2011 (7) TMI 1041 - HC - VAT and Sales Tax

Whether in the facts of the present case, by virtue of the settlement of the dispute in the appeal preferred against the original order of assessment dated June 30, 2005, the proceeding for penalty arising therefrom also abated? Held that - Set aside the proceeding for imposition of penalty in view of the clear bar created under section 9 of the SOD Act and hold that on a certificate of settlement being issued under section 8(1) of the SOD Act, there was no further scope of proceeding against the writ petitioners for penalty for suppression of the material fact on the basis of the finding recorded by the assessing officer in his order dated June 30, 2005. Appeal allowed.

Issues Involved:
1. Legality of the penalty imposed under Section 76(1)(b) of the West Bengal Sales Tax Act, 1994.
2. Impact of the settlement under the West Bengal Sales Tax (Settlement of Dispute) Act, 1999 on the penalty proceedings.
3. Authority of the State Government to proceed with penalty after settlement of the assessment dispute.

Issue-wise Detailed Analysis:

1. Legality of the penalty imposed under Section 76(1)(b) of the West Bengal Sales Tax Act, 1994:
The writ petitioners, as occupiers of a jute mill and registered dealers, submitted returns for the quarter ending March 31, 2003, declaring gross purchases of raw jute. The Joint Commissioner disbelieved the claim of inter-State purchases worth Rs. 14,46,93,149.32 and levied a substantial purchase tax. An appeal was filed against this order. During the appeal's pendency, the Assistant Commissioner initiated proceedings under Section 76 for furnishing incorrect particulars and imposed a penalty of Rs. 58,18,784. The petitioners challenged this penalty through a revisional application, which was affirmed by the revisional authority. The West Bengal Taxation Tribunal later reduced the penalty to Rs. 20,00,000, which led to the current writ application.

2. Impact of the settlement under the West Bengal Sales Tax (Settlement of Dispute) Act, 1999 on the penalty proceedings:
The petitioners sought to resolve the assessment dispute under the SOD Act, resulting in a certificate issued by the State Government. Mr. Bhattacharjee argued that once the assessment dispute was settled, there was no scope for further penalty proceedings based on the same assessment order. The SOD Act's Section 9 states that a certificate of settlement is conclusive and bars reopening settled matters in any proceeding or review. Therefore, the issuance of the certificate should have precluded any further penalty proceedings.

3. Authority of the State Government to proceed with penalty after settlement of the assessment dispute:
Mrs. Roy contended that the settlement under the SOD Act only reduced the assessment amount and did not affect the penalty proceedings for furnishing incorrect particulars. However, the court found that once the assessment dispute was settled, the entire dispute, including the basis for the penalty, was resolved. The State Government, having accepted the settlement, could not proceed with the penalty. The court emphasized that the State Government had the discretion to refuse settlement in serious cases but chose not to exercise it here.

Conclusion:
The court concluded that the settlement certificate under Section 8(1) of the SOD Act was conclusive, and no further penalty proceedings could be pursued based on the settled assessment order. The penalty proceedings were quashed, and the writ petition was allowed. The similar writ application, WPTT No. 21 of 2011, was also allowed, quashing the penalty imposed.

Disposition:
Both writ applications were disposed of by a common order, with no order as to costs. Certified copies of the order were to be provided to the parties' counsel within a week of application.

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