2016 (1) TMI 1047 - HC - VAT and Sales Tax

Nature of assessment - best judgment assessment or not - Levy of penalty - Assessment made under Sub section (3) of Section 33 of Maharashtra Sales Tax Act, 1959 - Held that - The order of assessment, looks into the books of account produced by the assessee, draws various transactions from it and ultimately works out tax at ₹ 34,575.85. The tax has been worked out on the basis of books of account of assessee after he produced the same in response to notice of department and, therefore, it is not best judgment assessment. Perusal of order of the sales tax officer dated 5.8.1980 does not show that it is in exercise of best judgment that the assessment has been done. On the contrary, the entries in the books of account varying with returns filed are relied upon and then the assessment has been completed. No provision has been pointed out to this Court which prohibits the department from looking into the returns which are filed belatedly i.e. after prescribed date. The provisions of Explanations I and II of Section 36(2)(c) of the said Act are no doubt mutually exclusive, but then that does mean that the provisions of Sections 33(3) and 33(5) of the said Act are also mutually exclusive. If the return is filed belatedly and it does not give correct and complete figures, the provisions of Section 33(3) of the said Act can be applied by the department to such return. Levy of penalty confirmed - Decided in favor of revenue.

Summary

Issues:
1. Interpretation of Sections 33(3) and 33(5) of the Maharashtra Sales Tax Act, 1959.
2. Application of penalty provisions under Section 36(2)(c) and Explanations I and II.

Analysis:
1. The primary issue in this case revolves around the interpretation of Sections 33(3) and 33(5) of the Maharashtra Sales Tax Act, 1959. The Applicant argued that the assessment was not governed by Section 33(5) as contended by the Respondent, but rather by Section 33(3). The crux of the matter lay in whether the assessment was based on the information furnished in the return or due to the non-filing of returns within the prescribed time. The Applicant emphasized that the Explanation I to Section 36(2)(c) was rightly applied due to the shortfall in tax payment compared to the demand. Conversely, the Respondent relied on the non-filing of returns within the prescribed time to assert that Section 33(5) was applicable, rendering Explanation I inapplicable.

2. The second issue pertained to the application of penalty provisions under Section 36(2)(c) and the relevance of Explanations I and II. The Respondent argued that penalties were levied under Section 36(2)(c), and Explanations I and II were distinct rules enabling penalties under different circumstances. The Respondent further cited case law to support the contention that Explanation II would apply when Section 33(5) was invoked. The Court noted discrepancies in the penalty amount mentioned in various documents but ultimately ruled in favor of the department, emphasizing that the provisions of Sections 33(3) and 33(5) were not mutually exclusive, allowing the department to apply Section 33(3) even to belatedly filed returns that were incomplete or inaccurate.

In conclusion, the Court answered the questions against the assessee and in favor of the department, highlighting the department's authority to utilize Section 33(3) for belatedly filed returns, thereby upholding the application of penalty provisions under Section 36(2)(c) and Explanations I and II as warranted by the circumstances of the case.