1992 (3) TMI 331 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the notification dated May 7, 1959, particularly clause 9.
2. Interpretation of "tax due" under section 10(3)(b) of the Rajasthan Entertainments and Advertisement Tax Act, 1957.
3. Requirement of mens rea for the imposition of penalty.
4. Legality of penalties imposed for delayed payment of entertainment tax.

Detailed Analysis:

1. Validity of the Notification dated May 7, 1959, particularly Clause 9:
The petitioner challenged the validity of clause 9 of the notification dated May 7, 1959, arguing that it was ultra vires the authority conferred by section 6(3) of the Act. The notification stated that failure to deposit tax would amount to an offense under section 10(3)(c) of the Act. However, the court found that there was no provision in the Act corresponding to section 10(3)(c). The court concluded that clause 9 of the notification had to be ignored, as the State Government was not authorized to declare non-payment of tax as an offense through the notification.

2. Interpretation of "Tax Due" under Section 10(3)(b) of the Rajasthan Entertainments and Advertisement Tax Act, 1957:
The petitioner contended that "tax due" refers to the amount assessed and not the advance tax payable with returns. The court examined section 5 and sub-sections (3) and (4) of section 6 of the Act. It was clarified that "tax due" in this context includes the tax payable according to the returns under section 6(3). The court concluded that non-payment of tax in accordance with the notification dated May 7, 1959, constitutes a contravention under section 10(3)(b)(i) of the Act.

3. Requirement of Mens Rea for the Imposition of Penalty:
The petitioner argued that the default was technical and lacked mens rea. The court held that the provision of penalty under section 10(3)(b)(i) does not necessitate mens rea. The failure to pay tax itself makes a person liable for a penalty, irrespective of intent.

4. Legality of Penalties Imposed for Delayed Payment of Entertainment Tax:
The court reviewed the penalties imposed under section 10(3)(b) for delayed tax payments. It was determined that the maximum penalty of Rs. 500 could be levied for each week of default, not cumulatively for all weeks. The court also addressed the practice of the department accepting cheques in advance. If cheques were given in advance and encashed timely, no penalty would be imposed. Conversely, if cheques were dated later than the due date or dishonored, the petitioner would be liable for penalties.

Conclusion:
The writ petitions were partly allowed. The petitioner was held liable for penalties for each week's delay in tax payment. However, no penalties would be imposed if cheques were given in advance and encashed on time. The notification's clause 9 was deemed ultra vires, and the interpretation of "tax due" was clarified to include advance tax payable with returns. No costs were ordered.