1993 (7) TMI 331 - HC - VAT and Sales Tax

Summary

Issues:
1. Delay in filing monthly returns and making payments under the Karnataka Sales Tax Act, 1957.
2. Levy of penalty under section 12-B(3) of the Act.
3. Discretionary power of the assessing authority in imposing penalties.
4. Calculation of penalty by the appellate authority and the Appellate Tribunal.
5. Consideration of circumstances and conduct of the assessee in determining the penalty amount.

Analysis:
1. The judgment addressed the issue of delays by an assessee in filing monthly returns and making payments under the Karnataka Sales Tax Act, 1957. The delays ranged from 20 to 25 days on several occasions, with some exceeding a month. The assessee attributed the delays to the process of realizing cheques sent to the head office at Nagpur for clearance, causing delays in payments each month.

2. The assessing authority levied a maximum penalty of 1 1/2 times the amount under section 12-B(3) due to the delays. The appellate authority upheld the penalty, considering the tax payments in each default month less than the tax payable, leading to the imposition of penalties. The Appellate Tribunal adopted a different penalty calculation method, considering the period of delay in payment of advance tax for each month under section 12-B(1) of the Act.

3. The judgment discussed the discretionary power of the assessing authority in imposing penalties under section 12-B(3). The counsel for the assessee argued against the levy of penalties, citing a decision emphasizing that penalties should not be imposed unless there is deliberate defiance of the law or contumacious conduct. The judgment highlighted that penalties should be imposed judiciously, considering all relevant circumstances.

4. The calculation of penalties by the appellate authority and the Appellate Tribunal was scrutinized. The Appellate Tribunal's penalty calculation method was deemed improper as it applied section 13(2) of the Act, which is not relevant to the levy of penalties under section 12-B(3). The judgment emphasized the importance of assessing both the necessity and quantum of penalties based on the conduct of the assessee.

5. The judgment considered the circumstances and conduct of the assessee in determining the penalty amount. While acknowledging the repetitive delays by the assessee, the court noted the lack of proper payment arrangements in Bangalore as a reason for the delays. Ultimately, a nominal penalty of Rs. 500 for each assessment year was deemed appropriate as a warning to the assessee to be more diligent in the future. The revision petitions were allowed, modifying the penalty amount imposed by the authorities.