1995 (2) TMI 388 - HC - VAT and Sales Tax

Summary

Issues:
Levy of penalty under section 9(2A) of the Central Sales Tax Act read with section 36(3) of the Bombay Sales Tax Act.
Applicability of limitations under section 33(4A) of the Bombay Sales Tax Act to the levy of penalty.

Analysis:
The case involved a reference under section 61(1) of the Bombay Sales Tax Act, 1959, read with section 9(2) of the Central Sales Tax Act, 1956, where the Maharashtra Sales Tax Tribunal referred questions of law to the Bombay High Court for opinion. The primary issue was whether the levy of penalty under section 9(2A) of the Central Sales Tax Act, along with section 36(3) of the Bombay Sales Tax Act, was valid. Another issue was the applicability of limitations under section 33(4A) of the Bombay Sales Tax Act to the penalty levy.

The assessee, a registered dealer under the Central Sales Tax Act, was initially assessed by the Sales Tax Officer, and a penalty was levied. The assessee appealed the penalty, arguing it was imposed without a reasonable opportunity of hearing. The Tribunal accepted this contention and set aside the penalty order, allowing the assessee's appeal.

Subsequently, the Sales Tax Officer issued a show cause notice proposing to levy a penalty again for the same reason. The assessee challenged this before the Assistant Commissioner of Sales Tax (Appeals) on grounds including the Sales Tax Officer's power to initiate fresh penalty proceedings after the Tribunal's order and the quantum of penalty. The Assistant Commissioner upheld the power to impose a fresh penalty but reduced the amount. The assessee then appealed to the Tribunal, which confirmed the power to impose a fresh penalty but further reduced the amount.

The assessee contended that once a penalty order is set aside, the Sales Tax Officer cannot reimpose the penalty by passing a fresh order. This argument was supported by a previous decision of the Court. The Revenue did not dispute this contention but sought reconsideration based on implications. The Court, however, held that the previous decision's ratio was not affected by other judgments cited.

The Court analyzed the powers of appellate authorities in appeals against penalty orders under the Act. It concluded that the appellate authority cannot set aside a penalty order to enable a fresh order and that setting aside a penalty order means cancellation. Therefore, the authority imposing the penalty cannot reimpose it through a fresh order.

Consequently, the Court answered the first question regarding the validity of the penalty levy in the negative and in favor of the assessee. As a result, the second question became academic and was not answered. The reference was disposed of accordingly, with no order as to costs.