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TMI Blog1990 (10) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... at 1 times the tax not paid in time was worked out to Rs. 47,795 and a penalty of Rs. 47,795 was proposed to be levied and show cause notice in that behalf was issued on September 28, 1979. The assessee in reply to the show cause notice, on October 6, 1979, filed his objection stating that its sales in favour of M/s. Kirloskar Co. and others were on credit basis and that it would be in a position to pay only after the money was received from its purchasers (debtors). It further stated that it was operating overdraft in Syndicate Bank and in order to improve its business it had invariably reached the permitted limit and therefore it claimed that there was delay in payment of tax. 3.. Similar were the facts in the case of the petitioner in respect of the assessment year 1978-79. The proposition notice proposed to levy a penalty of Rs. 21,162 in accordance with the prescription under section 12-B(2) of the Act. The explanation offered for non-payment of tax and non-filing of returns in time was not exactly identical for the succeeding assessment year as in the case of the assessment year 1977-78, in that the Commercial Tax Officer had taken steps to recover part of the taxes due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the admitted facts, inasmuch as there was no dispute that requirement of sub-section (1) of section 12-B was complied with by the petitioner-assessee. What really falls for consideration is question No. (i) but in a slightly different form, i.e., whether the assessing authority in the first instance and thereafter the Tribunal had applied its mind in exercising its discretionary power under section 12-B(3) of the Act before imposing the penalty subject to the maximum prescribed in the provision itself, namely sub-section (3) of section 12-B. 7.. Mr. Indra Kumar, learned counsel for the petitioner, before us strenuously contended that once the petitioner pleaded certain hardships then there was a case in which the assessing authority should have taken notice of the hardship pleaded and absolved the assessee-petitioner of the burden of paying penalty prescribed by sub-section (3) of section 12-B of the Act. He specially drew our attention to the decision of a Division Bench of this Court reported in Elestone Estates and Industries Ltd. v. State of Karnataka [1983] 54 STC 341 wherein this Court observed that the power conferred by section 12-B(3) of the Karnataka Sales Tax Act wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a great financial difficulty as he was to pay huge compensation to the workers who were retrenched from service and goods have been sold on credit basis and the amount had not been realised the particulars of which were furnished before the appellate authority." It was specially on the last of the causes shown in that case that Mr. Indra Kumar laid stress before us. He pointed out that in this case also the assessee-petitioner was hard-pressed for money as his debtors, namely, M/s. Kirloskar Co. had not paid for the purchases made for the products of the assessee-petitioner and therefore it was in difficulty and as such could not comply with the requirements of sub-section (1) of section 12-B of the Act. The significant difference in facts we notice is that the cumulative effect of the explanation given which was taken into consideration by this Court and the order made by the authorities below found fault with for not considering much of those causes in their proper perspective to levy or not to levy penalty. It so happened in that case that the assessing authority had levied certain amount of penalty where the first appellate authority reduced the penalty which was interf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be implicit evidence in the process of imposition of penalty that all materials relevant to the exercise of discretion which was before the authority was indeed considered by it before penalty came to be imposed. If that is the test accepted universally in all common law countries in regard to the exercise of a discretionary power then one cannot find fault with the Commercial Tax Officer in the instant cause. But for the assessment year 1977-78 he imposed a penalty of Rs. 21,162 which was affirmed by the subsequent appellate authority but it was only in the case of succeeding assessment year the appellate authority reduced the sum to Rs. 6,211 having regard to the fact that in that year by steps taken under section 14 of the Act most of the tax due had been recovered from M/s. Kirloskar Co., which factor was absent in the earlier assessment year. But nevertheless on the facts disclosed in the case, admittedly, we find that for the assessment year 1977-78 the explanation offered was rejected without inviting the assessee to substantiate the cause shown by him in order to test whether he had defaulted in not paying the advance of tax and whether it was a wilful default or not. No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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