2011 (3) TMI 1523 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to penalty under section 78(5) of the RST Act, 1994 read with sections 31 and 45 of the Rajasthan Tax on Luxuries (Tobacco and its Products) Act, 1994.

Analysis:
The revision petition challenged the penalty imposed on the petitioner-assessee/transporter for carrying "gutkha," a tobacco product, under the provisions of the Rajasthan Tax on Luxuries (Tobacco and its Products) Act, 1994. Both the counsel for the petitioner-assessee and the Revenue acknowledged that the Luxury Tax Act had been struck down by the apex court in the case of Godfrey Phillips India Ltd. v. State of U.P. The court noted that the penalty imposed under section 78(5) of the RST Act with the aid of the luxury tax could not be sustained based on the judgments of the apex court and a Division Bench of the court in the case of Dinesh Tobacco Industries v. State.

The court held that in light of the judgments of the apex court and the Division Bench, the impugned orders of the Tax Board and the lower authorities could not be sustained. Consequently, the revision petition filed by the assessee was allowed, and the impugned orders passed by the Tax Board, Deputy Commissioner (Appeals), and the penalty order were set aside. The court's decision was based on the invalidity of the Luxury Tax Act following the apex court's ruling, leading to the reversal of the penalties imposed on the petitioner-assessee.