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2014 (9) TMI 466 - HC - VAT and Sales TaxPenalty levied at double the tax - Evasion of duty u/s 17 - whether the qualification in the definition clause (f) of Section 2, being the rent charged per room, per person or per day, would change the character of the levy - Held that:- Petitioner's transaction having been found to be one under the Act of 1976, the next question is with respect to the sustainability of the levy of penalty. The authorities below as also the Tribunal impute contumacious act on the part of the assessee in not obtaining registration, collecting tax from the users, herein the lessee, and paying it to the State. The petitioner, however, asserts a bona fide belief that the transaction, as it is disclosed from the agreements, being not covered under the Act of 1976. It cannot be said that the non-registration of the assessee under the Act of 1976 was bona fide, coming within the legal frame-work of the statute, taking the petitioner out of the coverage under the statute. This Court is of the opinion that the mere fact of existence of two agreements, for the lease and for provision of amenities, cannot by itself take away the petitioner's coverage under the Act. Those agreements were also the result of a composite transaction as revealed from the construction agreement, providing for lease for the purpose of accommodation of trainees and provision for amenities and facilities to such inmates. The fact is that the assessee did not obtain registration despite the transaction being clearly covered under the Act of 1976. Penalty levied at the maximum rate of double the tax evaded, may not be proper in the facts and circumstances of the case. Hence, the penalty imposed for the respective years and the two months in the last year are modified and confined to the extent of the tax liability. There is also considerable force in the argument of the learned counsel for the petitioner that between 1997 and 2002, the measure on which the rate applied is to be decided, per person per day. Hence, the CTO is directed to re-do the assessment for the period upto 31.03.2002, computing the rental charges per person per day, since all the rooms provided in the petitioner's building is of double occupancy. The quantum of penalty levied would have to be as per the directions herein above, if the rent per day per person is above the assessable limit and not at all if found otherwise - Decided partly in favour of assessee.
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