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2017 (7) TMI 973 - HC - VAT and Sales TaxPenalty u/s 17 (3) (b) (ii) of the M.P. General Sales Tax Act, 1958 - It is the case of the petitioner that in conformity with the policy to tax raw materials at a lower rate under the Sales Tax Act and also under the Act, 1976, general rate of entry tax on raw material was 7% under Section 4 of the said Act. The State Government could specify local area or areas and the goods for levy of entry tax at a rate not exceeding 10% by notification under Section 4A of the Act, 1976 - - It is the further case of the petitioner that despite showing sufficient cause under Section 17 (3) (b) (ii) of the Act, 1958, penalty to the extent of 4,09,09,903/- ₹ was imposed holding that Section 17 (3) (b) is automatic and mandatory though the petitioner had sufficient cause for not paying balance of tax that was assessed, whereas the admitted tax as per the return had already been paid and the returns filed are late only by three days. Held that: - A focused glance of Section 17 (3) (b) of the Act, 1958 would show that if a registered dealer fails without sufficient cause to pay the amount of tax in the manner prescribed under subsection (2) of Section 22 or fails to furnish his return under sub- section (1) or revised return under sub-section (2) for any period in the manner and by the date prescribed thereunder, the Commissioner may, after giving such dealer a reasonable opportunity of being heard, impose a penalty provided under Section 17 (3) (c) (ii), a sum equal to one percent of the tax for every month or part thereof. Therefore, the condition precedent for levy of penalty is that dealer must have failed without sufficient cause to comply with the provisions of Section 22 (2) or Section 17 (1) or Section 17 (2) of the Act, 1958 and further that a reasonable opportunity of hearing has to be granted to the dealer before imposing penalty. It is settled law that an order imposing a penalty for failure to carry out a statutory obligation is the result of quasi-criminal proceedings and penalty will not ordinarily be imposed unless the party obliged has either acted deliberately in defiance of law or was guilty of contumacious or dishonest conduct, or acted in conscious disregard of its obligation. A penalty will not also be imposed merely because it is lawful to do so. In spite of a minimum penalty prescribed, the authority competent to impose the penalty may refuse to impose the penalty if the breach complained of was a technical or venial breach, flew from a bona fide though mistaken belief - taking note of the statutory provisions and principles governing imposition of penalty and the nature of penalty i.e. penal provision, the authority imposing penalty has to exercise that jurisdiction in consonance with the aforesaid provisions of law. Whether the assessing authority is justified in imposing penalty after giving a reasonable opportunity of being heard as contemplated under Section 17 (3) (b) of the Act, 1958? - Held that: - the assessing authority has neither given reasonable opportunity of hearing before imposing penalty and even not recorded that failure to pay the tax within the stipulated time is without sufficient cause. The revisional authority has also perpetuated the illegality. The order of the assessing authority duly upheld by the revisional authority to the extent of imposing penalty, is hereby quashed - petition allowed - decided in favor of petitioner.
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