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TMI Blog1973 (8) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... rissa) Rules (hereinafter called the "Rules") and for all the periods referred to above, penalties have been imposed. In this writ application, the petitioner disputes the authority of the Sales Tax Officer to impose penalty. 2.. It is contended for the petitioner that in the absence of a clear provision in the Act, there could be no levy of penalty in terms of the Rules. On the other hand, learned counsel for the revenue has contended that rule 16(2) of the Rules is very clear and since it is a rule intra vires the Act, the dispute raised by the petitioner is without merit. 3.. The only question for decision, therefore, is as to whether the opposite party No. 2 had jurisdiction to levy penalty for non-payment of tax demanded under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in satisfying the demand of tax. Section 13 provides for rule-making. Sub-section (1) authorises the Central Government to make rules. Sub-section (3) authorises the State Government to make rules not inconsistent with the provisions of the Act or the rules made under sub-section (1) of section 13 (i.e., by the Central Government) to carry out the purposes of the Act. Sub-section (4) in particular and without prejudice to the powers conferred by sub-section (3) makes provision for rule-making for purposes as indicated therein. Those are: (a) The publication of lists of registered dealers, of the amendments made in such lists from time to time, and the particulars to be contained in such lists; (b) the form and manner in which accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the authority to whom any change in the ownership of any business or in the name, place or nature of any business carried on by any dealer shall be furnished. (The amendments made by Central Act 61 of 1972 have not been taken note of as they were not relevant for this writ petition.) Rule 16 of the Rules makes provision for the notice of demand. Subrule (2) thereof provides: "If, on the date fixed under sub-rule (1) the dealer has not paid the amount due or has failed to produce evidence of payment by the date fixed in the notice in form VII the Commissioner may impose a penalty not exceeding one-half of the total amount due and serve a notice in form VIII directing the dealer to pay the penalty together with sums previously due by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide for the making of a provision as contained in rule 16(2) of the Rules. Mr. Lenka for the petitioner in support of the contention that the rule is ultra vires the Act, places reliance upon a Bench decision of the Mysore High Court in the case of Guldas Narasappa Thimmiah Oil Mills v. Commercial Tax Officer, Raichur[1970] 25 S.T.C. 489. It has been stated therein: "In our judgment, the provisions relating to penalty in a taxing statute are substantive in character. In this view such provisions cannot be reasonably accepted as forming part of the procedural law. Unless such penal provisions in the State law are expressly adopted by the provisions of section 9(2) of the Central Act, they cannot be relied upon for the purpose of reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Superintendent of Commercial Taxes, Purnea[1972] 30 S.T.C. 151., has also adopted a similar view. 5.. Learned standing counsel seeks to distinguish these decisions by saying that in the State Rules made under the Act in exercise of powers vested under section 13, in the Mysore, West Bengal and Bihar Acts, no provision for imposition of penalty in the event of default to satisfy the tax demanded has been made. Levy of penalty in those cases was justified under the provision of the State sales tax law and the High Courts did not accept that stand. In view of the fact that there is a special provision in the Rules made under the Act as applicable to Orissa, it cannot be said that levy of penalty for default to satisfy the tax demand is wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of West Bengal to impose a penalty for delay in filing a return, nor does it empower them to impose a penalty for non-payment of a tax or a penalty. It is well-settled that a taxing statute must be strictly construed and in so far as a penalty contemplated by section 9(2) of the Central Act is concerned, I am of the opinion that it must be held to be a tax. In order to enable the sales tax authorities of the State of West Bengal to impose a tax for either of the purposes mentioned above, there must be clear and unambiguous provisions in the Central Act itself, and in the absence of such provisions in the Central Act, it cannot be said that the reference to the procedure for realisation of tax and penalty in section 9(2) of the Central A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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