1994 (2) TMI 273 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to the levy of penalty under section 45A of the Kerala General Sales Tax Act, 1963.
2. Interpretation of the provisions of section 45A regarding the imposition of penalty.
3. Claim of exemption under section 5(3) of the Central Sales Tax Act, 1956.
4. Assessment of penalty based on false and incorrect returns.
5. Application of the doctrine of proportionality in determining the penalty.
6. Introduction of a new point in the memorandum of appeal regarding the penalty amount.

Analysis:

1. The writ appeal challenged the levy of penalty under section 45A of the Kerala General Sales Tax Act, 1963, for the assessment year 1984-85. The appellant contested the penalty imposed by the Deputy Commissioner, which was upheld by the Board of Revenue, leading to the dismissal of the writ petition by the learned single Judge.

2. The main issue revolved around the interpretation of the provisions of section 45A to determine if the conditions for imposing a penalty were met. The section allows for the imposition of a penalty if a person submits an untrue or incorrect return, with the penalty not exceeding twice the amount of tax evaded or sought to be evaded.

3. The appellant claimed exemption under section 5(3) of the Central Sales Tax Act, 1956, regarding the purchase of cashew nuts. However, it was found that the appellant did not meet the conditions for exemption as there was no prior foreign contract or orders related to the purchases made during the year in question.

4. It was established that the appellant filed false and incorrect returns, claiming exemption for all purchases made during the year, leading to the evasion of tax amounting to Rs. 1,65,431.63. The deliberate withholding of tax payment indicated dishonest intention and contumacious conduct to defraud the revenue.

5. The court rejected the argument of disproportionate penalty imposition, emphasizing the deliberate and systematic defrauding of revenue by the appellant. The application of the "proportionality" principle was deemed unnecessary due to the fraudulent intention to evade tax, with the court highlighting the lack of any arguable point for exemption.

6. A new point was introduced in the memorandum of appeal regarding the penalty amount imposed, alleging a mistake in the notice issued. However, the court found that the appellant had not raised this point at earlier stages of the proceedings, thereby waiving the right to contest it. The court dismissed the writ appeal, upholding the conclusions of the learned single Judge.