2009 (3) TMI 950 - AT - VAT and Sales Tax

Penalty - dealer liable to file return failed to submit such return within the prescribed period of time - imposition made for public purpose - levy of late fee -

Issues Involved:
1. Constitutionality and legality of the amendment to sub-section (2) of section 32 of the West Bengal Value Added Tax Act, 2003.
2. Legality of the imposition of late fee for submitting returns beyond the prescribed date.
3. Legislative competence of the State of West Bengal to levy the late fee.
4. Retrospective effect of the amendment.
5. Absence of a charging section for the levy of the late fee.
6. Allegation of double jeopardy due to the imposition of both late fee and penalty.

Issue-wise Detailed Analysis:

1. Constitutionality and Legality of the Amendment:
The petitioners questioned the constitutionality and legality of the amendment of sub-section (2) of section 32 of the West Bengal Value Added Tax Act, 2003, which was amended by W.B. Act 3 of 2007 and later by the West Bengal Finance Act, 2008. The amendment introduced a provision for payment of penalty for delayed filing of returns, which was later replaced by a late fee.

2. Legality of the Imposition of Late Fee:
The petitioners argued that the imposition of a late fee is essentially a tax and that the State of West Bengal lacks the competence to levy such a tax. They contended that the late fee cannot be considered a "fee" as there is no quid pro quo. The Tribunal held that the late fee is not a tax but a fee related to the special benefit of filing returns beyond the prescribed period and avoiding the adverse consequences of non-submission. The Tribunal emphasized that the late fee is optional and uniform for all, and it is not related to the paying capacity of the dealers.

3. Legislative Competence of the State of West Bengal:
The Tribunal found that the State Legislature has the competence to levy the late fee under entry 66 of List II of the Schedule VII to the Constitution, which empowers the State Legislature to levy fees in respect of all matters enumerated in the said List. The Tribunal held that the impugned late fee is a fee and not a tax, and thus, the State Legislature has the legislative competence to levy it.

4. Retrospective Effect of the Amendment:
The petitioners challenged the retrospective effect of the amendment, arguing that it unfairly prejudices them. The Tribunal held that the retrospective imposition of the late fee from April 1, 2007, is justified as it coincides with the date when the right to submit returns after the prescribed period upon payment of a penalty was first introduced. The Tribunal stated that the petitioners are not prejudiced by the retrospectivity as they are not required to pay the late fee if they do not want to file any return for the period between April 1, 2007, and March 31, 2008.

5. Absence of a Charging Section:
The petitioners argued that there is no charging section in the VAT Act authorizing the levy of the late fee. The Tribunal rejected this argument, stating that section 32(2) clearly imposes the liability to pay the late fee for delayed returns and contains all the characteristics of a charging section. The Tribunal found the language of section 32(2) to be clear, specific, and unambiguous.

6. Allegation of Double Jeopardy:
The petitioners contended that the imposition of both a late fee and a penalty for delayed submission of returns constitutes double jeopardy. The Tribunal found this allegation to be factually incorrect. It clarified that once a dealer files a return with the appropriate late fee, they are no longer considered a defaulter in submitting returns and are not liable to pay any penalty for non-filing of returns. The Tribunal explained that a dealer might still be liable for penalties related to delayed payment of tax but not for non-submission of returns if they have filed the return with the late fee.

Conclusion:
The Tribunal dismissed all three applications, finding no merit in any of the contentions raised by the petitioners. It upheld the legality and constitutionality of the amendment to sub-section (2) of section 32 of the West Bengal Value Added Tax Act, 2003, and confirmed the legislative competence of the State of West Bengal to levy the late fee. The Tribunal also found no issue with the retrospective effect of the amendment and rejected the allegations of the absence of a charging section and double jeopardy.

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