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TMI Blog2010 (2) TMI 1103X X X X Extracts X X X X X X X X Extracts X X X X ..... ill that time. The first issue is answered accordingly. Both legally and factually the assessing officer is not justified in levying penalty, which amounts to non-application of mind. In these circumstances, we set aside the order of levying penalty by the assessing officer and remit the matter with a direction to re-hear the matter afresh and dispose of the same, in accordance with law, after giving opportunity to the petitioner. The second issue is disposed of accordingly. The State Government still has the power to issue specified notification, if it is necessary to do so in the public interest during the relevant period as law stands. The third issue is answered accordingly. X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,44,055. For the assessment year 2004-05, the assessee has returned total taxable turnover at Rs. 57,36,05,138.94 and the assessing officer also determined the total taxable turnover of Rs. 57,36,05,138.94. While completing the assessment, the assessing officer levied ten per cent tax on sale of software, automatic teller machine (ATM) and UPS at ten per cent and also 12 per cent on air-conditioners without form C. While levying tax, the assessing officer also levied penalty under section 13(3) of the Act at Rs. 5,89,47,704. For the assessment year 2005-06, the assessee reported the total taxable turnover of Rs. 41,60,50,716 and the assessing officer has determined the total taxable turnover at Rs. 41,60,50,716. While completing the assessment, the assessing officer levied ten per cent tax on sale of software, automatic teller machine (ATM) and UPS at ten per cent without form C and also 12 per cent on air-conditioners without form C. While levying tax, the assessing officer also levied penalty under section 13(3) of the Act at Rs. 4,86,25,434. These assessments were made on the ground that any inter-State trade or commerce without the support of declaration form C or D is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a notification, can so order even if the sales fall under sub-section (2) of section 8. He further submitted that this specific clause 8(5)(2)(b) "to any person or to such class or persons" which includes dealers other than the registered dealer and therefore, the State Government has got power under section 8(5) for reducing the rate of tax. Even after the amendment, the State Government can notify under section 8(5)(b) in respect of sales to nondealers such as charitable institutions, scientific research bodies, educational institutions, service providers as being sales to "any person or to such class of persons". Therefore, they are persons who cannot fulfil the requirement of sub-section (4) of section 8 of the Act. Therefore, the State Government has all the power to exempt or reduce the tax. He further submitted that the earlier notification in G.O. Ms. No. 37/2001/F2 dated October 1, 2001 issued under section 8(5) of the CST Act is only partially modified by G.O. Ms. No. 89/F2/2003 dated October 29, 2003. The said subsequent Government Order, while maintaining the earlier Government Order, operates as a proviso to registered dealers and Government have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 89/F2/2003, which partially modified the earlier notification dated October 1, 2001. No concession is available after October 1, 2002 unless the sales are made to registered dealer or Government against declaration in form C or D as prescribed under sub-section (4) of section 8 of the said Act. In view of the subsequent notification, no concessional rate is available unless the assessee produces form C or D. Therefore, the assessing officer has correctly levied tax on information technology products at ten per cent without form C. it is also further submitted that whenever the Government wants to grant exemption under section 8(5)(b) of the Act, the State Government can issue notification specifying "to any person or to such class of persons". In the present case, no such notification is issued by the State. Therefore, the petitioner is not entitled to any benefit of concessional rate of tax. It is also submitted that the assessing officer has correctly levied penalty under section 13(3) read with 9(2) of the Central Sales Tax Act and therefore, the order passed by the assessing officer is in conformity with law. The assessee is not entitled for concessional rate of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner till that time. The first issue is answered accordingly. The second issue relates to the levy of penalty under section 13(3) of the Pondicherry General Sales Tax Act, 1967 read with section 9(2) of the CST Act. It reads as follows: "13. Procedure to be followed by the assessing authority.