1995 (2) TMI 417 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of section 55(6)(b) and section 36(2)(c) of the Bombay Sales Tax Act, 1959.
2. Presumption of deemed concealment and its rebuttal.
3. Applicability of Explanation (2) to section 36(2)(c) when returns are filed late.

Summary:

Issue 1: Interpretation of section 55(6)(b) and section 36(2)(c)
The Tribunal held that the first appellate authority can invoke the rule of evidence contained in Explanation (2) to section 36(2)(c) and confirm the penalty levied by the Sales Tax Officer. The appellate authority has wide powers under section 55, including the ability to sustain penalties by applying any relevant Explanation, provided the assessee is given an opportunity to rebut the presumption.

Issue 2: Presumption of deemed concealment and its rebuttal
The Tribunal erred in holding that the presumption of deemed concealment was not rebutted even after acceptance of the closed and adjusted books of accounts by the Sales Tax Officer. The assessee had submitted that the tax paid was not less than 80% of the tax assessed when considering the set-off allowed. The Tribunal's interpretation that the presumption of concealment could only be rebutted by showing no turnover was liable to tax was incorrect.

Issue 3: Applicability of Explanation (2) to section 36(2)(c)
The Tribunal was not justified in holding that Explanation (2) to section 36(2)(c) is attracted even when the assessment was made on the basis of returns filed late. Explanation (2) applies only to cases where the dealer fails to submit returns within the prescribed time resulting in a best judgment assessment u/s 33(5). In this case, the returns were filed late but were accepted, and the assessment was made u/s 33(3). Therefore, Explanation (2) was not applicable, and the penalty could not be sustained under this provision.

Conclusion:
The Tribunal was not justified in confirming the penalty u/s 36(2)(c) with the aid of Explanation (2). The reframed question, "Whether under the facts and circumstances of the case, the Tribunal was justified in confirming the penalty levied on the assessee u/s 36(2)(c) of the Bombay Sales Tax Act, 1959," was answered in the negative, in favor of the assessee and against the Revenue.