1996 (5) TMI 397 - HC - VAT and Sales Tax

Summary

Issues:
Penalty for dishonored cheque under Central Sales Tax Act, 1956 and Punjab General Sales Tax Act, 1948.

Detailed Analysis:

The petitioner, a registered dealer under the Central Sales Tax Act, 1956 and the Punjab General Sales Tax Act, 1948, faced penalty proceedings for a dishonored cheque payment of tax for a quarter. The dealer claimed the bank wrongly dishonored the cheque and presented a certificate from the bank to support this claim. However, the Assessing Authority found that the dealer did not have sufficient funds in its account when the cheque was dishonored. Consequently, a penalty of Rs. 2,50,000 and interest of Rs. 30,700 were imposed. The petitioner appealed, leading to a reduction in the penalty to Rs. 1,30,000 by the Deputy Excise and Taxation Commissioner. Further appeals were dismissed, prompting the petitioner to seek referral of questions of law to the High Court.

The Tribunal dismissed the application for referral, stating that the issues were factual and not legal. The petitioner then filed a petition under the Central Sales Tax Act and the State Act to direct the Tribunal to refer the questions to the High Court. The petitioner argued that the certificate from the bank absolved them of fault, but the court disagreed. It was found that the dealer did not have sufficient funds when the cheque was dishonored, rendering the certificate irrelevant. The court emphasized that the findings were factual and not legal questions for referral.

Additionally, the petitioner's argument regarding interest not being chargeable under the Central Act was not considered as it was not raised before the Tribunal. The court highlighted that a plea not raised before the Tribunal cannot form the basis for a legal question. Ultimately, the petition was dismissed, and each party was directed to bear their own costs.

In conclusion, the court upheld the penalty imposed on the petitioner for the dishonored cheque, emphasizing that the findings were based on facts and not legal questions suitable for referral to the High Court. The judgment serves as a reminder that factual determinations play a crucial role in penalty proceedings under tax laws.