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TMI Blog1991 (3) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... Act as to why penalty should not be imposed for non-payment of arrears of tax but none appeared on behalf of the dealer and, therefore, Shri S.N. Kak, Sales Tax Officer, Ward No. 1, by his order dated 7th August, 1968, imposed a penalty of Rs. 10,000. The dealer was also asked to deposit Rs. 45,072.08, the amount of dishonoured cheque. A penalty of Rs. 5,000 was imposed by Shri S.N. Kak for non-payment of tax for the first quarter of 1968-69 amounting to Rs. 40,257.86 under section 11(3a) by order dated 7th September, 1968. Assessment for the year 1967-68 was framed by Shri R.C. Minocha, Assistant Sales Tax Officer, Ward No. 1, by his order dated 28th February, 1972. He observed that the cheque for Rs. 45,072.08 having been presented on 30th June, 1968, was obviously tendered late by two months and that too was dishonoured. The dealer contended that the cheque was tendered in time and after that they did not know about the same. The payment of the cheque was, however, cleared by the dealer in instalments at his convenience in the months of March, April and December, 1969. For this default the learned assessing authority imposed a penalty of Rs. 15,000 under section 11(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 11(3a) of the Act, no further penalty could have been imposed by the assessing authority as there was no provision in law for imposition of penalty after the penalty had been imposed under section 11(3a). He also observed that after section 11(3a) there is section 11(4) according to which any amount of tax or penalty which remains unpaid after the date specified in the notice shall be recoverable as arrears of land revenue. Thus according to him penalty of Rs. 15,000 and Rs. 13,500 imposed by the assessing authorities, vide the assessment order for the years 1967-68 and 1968-69 under section 11(1) were uncalled for as the same could not have been imposed under any provision of law. The said penalties were, therefore, deleted. The Assistant Commissioner, however, maintained the penalties of Rs. 7,500 and Rs. 6,100 imposed under section 22-A(1) in the assessment years 1967-68 and 1968-69, respectively on the ground that the dealer had furnished incorrect figures of the sales to the sales tax department because the return figures were below the real amount as the sales tax had been excluded by the dealer from the sale price while filing the returns. Still dissatisfied, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not encashed before the due date of submission of returns, the delay is entirely attributable to him and that delay in encashment of the cheques was not relevant for the purposes of imposition of penalty under section 11(1). As the cheques were cleared after a long time and tax remained unpaid for a considerable period he found the contention of the learned counsel for the petitioner as devoid of merits. The Financial Commissioner also held that the dealer was not liable to make out a case that there was a reasonable cause for non-furnishing of returns duly accompanied by receipted challans. The plea that the penalty for non-payment of tax in time for two cheques which were dishonoured had already been imposed by Shri S.N. Kak, Sales Tax Officer and, therefore, the imposition of further penalty under section 11(1) against the time of framing assessment was not warranted was not accepted. The learned Financial Commissioner held that penalties imposed by the learned Assistant Sales Tax Officer under section 11(3a) of the Act were on account of dishonouring of cheques. It was argued that penalty under section 11(3a) can be imposed only after the assessment had been made an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Whether, on the facts and circumstances of the case, the learned Financial Commissioner was justified in holding that penalty under section 11(1) of the Bengal Finance (Sales Tax) Act, 1941 (as extended to the Union Territory of Delhi) could be imposed in addition to the penalty already imposed under section 11(3a) of the said Act? (ii) Whether, on the facts and circumstances of the case, the penalty under section 11(1) can be imposed for not filing the returns according to section 10(3)? (iii) Whether, on the facts and circumstances of the case, it is necessary to prove mens rea for imposing a penalty under section 22-A? (iv) Whether, on the facts and circumstances of the case, the learned Financial Commissioner was justified in holding that by reducing the tax element from the sale price as disclosed in the bills, the dealer had furnished inaccurate figures below the real amount?" The penalties in question which have been levied are under section 11(1) and under section 22-A. There is no challenge to the penalty which was levied under section 11(3a). We will first consider the penalty which has been levied under section 11(1) which, in respect of the assessment