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TMI Blog1990 (1) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 29(1A) of the Rules for each of the first two months of the relevant quarters, both under the Bombay Sales Tax Act and the Central Sales Tax Act, as the case may be? Questions at the instance of the assessee: (1) Whether, on the facts and in the circumstances of the case, was the Tribunal justified in law under the Bombay Sales Tax Act or the Central Sales Tax Act, as the case may be, in upholding the levy of penalty under section 36(3) of the Bombay Sales Tax Act, 1959, for nonpayment of part or whole of the tax payable along with the returns without issue of a notice from the department in form No. 26, as required under section 38(4) of the Bombay Sales Tax Act, 1959, read with rule 31 of the Bombay Sales Tax Rules? (2) In cases where penalty under section 36(3) of the Bombay Sales Tax Act, 1959, read with section 9 of the Central Sales Tax Act, 1956, is levied for a period prior to 7th September, 1976, the date of promulgation of the Central Sales Tax (Amendment) Act, 1976, the circumstances of there being no such provision under the Central Sales Tax Act, 1956, prior to the amendment of 1976, constitute a reasonable cause within the meaning of section 36(3) in the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 38, sub-section (4) of the Bombay Sales Tax Act, 1959. 6.. The assessee had earlier pleaded difficulty in payment of taxes. The assessee had urged that during the said period the textile machinery market was in a slump and the assessee was faced with financial difficulties on account of non-recovery of sale proceeds. On his application, the Additional Commissioner of Sales Tax had granted instalments for the payment of tax due as per returns. In these circumstances the assessee contended that there was no negligence or bad intention on his part in respect of non-payment of tax. Therefore, a penalty should not be levied. The contentions of the assessee were negatived by the Sales Tax Officer who levied penalties as stated earlier. 7.. Being aggrieved by the orders of the Sales Tax Officer against the levy of penalty the assessee filed first appeals before the Assistant Commissioner of Sales Tax (Appeals) III, Bombay City Division. The appeals, however, failed. The assessee thereafter filed second appeals before the Tribunal. Two second appeals were filed by the assessee, one under the Bombay Act and the other under the Central Act for the first assessment period. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished without full payment therefor, or (ii) assessed or reassessed for any period under section 33 or 35 less any sum already paid by the dealer in respect of such period, or (iii) assessed under sub-section (3) of section 41, and (b) the amount of penalty (if any) levied under section 36 or 37, and (c) and (d)......... shall be paid by the dealer or the person liable therefor into a Government treasury, by such date as may be specified in a notice issued by the Commissioner for this purpose, being a date not earlier than thirty days from the date of service of the notice: Provided that, the Commissioner or an appellate authority in an appeal under section 55 may, in respect of any particular dealer or person, and for reasons to be recorded in writing, extend the date of payment, or allow him to pay the tax or penalty (if any) or the sum forfeited, by instalments:" Under section 36, sub-section (3), as it stood at the material time, it is provided as follows: "36. (3) If a dealer does not, without reasonable cause, pay tax within the time he is required by or under the provisions of this Act to pay it, the Commissioner may, after giving the dealer an opportunity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... month, if his turnover exceeds Rs. 10 lakhs. 13.. The question is whether the penal provisions of section 36(3) are attracted if the dealer commits a default in making such monthly payment of tax under rule 29(1A). 14.. Now, penal provisions of section 36(3) are attracted if tax is not paid within the time prescribed. Section 38(2) requires a registered dealer furnishing returns to first pay into the treasury the whole of the amount of tax due from him according to such returns. It does not lay down any specific dates by which such tax is to be paid. Rule 29(1A) prescribes more specifically the manner in which tax as per return is to be paid when the turnover of the previous year exceeds Rs. 10 lakhs. In other words, where the tax to be paid is substantial, a more detailed schedule of payment as per section 38(2) read with rule 29(1A) is provided to facilitate proper recovery of tax. Rule 29(1A) is, therefore, a corollary to section 38(2). The aim of rule 29(1A) is to ensure payment of tax before furnishing a return as laid down in section 38(2). If tax is not paid or is not paid in full before filing the return, then, the tax due shall be paid by the dealer by such date as may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m into Government treasury before he filed the return. If the tax due as per return was not paid, a notice was required to be furnished in terms similar to section 38, sub-section (4) of the Bombay Sales Tax Act, 1959. Under section 16, sub-section (4), if the dealer failed to pay the amount of tax within the time prescribed in the notice he became liable to levy of penalty. 