1984 (1) TMI 284 - HC - VAT and Sales Tax

Summary

Issues: Penalty for non-deposit of advance tax under the Punjab General Sales Tax Act, 1948 for the assessment year 1967-68.

The judgment by the Punjab and Haryana High Court dealt with a case where the petitioner, a dealer registered under the Punjab General Sales Tax Act, 1948, had not deposited the advance tax as required by section 10(4) of the Act for the assessment year 1967-68. The petitioner, engaged in running an oil mill, had purchased groundnuts for the mill but had not deposited the correct amount of advance tax due to a subsequent increase in the purchase tax rate. The Assessing Authority imposed a penalty of Rs. 25,000 on the petitioner for this non-compliance. The petitioner appealed the decision, arguing that groundnut was not an oil-seed and, therefore, not subject to purchase tax. The appellate authority upheld the penalty, citing retrospective amendments to the law. The Sales Tax Tribunal later reduced the penalty to Rs. 15,000. The High Court was tasked with answering three questions of law referred by the Tribunal.

The High Court, after considering the arguments, ruled in favor of the petitioner on the first question. It held that a penalty could only be imposed if there was a contumacious disregard of the law by the dealer. Since the liability to pay purchase tax on groundnuts arose only after a retrospective amendment, the petitioner could not be deemed to have willfully disregarded the law. The Court cited a Division Bench judgment that supported this interpretation, emphasizing that if the assessee was not liable to pay the tax at the relevant time, it was a sufficient cause for non-payment. The Court did not address the other two questions due to the favorable ruling on the first question. Consequently, the penalty imposed on the petitioner was set aside, and each party was directed to bear its own costs.