1993 (10) TMI 335 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the levy of penalty under section 7AA of the Rajasthan Sales Tax Act for failure to furnish returns within the prescribed time.

Detailed Analysis:

The case involved revision petitions filed under section 15 of the Rajasthan Sales Tax Act, 1954, challenging the levy of penalty under section 7AA for not furnishing returns within the prescribed time for the assessment years 1980-81, RST/CST, and 1983-84. The assessing authority found that the returns were not submitted in time, invoking the provisions of section 7AA. The assessee claimed that the statements of sales were sent to their advocate by registered post for filing. The Deputy Commissioner (Appeals) rejected the appeal against the penalty levy, leading to an appeal before the Rajasthan Sales Tax Tribunal.

The Tribunal considered the submissions that the returns were sent completed to the advocate by registered post, but due to an inadvertent lapse, they were not filed in time. It was noted that the company relied on the advocate to file the returns promptly, as done in the past. The Tribunal found that penalizing the company for the advocate's default was unjust and set aside the penalty. Section 7(1) of the Act requires the furnishing of prescribed returns, while section 7AA allows for penalty if the assessing authority is satisfied that the dealer failed to furnish the return without reasonable cause within the specified time.

The Tribunal's decision was based on the principle that the levy of penalty under section 7AA is not automatic and requires the assessing authority to be satisfied about the absence of a reasonable cause for non-submission. Rule 54 of the Rajasthan Sales Tax Rules mandates that reasons for determining turnover, imposing penalties, or refusing refunds must be recorded, and the dealer must be given a chance to be heard. Although the Rules were framed before the enactment of section 7AA, natural justice principles dictate that a notice must be issued before imposing a penalty.

The assessing authority must examine the cause for non-submission or delayed submission of returns, and if a reasonable cause is established, no penalty should be levied. In this case, the assessee's timely tax payment and past compliance history were considered as factors supporting a reasonable cause for the delay in filing returns. The Tribunal's decision was upheld, concluding that the assessee had a reasonable cause, and the penalty under section 7AA was unwarranted.

In concurrence with the Tribunal's findings, the High Court dismissed the revision petitions, emphasizing that the assessee had a reasonable cause for the delay in filing returns, thereby negating the need for invoking section 7AA. No costs were awarded in the matter.