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2022 (1) TMI 106 - HC - VAT and Sales TaxTime limitation for imposing penalty u/s 10-A of the Central Sales Tax Act, 1956 - maximum period for reopening of an assessment under the CST Act - principal grounds of challenge is that the period of seventeen years could have been clubbed together for imposing penalty on the Petitioner - HELD THAT:- While on a plain reading, Section 10A does not stipulate a period of limitation for exercise of the power to impose penalty thereunder, it is obvious that the said power has to be exercised within a reasonable time. In the present case the period for which the penalty is sought to be imposed is as long as seventeen years i.e. from 22nd October, 1975 to 30th June, 1992. Clearly the legislative intent was not to empower the Department to levy penalty in one go for a period of seventeen continuous years. Such an interpretation would render the power unreasonable and arbitrary. Even though no limitation period as such has been indicated in Section 10-A of the CST Act it does not mean that the Department can decide arbitrarily to invoke to the power thereunder to levy penalty at any time of its choosing. In the light of the law that such power must be exercised within a reasonable time, the impugned order seeking to levy penalty in one go for a period of 17 years is unsustainable in law - Considering that the maximum period for reopening an assessment under the CST Act is seven years, and that too in the case of proven fraud, and considering that in this case there is nothing on record to show that the Petitioner indulged in a fraud, the period for which the penalty can be permitted to be imposed cannot exceed three years prior the date of the order imposing penalty. A direction is issued to the Opposite Parties to rework the penalty amount on pro rata basis by restricting the period to three years prior to the date of the impugned order of penalty i.e. from 1st July 1989 to 30th June, 1992 - Petition disposed off.
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