1996 (7) TMI 544 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of penalty under section 22(4-A) of the M.P. General Sales Tax Act, 1958 and section 9(2A) of the Central Sales Tax Act, 1956.
2. Validity of penalty imposition under section 22(4-A) of the State Act despite its absence at the time of the Central Sales Tax Act, 1956 enforcement.

Analysis:

Issue 1:
The Tribunal upheld the penalty imposed under section 22(4-A) of the M.P. General Sales Tax Act, 1958, and section 9(2A) of the Central Sales Tax Act, 1956. The penalty was deemed appropriate for recovering wrongful gains made by the dealer by withholding due taxes. The Tribunal emphasized the penalty's compensatory nature, likening it to the commercial cost of borrowing money. It was concluded that the penalty served the purpose of ensuring the dealer makes good the loss caused by withholding taxes, with no punitive intent. The Tribunal dismissed the appeals based on these grounds.

Issue 2:
The question arose regarding the validity of imposing penalties under section 22(4-A) of the M.P. General Sales Tax Act, 1958, in conjunction with section 9(2A) of the Central Sales Tax Act, 1956, despite the former not being in force when the latter was enacted. The Tribunal found the assessing authority's decision to levy penalties justified under the circumstances. The Tribunal highlighted that the penalty's purpose was to recover withheld taxes and that any argument against it was untenable considering the statutory provisions and equity principles. The Tribunal dismissed the appeals based on this reasoning.

The applicant's counsel raised concerns about the Tribunal's failure to provide its own opinion on the points referred to the Court. The non-applicant contended that it was premature for the Tribunal to address the matter due to pending rectification applications. Ultimately, the applicant decided not to press for answers at that stage and opted to pursue remedies before the Tribunal, seeking review or other appropriate actions. The Court declined to answer the questions, granting the applicant the freedom to seek remedies before the Tribunal. The non-applicant was given the liberty to contest any such applications in accordance with the law.