1978 (1) TMI 97 - AT - VAT and Sales Tax

Summary

Issues:
1. Assessment of purchase tax on hides and skins under the State Act.
2. Imposition of penalty under section 17(3) of the State Act.

Detailed Analysis:

Issue 1: Assessment of purchase tax on hides and skins under the State Act
The appeals before the Appellate Tribunal ITAT GWALIOR involved the assessment of a dealer under the M.P. General Sales Tax Act for the period from 11th July, 1973 to 31st March, 1975. The dealer was engaged in the trade of hides and skins, purchasing them in Madhya Pradesh and sending them to Madras for tanning. The turnover for the relevant period was determined, and purchase tax was assessed accordingly. The appellant contended that hides and skins were declared goods under the Central Sales Tax Act, which imposed restrictions on the levy of tax on such goods. However, the State Act did not specify the stage at which tax would be levied on declared goods, potentially allowing for multiple stages of taxation. The Tribunal found that the levy of purchase tax on hides and skins was in accordance with the provisions of the State Act, as the goods were purchased from unregistered dealers and dispatched outside the State.

Issue 2: Imposition of penalty under section 17(3) of the State Act
The appellant further challenged the imposition of penalties under section 17(3) of the State Act. The appellant argued that they did not consider themselves liable to pay purchase tax initially and only paid the tax amount after being advised by the assessing authority. The appellant contended that there was sufficient cause for the delay in payment and that the penalty was unjustified. The Department opposed this argument, citing previous court decisions that clarified the liability of purchasers for purchase tax. The Tribunal considered the appellant's actions, noting that they had informed the assessing authority of their interpretation regarding tax liability at the outset. The Tribunal found that the appellant had acted promptly to pay the tax once they were made aware of the assessing authority's view. Therefore, the Tribunal held that there was sufficient cause for the delay in payment and set aside the penalties imposed under section 17(3) of the State Act.

In conclusion, the appeals were partly allowed. The Tribunal rejected the contention to set aside the levy of purchase tax on hides and skins but set aside the penalties imposed under section 17(3) of the State Act.