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2006 (6) TMI 491

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..... 1989-90, 1990-91 and 1991-92 (hereinafter referred to as, the relevant assessment years ), the petitioner-firm submitted its returns under the provisions of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as, the 1941 Act ) showing taxable turnover as nil inasmuch as its entire business comprised in export of goods and sale of excess REP licences. The petitioner's returns for the relevant assessment years were accepted under the provisions of deemed assessment as contained in section 11E of the 1941 Act with effect from June 30, 1993. On May 1, 1996, the Supreme Court delivered its judgment in Vikas Sales Corporation v. Commissioner of Commercial Taxes reported in [1996] 102 STC 106 (SC); [1996] 4 SCC 433 declaring, inter alia, that those REP licences were goods and sale thereof were exigible to sales tax. On the basis of the aforesaid judgment of the Supreme Court, deemed assessments of the petitioner for the relevant assessment years were reopened on the ground of non-disclosure of sales of those REP licences and some other sales of fixed assets and motor cars although those sales were shown in the balance sheet for the relevant financial years. Such re .....

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..... er had reasonable cause for not including the disputed sales of REP licences in its returns for the relevant years all before the delivery of judgment by the Supreme Court in Vikas Sales Corporation [1996] 102 STC 106; [1996] 4 SCC 433 and was not liable to pay penalty under section 11E(4) of the 1941 Act. According to the petitioner, there was no infringement of sub-section (4) of section 11E and the concerned authorities committed error of law in imposing penalty without any valid reason or justification. Mr. Bajoria has further pointed out that exigibility of sale of REP licences to sales tax as held in Vikas Sales Corporation needs reconsideration by the Supreme Court in view of the recent judgment of the Constitution Bench of the Supreme Court in Sunrise Associates v. Government of NCT of Delhi delivered on April 28, 2006(1). In Sunrise Associates [2006] 145 STC 576 (SC), the Constitution Bench of the Supreme Court has overruled the earlier decision in H. Anraj v. Government of Tamil Nadu [1986] 61 STC 165; [1996] 1 SCC 414 and held that lottery tickets are mere actionable claims and not goods within the meaning of sales tax laws in different States. Although, judgment in V .....

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..... dient for attracting penalty. According to Mr. Mondal, in view of the judgment in Vikas Sales Corporation [1996] 102 STC 106 (SC); [1996] 4 SCC 433 sale of REP licences was always exigible to sales tax and the petitioner committed illegality in not disclosing those sales in its returns and in not paying tax and became liable to pay penalty under section 11E(4) of the Bengal Finance (Sales Tax) Act, 1941. There is no dispute that sales tax authorities in the State of West Bengal never treated sale of REP licences as sales within the meaning of the Act of 1941 before pronouncement of judgment in Vikas Sales Corporation [1996] 102 STC 106 (SC); [1996] 4 SCC 433. As neither the Revenue authorities nor the assessees regarded sale of REP licences as sales within the meaning of the Act of 1941, the petitioner was not expected to include those sales in its sales tax returns and pay tax thereon on its own. An assessee was to disclose only sales within the meaning of the Act of 1941 and was not under any legal obligation to disclose any and every transaction which, at the relevant point of time, was not believed to be sales within the meaning of the Act of 1941. It appears that .....

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..... ommissioner is satisfied that any dealer who has been liable to pay tax under sub-section (3) in respect of any period has defaulted to make payment of such tax, the Commissioner may, if he is satisfied that the default in payment of tax by the dealer under the said sub-section was made without reasonable cause, direct in the prescribed manner that the dealer shall pay by way of penalty a sum not less than twice and not exceeding thrice the amount of tax so remaining unpaid: (1)Reported in [1996] 102 STC 106 (SC); [1996] 4 SCC 433 Provided that no penalty under this sub-section shall be imposed in respect of the same fact for which a prosecution under sub-section (8a) of section 22 has been instituted and no prosecution would lie vice-versa. Aforesaid provision enabled the empowered authorities to impose penalty if the dealer defaulted in payment of tax without any reasonable cause during the relevant period under assessment. Penalty was/is imposable for default in payment of tax and not for non-disclosure of sales. For example, even if sales were disclosed but tax was not paid, penalty could be imposed if the dealer could not show any acceptable reasonable cause for such .....

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..... hereon. Sales Tax Acts are State Acts. The provisions of the statutes enacted by different States are not always identical. Approach, perception, attitude and interpretations of the sales tax authorities in different States may be and in fact are different in several aspects. As already pointed out, the sales tax authorities of Karnataka and Tamil Nadu proceeded on the view that REP licences were goods and sales thereof were exigible to sales tax and demanded taxes from the dealers. The dealers in those States had to approach the High Court therein contesting such stand of the sales tax authorities. The commercial tax authorities in the State of West Bengal, in their wisdom, accepted the position that REP licences were not goods and as such not exigible to sales tax under the 1941 Act and did not raise any demand of tax on such sales. Even after publication of the decision of the Karnataka High Court the commercial tax authorities in West Bengal did not take any action or exhibit any intention to treat sale of REP licences as sale of goods within the meaning of sales tax laws in this State. The respondents have not been able to disclose any material to show that the sales tax au .....

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..... estioned imposition of penalty for not paying sales tax on sales of REP licences and our judgment is confined to sale of REP licences only and does not deal with imposition of penalty for not paying tax on any other asset or goods. As already pointed out the judgment of the Constitution Bench in Sunrise Associates [2006] 145 STC 576 appears to have reopened the controversy regarding the nature and character of REP licences. In any event, penalty under section 11E(4) of the 1941 Act should not have been imposed in the facts and circumstances as discussed hereinabove. For the reasons aforesaid, we set aside the impugned orders passed by the CTO, Esplanade Charge, the orders passed by the Assistant Commissioner of Commercial Taxes, Chowringhee Circle and the Deputy Commissioner of Commercial Taxes, Chowringhee Circle so far as those orders relate to imposition of penalty on sales of REP licences under section 11E(4) of the 1941 Act during the period before the date of delivery of judgment of the Supreme Court in Vikas Sales Corporation [1996] 102 STC 106; [1996] 4 SCC 433. Applications are allowed to the extent indicated above. No order as to costs. B.K. MAJUMDAR (Technica .....

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