--(1) The assessment of a dealer shall be on the basis of the prescribed return relating to his turnover submitted in the prescribed manner within the prescribed period: (2) If no return is submitted by the dealer under sub-section (1) within the prescribed period, or if the return, submitted by him appears to the assessing authority to be incomplete or incorrect, the assessing authority shall, after making such enquiry as it may consider necessary, assess the dealer to the best of its judgment: Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of proving the correctness or completeness of any return submitted by him. (3) When making any assessment under sub-section (2), the assessing authority may also direct the dealer to pay in addition to the tax assessed, a penalty not exceeding one and a half times the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 13(3) of the Pondicherry General Sales Tax Act, 1967 read with section 9(2) of the Central Sales Tax Act, 1956." From a reading of the above finding, it is clear that there is no specific finding given by the assessing officer, the first respondent herein, that there is non-disclosure of turnover in the return. The only reason given by the assessing officer is that the assessee claimed concessional rate of tax deliberately and also the assessee has not disclosed the tax due in the return. These factors are not relevant for levying penalty. Non-disclosure of tax due in the return is not the relevant factor. The assessing officer has completely disregarded the condition enumerated in section 13(3) of the Pondicherry General Sales Tax Act. This court also considered the similar provision under the Tamil Nadu General Sales Tax Act in the case of Appollo Saline Pharmaceuticals (P) Ltd. v. Commercial Tax Officer (FAC) reported in [2002] 125 STC 505, wherein in paragraphs 5, 6 and 10, it has been held as follows (pages 508 and 509 in 125 STC): "5. The Supreme Court in the case of State of Madras v. S.G. Jayaraj Nadar & Sons [1971] 28 STC 700, at page 701 after extra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier judgments of this court, and therefore, penalty levied was wholly unwarranted. The levy of penalty without considering the bona fides of the petitioner cannot be sustained." The above judgment relied on by the petitioner-assessee squarely applies to the facts of the present case. Both legally and factually the assessing officer is not justified in levying penalty, which amounts to non-application of mind. In these circumstances, we set aside the order of levying penalty by the assessing officer and remit the matter with a direction to re-hear the matter afresh and dispose of the same, in accordance with law, after giving opportunity to the petitioner. The second issue is disposed of accordingly. In respect of the last issue, whether under section 8(5)(b) of the Central Sales Tax Act, 1956 the State Government has power to issue any notification in respect of inter-State sales without requirement of form C, we have to consider the notification and also amended provision of section 8(5) of the Central Sales Tax Act. Earlier, the Government of Pondicherry has issued a notification dated October 1, 2001 in G.O. Ms. No. 37/2001/ F2 granting concessional rate of tax of tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State or any class of such dealers as may be specified in the notification, to any person or to such class of persons as may be specified in the notification, no tax under this Act shall be payable or the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) or sub-section (2) as may be mentioned in the notification. . ." Clause 145 of the notes on clauses reads as follows: "Clause 145 seeks to amend section 8 of the Central Sales Tax Act, 1956 so as to-- (i) provide that Central sales tax does not become greater than local sales tax in case of sale of goods to the Government and registered dealers; (ii) provide for exemption from Central sales tax in cases where goods are exempt from local sales tax; (iii) make furnishing of form C compulsory by the dealer except in respect of exempted goods; (iv) include 'telecommunication network' in the category of goods which can be specified in certificate of registration for the purposes of levy of tax, etc.; (v) withdraw powers of the State Government to waive the requirement of C form." Relying on the above amended provision and also the note on clause, the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing for the respondents also brought to our notice the notification issued by the other States under section 8(5)(b) of the CST Act granting concessional rate of tax to non-dealers like banks, educational and medical institutions. The Government of Himachal Pradesh issued a notification dated June 30, 2005 granting concessional rate of tax to non-dealers like banks, educational and medical institutions subject to certain conditions and the said notification reads as follows: "Whereas the Governor of Himachal Pradesh is satisfied that it is necessary in the public interest to do so: 2. Now, therefore, in exercise of the powers conferred by clause (b) of sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act, No. 74 of 1956), the Governor of Himachal Pradesh is pleased to direct that tax payable under sub-section (2) of section 8 of the aforesaid Act on the sale of goods made in the course of inter-State trade or commerce by the industrial units manufacturing information technology and bio-technology goods to the non-dealers like banks, educational and medical institutions, autonomous bodies, etc., shall be calculated at 1% subject to furnishing of fol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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