1995 (10) TMI 215 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 38(3) of the M.P. General Sales Tax Act, 1958 regarding the splitting up of demand on account of tax and penalty for admission of appeal.

Analysis:
The judgment pertains to a reference made by the Tribunal at the instance of the Commissioner of Sales Tax, Madhya Pradesh, regarding the interpretation of section 38(3) of the M.P. General Sales Tax Act, 1958. The question raised was whether the Board of Revenue was justified in requiring the splitting up of demand on account of extra demand for tax assessed and that on account of penalty under section 17(3) of the Act for determining the amount to be deposited for admission of appeal. The case involved an assessment order passed against the assessee for entry tax, including tax and penalty. The appellate authority required the deposit of 75% of the total demand, which the assessee split between tax and penalty. The appellate authority dismissed the appeal for non-compliance, leading to a second appeal before the Tribunal. The Tribunal held the deposit to be proper, setting aside the earlier order and remanding the case for hearing on merits. The Commissioner of Sales Tax then sought reference on the matter.

The Government Advocate argued that the appellate authority was correct in requiring the deposit of the balance without splitting it between tax and penalty. The advocate contended that the Tribunal erred in accepting the split-up and remanding the matter. The advocate relied on a previous decision of the Court which held that when an appeal is preferred from an order imposing penalty, the appellant must pay one half of the total balance due, including tax and penalty. The Court reiterated that the expression "such balance" in section 38(3)(c) refers to the total balance due from the dealer. Therefore, the appeal could not be admitted unless one half of the total balance due, including tax and penalty, was paid.

The Court concluded that the splitting up of the demand on account of tax and penalty was not justified. The term "balance" in section 38(3) referred to the total balance due, encompassing both tax and penalty amounts. Relying on the previous decision, the Court held in favor of the Revenue and against the assessee. The reference was answered in the negative, with no order as to costs, and a copy of the order was to be transmitted to the Tribunal for information.