2017 (5) TMI 1228 - HC - VAT and Sales Tax

Penalty u/s 45(6) of the Gujarat Sales Tax Act, 1969 - The revisional authority took the assessment order under suo-motu revision and raised demand - penalty was deleted mainly on the ground that the revisional authority has no jurisdiction to levy penalty for the first time - Held that - the issue is not res-integra in view of decision of the Division Bench of this Court in the case of Ridhhi Siddhi Gluco Biols Ltd. 2017 (4) TMI 309 - GUJARAT HIGH COURT , where it was held that the penalty u/s 45(6) of the Act is mandatory and therefore, the same can be levied by the revisional authority for the first time in the suo-motu revisional proceedings - penalty upheld. Interest u/s 47(4A) of the Act - Held that - considering sub-clause (vi) of section 47(4A) of the Act, it cannot be said that the learned tribunal has committed any error in restricting interest charged under section 47(4) of the Act for the period of 36 months only. Petition allowed - decided partly in favor of petitioner.

Summary

Issues:
1. Challenge to impugned judgment and order passed by the learned Income Tax Appellate Tribunal.
2. Validity of penalty levied under section 45(6) of the Gujarat Sales Tax Act.
3. Jurisdiction of revisional authority to impose penalty for the first time.
4. Rectification of interest charged under section 47(4A) of the Act.
5. Compliance with Division Bench decision in Ridhhi Siddhi Gluco Biols Ltd. case.

Analysis:

Issue 1:
The State challenged the judgment and order passed by the Income Tax Appellate Tribunal, which confirmed the tax demand but deleted the penalty imposed under section 45(6) of the Gujarat Sales Tax Act. The State filed a Special Civil Application under Article 226/227 of the Constitution of India.

Issue 2 & 3:
The revisional authority had raised the tax demand substantially higher than the original assessment for the period of 2002-2003. The tribunal confirmed the tax liability but deleted the penalty under section 45(6) stating that the revisional authority lacked jurisdiction to levy penalty for the first time. However, the State argued, citing the Ridhhi Siddhi Gluco Biols Ltd. case, that the penalty under section 45(6) is mandatory and can be imposed by the revisional authority in suo-motu revision proceedings. The court agreed with the State and quashed the tribunal's decision to delete the penalty.

Issue 4:
The tribunal had restricted the interest charged under section 47(4A) of the Act to a period of 36 months only. The State challenged this decision, but the court found that the tribunal did not err in restricting the interest based on the provisions of sub-clause (vi) of section 47(4A) of the Act. Therefore, the challenge to this aspect failed.

Issue 5:
The court emphasized the importance of complying with the Division Bench decision in the Ridhhi Siddhi Gluco Biols Ltd. case, which established the revisional authority's power to levy penalty under section 45(6) for the first time. The court ruled in favor of the State, quashing the tribunal's decision to delete the penalty and upholding the restriction on interest charged.

In conclusion, the court partially allowed the petition, setting aside the tribunal's decision to delete the penalty under section 45(6) while upholding the restriction on interest charged.