal noted that the assessee likely collected tax from customers but failed to pay it to the government, suggesting misuse of public money for private gains. The Tribunal emphasized that public dues should take precedence over other financial obligations. Thus, the Tribunal's decision that financial stringency could not be pleaded as a reasonable cause in this context was upheld.

Conclusion:
The reference was answered in the affirmative, with all questions resolved in favor of the Revenue and against the assessee. The Tribunal's reasoning and decisions on each issue were found to be just and proper, requiring no further detailed discussion. The judgment emphasized the importance of compliance with tax payment obligations and the limited applicability of financial hardship as a defense in such cases.

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