1995 (2) TMI 395 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 17(3)(b)(ii) of the M.P. General Sales Tax Act, 1958 regarding the imposition of penalty for delay in tax payment.
Consideration of the Commissioner's power under section 22(4-A) to grant relief for tax payment and its impact on penalty imposition.

Analysis:
The judgment pertains to a reference made by the Appellate Tribunal regarding the imposition of penalties under section 17 of the M.P. General Sales Tax Act, 1958. The dispute arose from the delay in submitting quarterly returns and tax payments for the period April 1, 1969, to March 31, 1970. The assessee approached the Commissioner under section 22(4-A) for relief, which was granted in the form of additional time and installment benefits. Despite complying with the conditions set by the Commissioner, penalties were imposed by the assessing officer under section 17(3)(b)(ii) for the delay in tax payment for the 2nd, 3rd, and 4th quarters. The penalties were later reduced on appeal, leading to the reference to the High Court.

The Government Advocate argued that no question of law arose as penalties were imposed solely for the delay in tax payment, not for submitting returns late. The critical provision in question, section 17(3)(b)(ii), allows for penalties if a dealer fails to pay tax as prescribed, with a specific formula for calculating the penalty amount based on the duration of the default. The key requirement for penalty imposition is the failure to act "without sufficient cause."

The Court emphasized that while the assessee did fail to deposit tax along with the returns as mandated, the tax was eventually paid within the extended time and conditions granted by the Commissioner under section 22(4-A). Section 22 provides the mechanism for tax payment and recovery, with subsection (4-A) empowering the Commissioner to grant relief in cases where the dealer is unable to pay the assessed tax or penalties within the specified time. The Commissioner's decision under section 22(4-A) is crucial as it reflects on the existence of "sufficient cause" for penalty imposition under section 17(3).

The Court held that the Commissioner's decision to grant relief under section 22(4-A) is significant and should be considered in assessing the liability for penalties under section 17(3). The statutory authority and the Appellate Tribunal erred in overlooking the impact of the Commissioner's order on penalty imposition. Consequently, the Court ruled in favor of the assessee, stating that penalties could not have been rightfully imposed in the given circumstances. The reference was answered in the negative, favoring the assessee against the Revenue, with no costs imposed.