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TMI Blog1973 (4) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... 1971. Further appeal to the Sales Tax Tribunal, Chandigarh, was also dismissed by order dated 22nd February, 1972. The petitioner then made an application under section 22(1) of the Punjab Act for referring ten questions of law alleged to arise out of the order of the Tribunal. That application was dismissed by the Sales Tax Tribunal on 27th June, 1972, on the ground that penalty was not included in the expression "tax" used in section 22 and hence the application was not competent. Feeling aggrieved, the petitioner has filed the present petition under section 22(2)(b) and (3) of the Punjab Act for a direction to the Sales Tax Tribunal to state the case and refer the questions of law mentioned in the application to this court for decision. Section 22(1) of the Act reads as under: "Within 60 days from the passing of an order under section 20 or 21 by the Tribunal, affecting any liability of any dealer to pay tax under this Act, such dealer or the Commissioner may, by application in writing accompanied by a fee of one hundred rupees in case the application is made by a dealer, require the Tribunal to refer to the High Court any question of law arising out of such order." The qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty as an additional tax imposed upon a person in view of his dishonest or contumacious conduct. It is true that under the Hyderabad Income-tax Act, distinct provisions are made for recovery of tax due and penalty, but that in our judgment does not alter the true character of penalty imposed under the two Acts." It is, thus, clear that penalty is an additional tax which is levied and recovered in the same manner as the original tax. The Gujarat High Court considered this matter in Viswa Co. v. State of Gujarat[1966] 17 S.T.C. 581. and held on the interpretation of section 34(1) of the Bombay Sales Tax Act, 1953, that a question relating to the imposition of penalty under section 16(4) of the said Act could be referred to the High Court by the Tribunal under section 34(1). Section 34(1) of the Bombay Act is in identical terms as section 22(1) of the Punjab Act and, therefore, this judgment is directly in point. The learned counsel for the respondent has, however, urged that penalty is not included in the term "tax" and, therefore, no reference arising out of the order imposing penalty can be made to this court under section 22 of the Act. Reliance is placed on a single Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. It must necessarily be so. In a taxing statute of this nature, the Legislature must envisage and provide for cases, where the assessees attempt to contravene the provisions of the Act and to evade payment of rightful tax levied thereunder. If such contingencies are not visualised and such leaks are not plugged, no taxation law can be effectively and satisfactorily implemented. In order to satisfactorily and effectively implement their provisions, penalties are generally provided for in all taxation laws. Without such a sanction, there is the danger of evasion of tax. Thus, provision for levy and collection of penalties for contravening their requirements has become an integral part of such enactments, and one of their purposes. The argument that it does not form part of the purposes of the Act, is thus a wholly untenable one." At page 12 it is further observed: "Any tax and/or any penalty assessed or levied under the Sales Tax Act, as payable by the deceased dealer, is payable out of the estate of the deceased dealer..........Rule 23(1) clearly provides that they are to be paid only out of the estate of the deceased dealer. Such a provision appears to us to be quite reasonabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft to bear their own costs. Petition allowed. Appendix [The judgment of BAL RAJ TULI, J., in Shri Maya Ram Bhatia v. The Deputy Excise and Taxation Commissioner, Jullundur Division, Jullundur City, and Another (Civil Writ No. 555 of 1965) delivered on 10th September, 1969, is printed below: ] MAYA RAM BHATIA v. DEPUTY EXCISE AND TAXATION COMMISSIONER, JULLUNDUR DIVISION, JULLUNDUR CITY The petitioner carries on business at Amritsar and deals in karyana and vegetable oils and is registered as a dealer under the Punjab General Sales Tax Act, 1948 (hereinafter called the Act). For the year 1962-63 he was assessed by the Assistant Excise and Taxation Officer because his turnover did not exceed five lacs of rupees. The final order of assessment was made on 20th February, 1964. On 3rd September, 1964, respondent No. 2 issued a notice to the petitioner under section 10(7) of the Act to show cause why penalty should not be imposed in terms of that section. On 15th September, 1964, he imposed a penalty of Rs. 25,000 ex parte because the petitioner did not appear. Against that order, the petitioner filed an appeal before the Deputy Excise and Taxation Commissioner, Jullundur Divisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r amendment was made by the Punjab General Sales Tax (Amendment) Ordinance (1 of 1967), whereby section 20 of the Act was substituted for the previous section 20. Subsection (5) of section 20, as enacted by the Ordinance, reads as under: "No appeal shall be entertained by an appellate authority unless such appeal is accompanied by satisfactory proof of the payment of the tax or of the penalty, if any, imposed or of both, as the case may be: Provided that if such authority is satisfied that the dealer is unable to pay the tax assessed or the penalty, if any, imposed or both, he may, for reasons to be recorded in writing, entertain an appeal without the tax or penalty or both having been paid or after part payment of such tax or penalty or both." This Ordinance was replaced by the Punjab General Sales Tax (Amendment and Validation) Act (7 of 1967) and the same provision exists in subsection (5) of section 20 as enacted by the Amendment Act. It is thus clear that in 1964, when the petitioner filed the appeal, it was not necessary under the proviso to section 20 of the Act to pay the amount of penalty before the appeal could be entertained. The order of the Deputy Excise and Taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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