1976 (2) TMI 150 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Maintainability of the reference under section 34(1) of the Bombay Sales Tax Act, 1953.
2. Jurisdiction of the Sales Tax Officer to impose a penalty under section 16(4) after appellate and revisional orders.

Detailed Analysis:

Issue 1: Maintainability of the Reference
The preliminary objection raised by the respondents' counsel was regarding the maintainability of the reference under section 34(1) of the Bombay Sales Tax Act, 1953. The argument was based on the assertion that the impugned order of the Tribunal pertained only to the liability to pay a penalty, not the tax itself, and hence, no reference could be made to the High Court under section 34(1).

Legal Provisions and Definitions:
- Section 34(1): Allows for a reference to the High Court on any question of law arising out of an order affecting any liability to pay tax.
- Clause (18) of Section 2: Defines "tax" as sales tax, general sales tax, or purchase tax payable under the Act, but does not include penalties.

Court's Interpretation:
The court examined whether the term "tax" in section 34(1) includes penalties under section 16(4). The definition of "tax" in clause (18) of section 2 explicitly excludes penalties. The court noted that the term "penalty" is used distinctly from "tax" throughout the Act, including in section 16(4) itself. This distinction is further supported by the Supreme Court's decision in Khemka & Co. v. State of Maharashtra, where it was held that penalty is an additional liability and not merely an adjunct to tax.

Conclusion on Maintainability:
The court concluded that the term "tax" in section 34(1) does not include penalties. Therefore, the reference made under section 34(1) was not maintainable as it pertained solely to the penalty imposed under section 16(4).

Issue 2: Jurisdiction of the Sales Tax Officer
The Tribunal had concluded that once an appeal or revision application is filed, the Sales Tax Officer loses the authority to impose a penalty under section 16(4), and this power shifts to the superior authorities.

Legal Provisions:
- Section 16(4): Specifies the penalty for late payment of tax and includes a proviso that allows the appellate or revisional authority to determine the penalty rate once an appeal or revision is filed.

Court's Analysis:
The court did not delve deeply into this issue due to the preliminary finding on the maintainability of the reference. However, it implicitly supported the Tribunal's interpretation by focusing on the procedural aspects and jurisdictional boundaries set by the Act.

Conclusion:
The reference was not maintainable under section 34(1) of the Bombay Sales Tax Act, 1953, as the term "tax" does not include penalties. Consequently, the court declined to answer the question referred and returned the reference to the Tribunal. There was no order as to costs, given that the respondents had not raised this point before the Tribunal.