2006 (10) TMI 388 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether penalty and interest under the Act should be deleted based on the law laid down by the Supreme Court?
2. Whether penalty and interest should be levied when there is no contumacious conduct or concealment of gross turnover in the return?

Analysis:
The petitioner approached the court seeking a direction to the Sales Tax Tribunal to refer questions of law regarding the levy of penalty and interest under the Punjab General Sales Tax Act. The court, after hearing both parties, focused on the question of penalty. The petitioner, a charitable organization, filed its return claiming exemption based on a notification issued by the State Government. Despite the expired exemption, the petitioner hoped for restoration with retrospective effect. However, the Assessing Authority levied tax, interest for delayed payment, and penalties under sections 10(6) and 13(3) of the Act. The petitioner's appeal was unsuccessful, leading to the current petition.

Regarding the penalty issue, the court considered the nature of the petitioner as a non-profit organization and the past restoration of exemptions with retrospective effect. The court noted the absence of mens rea in the petitioner's failure to deposit tax with the return. Given the circumstances and the lack of justification for penalty imposition, the court ruled in favor of the petitioner, stating that there was no basis for levying the penalty. As a result, the petition was disposed of accordingly.