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2011 (9) TMI 905 - HC - VAT and Sales Tax
Issues:
1. Imposition of penalty for shortfall in the payment of sales tax by the petitioner. 2. Justifiability of the 300 per cent penalty imposed by the respondent-authority. Imposition of Penalty for Shortfall in Sales Tax Payment: The case involved writ petitions filed by a dealer against a penalty imposed for not disclosing correct figures of gross turnover and sales tax deficit for assessment years 1997-98, 1998-99, and 1999-2000. The petitioner, a liquor manufacturer and wholesale dealer, did not include excise duty paid in the turnover. The Assistant Commissioner imposed a 300% penalty for non-disclosure, which was upheld in subsequent appeals. The Supreme Court remitted the matter to the High Court to determine if the penalty imposition was proper. Justifiability of the 300% Penalty: The petitioner's counsel argued that the excise duty paid by the manufacturer was not clearly defined as part of the turnover at the time. However, the respondent contended that excise duty formed part of the sale price and should be included in the turnover. The petitioner was found deficient in paying sales tax and admitted taxes, leading to the imposition of the 300% penalty under section 20(1)(a) of the Finance Act. The court referred to definitions of "gross turnover" and "sale price" under the Bihar Finance Act to support the inclusion of excise duty in turnover. The court rejected the petitioner's argument that a stay order against sales tax recovery absolved them from payment, holding the petitioner liable for the due tax. Due to intentional evasion and prolonged litigation to avoid tax liability, the court upheld the 300% penalty as justified. The judgment dismissed the writ petitions, confirming the penalty imposition and ordering the petitioner to pay costs. Both judges concurred with the decision. This detailed analysis covers the issues of penalty imposition for sales tax shortfall and the justifiability of the 300% penalty, providing a comprehensive understanding of the legal judgment.
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