17.. The Gujarat High Court held that section 16, sub-section (2), merely fixed the liability of the assessee to pay the amount of the tax according to his return. He was required to pay the tax by such date as may be prescribed in the notice issued under section 16, sub-section (5). If the assessee paid the amount of tax before the date specified in the notice, the notice was complied with and there would be no default. The Gujarat High Court held that in such a case, the penalty under section 16, sub-section (4), cannot be imposed. It said (page 594) "This sub-section [section 16(2)] merely declares the liability of the assessee to pay the full amount of tax due according to the return before furnishing the return;......it must be remembered that sub-sections (2), (4) and (5) of section 16 form part of a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax Act, 1953, inasmuch as the penalty provision is under a separate section in the Bombay Sales Tax Act, 1959 and does not form part of the present section 38 of the Bombay Sales Tax Act, 1959. We do not see how that makes any difference to the interpretation of the two sections. 20.. The Gujarat High Court in the case of Motilal Joitaram Patel v. Sales Tax Officer 1975 Tax LR 1589, has also distinguished the earlier case by saying that unlike section 16 of the previous Act the provisions of section 38, sub-section (4), relating to the giving of notice are not attracted where the tax is paid by the assessee on the basis of his return. It is only when the tax assessed is required to be paid that a notice under section 38(4) is required. Hence when a dealer is required to pay tax before filing his return under section 38(2), the provisions of section 38(4) are not attracted. 21.. With all respect to the learned Judges of the Gujarat High Court, we fail to see the point of distinction sought to be made out. Under section 38(4) of the Act in terms there is a provision for giving of notice when the amount of tax due as per returns is not paid before filing the return. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore filing the return and it is only if full tax is not paid before filing the return that a notice is required to be given and the penal provisions of section 36, sub-section (3), are attracted for its non-compliance. Non-compliance with rule 29(1A), therefore, does not attract the penal provisions of section 36, subsection (3). 26.. As pointed out by Mr. Sheth, learned Advocate for the assessee, the rule-making power under section 74(xii) is in respect of the intervals at which and the manner in which tax shall be paid under section 38. Rule 29(1A) merely furthers the objectives of section 38. It does not enlarge the scope of section 38 so as to attract the penalty provisions of section 36(3) even when a notice as required under section 38(4) is not given. The rule, in our view, merely prescribes the manner of paying tax which may be large because the turnover of sales and purchases have exceeded Rs. 10 lakhs in the previous year. The rule facilitates full payment of tax before the return is filed. It cannot take the place of substantive provisions of law prescribed under section 38. In the absence, therefore, of a notice under section 38(4), penalty under section 36(3) is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of which he is liable to submit returns under the general sales tax law of the appropriate State. 30.. Under rule 5 of the Central Sales Tax (Bombay) Rules, 1957, every dealer registered under the Central Sales Tax Act shall, unless he has been exempted in this behalf by the Commissioner, by an order in writing in this behalf, furnish a return in form III-B in respect of each period for which his turnover is required to be determined under rule 11 of the Central Sales Tax (Registration and Turnover) Rules, 1957. Form III-B shall consist of return-cum-challan. Each such return is required to be accompanied by a challan showing the payment of tax due and payable according to the return in the Government treasury. Therefore, if full tax is not paid according to the return by a registered dealer under the Central Sales Tax Act, provisions of section 38(4) and, for non-compliance with notice, provisions of section 36, sub-section (3) of the Bombay Sales Tax Act, 1959, are attracted. 31.. In the present case however, a notice in form 26 under section 38, sub-section (4) of the Bombay Sales Tax Act was not given in connection with penalty to be levied under the Central Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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