1977 (2) TMI 28 - HC - VAT and Sales Tax

Issues Involved:
1. Levy of penalties under Section 36(3) of the Bombay Sales Tax Act, 1959 for three different periods.
2. Challenge to the quantum of penalties levied.
3. Request for remission or reduction of penalties.

Issue-wise Detailed Analysis:

1. Levy of Penalties under Section 36(3) of the Bombay Sales Tax Act, 1959:
The appeals were directed against orders levying penalties for three periods: 1st July 1970 to 30th June 1971, 1st July 1971 to 30th June 1972, and 1st July 1972 to 30th June 1973. The penalties levied were Rs. 46,768.37, Rs. 24,443.70, and Rs. 1,986.89 respectively.

2. Challenge to the Quantum of Penalties Levied:
The primary contention was that the penalties should be remitted or reduced significantly. Various grounds were advanced in support of this contention.

3. Request for Remission or Reduction of Penalties:

First Period (1st July 1970 to 30th June 1971):
- Excess Payment: The Assistant Commissioner's working indicated an excess payment by the assessee of Rs. 34,000. This excess payment was argued to mitigate the penalty quantum significantly. The court acknowledged this as a relevant factor for remission.
- Non-Collection of Tax: It was contended that the tax was not collected at all, as verified by the Assistant Commissioner. This was disputed by the Sales Tax Officer, but the court found the contention relevant for remission.
- Deposits as Part of Turnover: The Assistant Commissioner included deposits of Rs. 2,95,508 in the turnover, which was contested. The court noted that the legal position on this matter was not clear, making it a relevant factor for remission.
- Refund Order: A refund order of Rs. 32,518 under the Central Sales Tax Act was issued for the same period. The court found this relevant for considering remission under the proviso to Section 36(3).
- Business Mode and Delays: The appellant's business involved lengthy procedures with government-nominated agriculturists, causing delays in payments. The court did not find this a sufficient ground for remission.
- Liquid Assets: The court found that the appellant did not have sufficient liquid assets to pay the taxes, despite the balance sheets showing significant bank balances, as these were against hypothecated goods.

Based on these factors, the court reduced the penalty for the first period to Rs. 20,000.

Second Period (1st July 1971 to 30th June 1972):
- Non-Collection of Tax: Similar to the first period, it was contended that the tax was not collected.
- Deposits as Part of Turnover: The Assistant Commissioner included deposits of Rs. 81,436 in the turnover, which was contested.
- Business Mode and Delays: The court reiterated that these were not relevant for remission.
- Legal Position on Sales Tax: The legal position regarding the liability of the Maharashtra Agro Industries Development Corporation to pay sales tax was not clear until 3rd October 1972. This ambiguity was considered relevant for remission for the year 1972-73.

The court slightly reduced the penalty for the second period to Rs. 20,000.

Third Period (1st July 1972 to 30th June 1973):
- The court found no grounds for reduction of the penalty for this period.

Conclusion:
- First Period (1st July 1970 to 30th June 1971): Penalty reduced to Rs. 20,000.
- Second Period (1st July 1971 to 30th June 1972): Penalty reduced to Rs. 20,000.
- Third Period (1st July 1972 to 30th June 1973): No reduction in penalty; appeal dismissed.

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