year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er may, if he is satisfied that the default was made without reasonable cause, direct that the dealer shall pay by way of penalty in addition to the amount of tax so assessed a sum not exceeding one and a half times that amount. (3) The amount of tax- (a) due where the returns are furnished without receipt showing full payment thereof, or (b) assessed under sub-section (1), less the sum, if any, already paid by the dealer in respect of the said period, or (c) assessed under sub-section (2), shall, together with any penalty that may be directed to be paid under any of the provisions of this section or section 22-A, be paid by the dealer into a Government treasury or the Reserve Bank of India or in such other manner as may be prescribed by such date as may be specified in a notice issued by the Commissioner for this purpose and the date to be so specified shall be not less than thirty days from the date of service of such notice: Provided that the Commissioner may, in respect of any particular dealer and for reasons to be recorded in writing, extend the date of such payment or allow such dealer to pay the tax due and the penalty, if any, by instalments. (3a) When a dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reason for our coming to the aforesaid conclusion is very simple. Sub-section (1) deals with furnishing of the return, whereas it is subsection (3) of section 10 and sub-section (3) of section 11 which deal with the payment of tax. When there is a provision in sub-section (1) of section 11 for levy of penalty, it is obvious that levy of penalty for the same offence cannot be provided for in sub-section (3a) of section 11. But we find that sub-section (3) envisages a situation where the amount of tax may be due "where the returns are furnished without receipt showing full payment thereof". In such a situation where there is no proof of payment of tax having been made along with the returns, sub-section (3a) immediately comes into play. That is a sub-section which deals, expressly, with the dealer making a default in payment of the tax. To put it differently, payment of tax is contemplated by sub-section (3) of section 10, section 11(1) and subsection (3) of section 11. For the non-payment of tax, there is a specific provision enabling the levy of penalty and that provision is sub-section (3a) of section 11. Assuming, for the sake of argument, that penalty could have been levied un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed out by the learned counsel for the Commissioner of Sales Tax, a default arising by reason of dishonour of a cheque is a much earlier default which can be detected almost immediately; it does not require completion of the assessment before a penalty can be imposed." We are in agreement with the aforesaid observations and, in our opinion, the sales tax authorities were wrong in levying penalty under section 11(1) in addition to the penalty which has been levied under section 11(3a). This takes us to the next penalty which has been levied under section 22-A. The said provision reads as under: "22-A(1). If the Commissioner or any person appointed under subsection (1) of section 3 to assist him, in the course of any proceedings under this Act is satisfied that a dealer has concealed the particulars of his sales or has furnished inaccurate particulars of his sales and has thereby returned figures below the real amount, he may, after giving the dealer a reasonable opportunity of being heard, direct that the dealer shall, in addition to the tax payable by him under this Act, pay, by way of penalty, a sum not exceeding one and a half times the amount of tax which would have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable or that he had not furnished any inaccurate particulars. Though, whether inaccurate particulars were furnished or not is usually a question of fact in the present case the fact, as found by the Financial Commissioner, is that the dealer charged a consolidated price which included therein the amount of sales tax. It is further found as a fact that in the returns which were filed by the dealer the price was reduced by the price of sales tax and the tax was paid on the reduced turnover. In other words, the tax was paid on the actual consolidated amount of the sale price. This being so, the provisions of section 22-A were clearly not attracted to the present case. No inaccurate particulars were furnished which have resulted in the furnishing of the sale figures below the real amount. Even if it was assumed that no element of mens rea is required for the applicability of section 22-A, it does appear to us that in the present case the facts, as found, do not show that the essential ingredients for the levy of penalty under section 22-A were present. On a reading of section 22-A, it seems that in order to attract the application of that section, all that has to be determined is wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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