1965 (1) TMI 41 - SC - VAT and Sales Tax

Unable to read the stay order as implying that the respondent was obliged to deposit tax, for the stay order then would be of no utility to the assessee. Apart from that, the respondent did not file returns till December, 1959, and January-March, 1960, and section 7(2) could not be attracted till then. We are not concerned with the question whether there has been any breach of section 16(1)(c), In the result, the appeals fail and are dismissed with costs.

Summary

Issues:
1. Imposition of penalties by Sales Tax Authorities for delay in tax payment.
2. Validity of penalties imposed on the respondent.
3. Interpretation of relevant statutory provisions under the Rajasthan Sales Tax Act.
4. Compliance with the provisions of Section 7(2) and Section 16(1)(b) of the Act.
5. Effect of the High Court's stay order on tax payment obligations.
6. Assessment of penalties by the Sales Tax Officer.

Analysis:
The Supreme Court heard appeals against the Rajasthan High Court's judgment allowing Civil Writ Petitions and quashing penalties imposed by Sales Tax Authorities on the respondent for tax payment delays. The High Court found the penalties imposed in violation of Article 20(1) of the Constitution but focused on statutory provisions' violation. The respondent challenged assessments made for 1955-56, initially claiming invalid Rules, later withdrawn post validation by an Ordinance and Act. The Sales Tax Officer issued a show-cause notice for tax payment delay, leading to penalties under Section 16(i)(b) of the Act.

The respondent's appeal to the Deputy Commissioner of Sales Tax was dismissed, emphasizing compliance with Section 7(2) requirements. Subsequently, penalties were imposed for another period, leading to further challenges via writ petitions. The Supreme Court refrained from opining on constitutional violations but focused on statutory construction. The Court analyzed Sections 7 and 16 of the Act, particularly Section 16(1)(b), requiring tax payment within the specified time.

The respondent argued that no tax was due until returns were filed under Section 7(1) and deposited as per Section 7(2), complying with the Act's provisions. Conversely, the Advocate-General contended that tax became due upon show cause notice issuance. The Court held that tax must be ascertained by the assessing authority under Section 10 or by the assessee under Section 7(2) before becoming due under Section 16(1)(b). The show cause notice did not make tax due without a specific provision.

The Court rejected the argument that the High Court's stay order implied tax deposit obligations, as no returns were filed until later. The stay order did not mandate immediate tax payment. Ultimately, the Court found no breach of Section 16(1)(b) and upheld the High Court's decision to quash the penalties. The appeals were dismissed, emphasizing compliance with statutory provisions and the absence of tax due within the specified time under the Act.