1996 (7) TMI 507 - HC - VAT and Sales Tax

Summary

Issues:
- Imposition of penalty under section 17(3)(c)(ii) of the Madhya Pradesh General Sales Tax Act, 1958
- Interpretation of section 17(3)(b) of the Act regarding non-payment or late payment of monthly tax

Analysis:
The case involved a dispute regarding the imposition of a penalty of Rs. 8,537 on the assessee under section 17(3)(c)(ii) of the Madhya Pradesh General Sales Tax Act, 1958. The assessee, engaged in sales of vehicles and parts, had faced best judgment assessment due to defective accounts, resulting in a higher turnover determination than recorded. Additionally, delays in submitting quarterly returns and late payment of monthly tax led to the penalty imposition. The first appeal and Second Appeal No. 248-III/86 were both rejected, prompting the department to file an application under section 44 of the Act, seeking clarification on the legality of the penalty.

During the hearing, both parties acknowledged an error in the referred question, proposing a correction to section 17(3)(b) of the Act instead of section 17(3)(c)(ii). The counsel for the applicant cited a Full Bench decision in the Himmat Steel Foundry Limited case, highlighting that penalties under section 17(3)(b) cannot be applied for late or non-payment of monthly tax as per rule 27(2) of the Rules. The Full Bench's interpretation emphasized that the statute must be construed strictly, and non-payment or late payment of monthly tax, even under rule 27(2), is not an offense unless the deficiency is not rectified before filing the return.

The court concurred with the Full Bench's view, noting that the penalty was imposed for non-payment of monthly tax on time, with late return submission being a secondary issue. No evidence was presented to challenge the legal correctness of the Full Bench's interpretation. Consequently, the court ruled against the department, finding the penalty imposition incorrect under section 17(3)(b) of the Act. The court granted liberty to the Tribunal to restate the case and refer the question correctly under section 17(3)(c)(ii) or pursue alternative proceedings within four months. The case was disposed of with no costs awarded, and the order was to be transmitted to the Tribunal as per legal requirements.