2009 (4) TMI 902 - HC - VAT and Sales Tax

Summary

Issues:
1. Imposition of penalty under section 10(6) of the Punjab General Sales Tax Act, 1948.
2. Justification of interest imposition under section 11D regarding deposited tax before filing returns.

Analysis:

1. Imposition of Penalty under Section 10(6):
The petitioner-dealer filed an application under section 22(1) of the Act, seeking a reference of legal questions arising from the Tribunal's order. The Assessing Authority had imposed a penalty of &8377; 2,150 under section 10(6) and interest of &8377; 18,190 under section 11D for alleged short-payment of &8377; 21,309. The petitioner-dealer contended that since no interest was payable as tax was deposited before filing the returns, the imposition of penalty under section 10(6) should not arise. The court, after considering previous judgments and the facts of the case, ruled in favor of the petitioner-dealer, stating that if no interest was payable, then the question of imposing a penalty did not stand. Consequently, the court answered question No. (i) against the Revenue and in favor of the petitioner-dealer.

2. Interest Imposition under Section 11D:
The second question pertained to the justification of interest imposition under section 11D when tax was deposited before filing the returns. The petitioner-dealer argued that a similar issue had been decided in their favor in a previous case, where it was held that interest was not payable for the period before the demand was raised. Referring to relevant judgments, including one by the Supreme Court, the court agreed with the petitioner-dealer's stance. The court noted that the tax as per the return was deposited by the petitioner-dealer, and hence, no interest could be imposed. Therefore, question No. (ii) was also answered against the Revenue and in favor of the petitioner-dealer.

In conclusion, the court ruled in favor of the petitioner-dealer on both issues, rejecting the Revenue's contentions and upholding the petitioner's arguments. The judgment clarified the legal aspects regarding penalty imposition under section 10(6) and interest imposition under section 11D, providing a favorable outcome for the petitioner-dealer based on the facts and relevant legal precedents.