1997 (8) TMI 477 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Applicability of Section 36(2)(c), Explanation (1) of the Bombay Sales Tax Act, 1959.
2. Justification of penalty under Section 36(2)(c) read with Explanation (1).
3. Legality of assessment under Section 33(3) versus Section 33(5) of the Bombay Sales Tax Act, 1959.

Issue-wise Detailed Analysis:

1. Applicability of Section 36(2)(c), Explanation (1) of the Bombay Sales Tax Act, 1959:
The core issue was whether Section 36(2)(c), Explanation (1) could be applied to the case where the assessee did not pay the full tax due as per the returns within the stipulated time. The assessee argued that Section 36(2)(c) pertains to cases of "concealment of particulars of any transaction or knowingly furnishing inaccurate particulars of any transaction" and not to cases of delayed payment of tax. The Tribunal had held that the provisions were attracted because the tax paid was less than 80% of the assessed tax, invoking the presumption of concealment under Explanation (1).

2. Justification of Penalty under Section 36(2)(c) read with Explanation (1):
The Tribunal imposed penalties on the assessee under Section 36(2)(c) for both the Bombay Act and the Central Act, assuming that the shortfall in tax payment constituted concealment. The assessee contended that there was no concealment or inaccurate particulars furnished, as the returns were accepted in toto by the Sales Tax Officer. The court examined whether the failure to pay the full amount of tax due as per the returns could be construed as concealment under Section 36(2)(c). The court concluded that Section 36(2)(c) is not applicable to cases of delayed tax payment, which should be penalized under Section 36(3) instead.

3. Legality of Assessment under Section 33(3) versus Section 33(5):
The question was whether the assessment could be legally made under Section 33(3) of the Act or should have been made under Section 33(5). The Tribunal held that the assessment could be made under Section 33(3), which was challenged by the assessee. However, given the court's decision on the first two questions, this issue was rendered moot and was not answered.

Judgment Summary:
The court held that the provisions of Section 36(2)(c) of the Bombay Sales Tax Act, 1959, were not applicable to the case of the assessee, as the default was in the payment of tax and not in the concealment of turnover or furnishing inaccurate particulars. The penalty should have been considered under Section 36(3) for delayed payment of tax. Consequently, the court answered the first two questions in the negative, in favor of the assessee, and did not find it necessary to answer the third question. The reference was disposed of with no order as to costs.