2024 (6) TMI 366 - HC - VAT and Sales Tax

Legality of the penalty imposed u/s 31(3) of the Bihar Finance Act, 1981 - want of Form 28B of Bihar Finance Act, 1981 - condonation of delay of 213 days in filing appeal - Whether defendants are liable to pay sum of Rs. 1,68,301.58 paisa with pendente lite and future interest at the rate of 18 % per annum till realization to the plaintiff M/s Anil Automobile or not? HELD THAT - It transpires that present appellant has not raised any objection at the very stage of admission of the appeal on the ground of limitation and has taken the matter very lightly and also participated in the hearing on merits without raising aforesaid objection at any stage of the proceeding. Under aforementioned circumstances, it may be deemed that matter of delay has been properly discussed by the appellate court and thereafter entered into decision on merits. As such above objection holds no much water at the present stage of second appeal. The foremost important question of law involved in this appeal is pertaining to decision of the Commercial Tax Tribunal which finally hold that imposition of penalty due to want of Form 28B of Bihar Finance Act, 1981, which was not required for the purpose of transportation of the goods in the seized vehicle. Hence, imposition of penalty was not proper and justified under law. In that view of the matter reversal of above decree passed by concerned trial court by the first appellate court is justified or not. The learned trial court found the plaintiff to be entitled to the refund of penalty amount of Rs. 48,432/- along with interest at the rate of 18 % per annum from 20.02.1993 till its realization. From perusal of the impugned judgment passed by first appellate court it appears that the judgment of the learned Appellate Court is based upon extraneous facts and conjecture that the appellant/plaintiff has filed no receipt of deposit of the fine amount of Rs. 48,432 as well as he can t claim refund of the said amount and allowed the appeal setting aside the judgment of concerned trial court. In the instant case, at the stage of trial the defendants/respondents never disputed the deposit of penalty amount. It is also not disputed that on issuance of direction by the Commercial Tax Officer of I.B. the appellant appeared and also explained that no permit is required in form 28-B Bihar Finance Act, 1981 for transportation of goods seized in this case. In spite of that penalty was imposed which was also deposited and goods and vehicles were released. It is evident that the order passed by Commercial Tax Officer was ultimately quashed by the higher forum and it was found that there was no contravention of the Section 31 (3) of Bihar Finance Act, 1981 in the instant case. Under such circumstance the penalty illegally imposed upon the appellant is required to be refunded as per doctrine of equity, justice and good conscience which prevents unjust enrichment - merely on the ground that penalty amount was deposited by the driver of the vehicle and not by the present appellant and receipt of deposited is not produced is not sufficient to discard the genuine claim of the appellant/ plaintiff which was never contested on such ground by the respondents. The judgment of reversal passed by First Appellate Court is absolutely beyond the weight of evidence and devoid of any sound reasoning rather it is based on conjecture and surmises. As such impugned judgment and decree passed by lower appellate court in Money Appeal No. 02 of 2012 dated 30.11.2016 and 08.12.2016 is hereby, set aside and judgment and decree passed by learned trial court in Money Suit No. 35 of 2006 is hereby upheld and confirmed - appeal allowed.

Summary

Issues Involved:
1. Legality of the penalty imposed u/s 31(3) of the Bihar Finance Act, 1981.
2. Admissibility of the appeal filed with a delay of 213 days.
3. Entitlement of the plaintiff to the refund of the penalty amount along with interest.

Summary:

1. Legality of the penalty imposed u/s 31(3) of the Bihar Finance Act, 1981:
The plaintiff, a partnership firm, purchased mobil goods from M/s Indian Oil Corporation Ltd. The goods were seized by the Commercial Tax Officer due to non-production of a road permit. The Assistant Commissioner imposed a penalty of Rs. 48,432 u/s 31(3) of the Bihar Finance Act, which was paid by the plaintiff. The plaintiff's appeal against this penalty was allowed by the Joint Commissioner (Appeal), but this decision was later set aside by the Commissioner of Commercial Taxes. The plaintiff's revision petition was eventually allowed by the Commercial Tax Tribunal, which found no evidence of tax evasion and restored the Joint Commissioner's order, declaring the penalty unjustified.

2. Admissibility of the appeal filed with a delay of 213 days:
The defendants filed an appeal against the trial court's judgment with a delay of 213 days. The appellate court admitted the appeal subject to condonation of delay to be decided at the final hearing. However, the appellate court did not address the limitation issue in its final judgment. The High Court noted that the mandatory provision of Order 41 Rule 3(A) CPC was ignored, but since the appellant did not object at the admission stage and participated in the hearing, it was deemed that the delay was implicitly condoned.

3. Entitlement of the plaintiff to the refund of the penalty amount along with interest:
The trial court decreed the suit in favor of the plaintiff, directing the defendants to refund the penalty amount with interest at 18% per annum. The appellate court reversed this decision, stating that the plaintiff did not provide a receipt for the penalty payment and that the penalty was deposited by the truck driver, not the plaintiff. The High Court found this reasoning flawed, emphasizing that the penalty was ultimately deemed unjustified by the Commercial Tax Tribunal and that the plaintiff was entitled to a refund based on the principles of equity, justice, and good conscience. The High Court set aside the appellate court's judgment and upheld the trial court's decree, confirming the plaintiff's entitlement to the refund with interest.

Conclusion:
The High Court allowed the appeal, setting aside the appellate court's judgment and confirming the trial court's decree. The plaintiff is entitled to a refund of Rs. 48,432 along with interest at 18% per annum from 20.02.1993 until realization.