TMI Blog2005 (3) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing authority is not competent to levy a penalty for the first time when no penalty has been levied by the assessing authority is wholly untenable, without statutory basis and unreasonable from any point of view. The said plea is liable to be rejected. The non- levy of penalty is itself an illegality caused by a failure to exercise the jurisdiction by the assessing authority and therefore, prejudicial to the interests of the Revenue. Hence the levy of penalty by means of an order in revision proceedings is reasonable, just and proper and therefore, not liable to be faulted. - Civil Appeal No. 2643, 2644 of 2000 - - - Dated:- 31-3-2005 - VARIAVA S.N., LAKSHMANAN AR. AND KAPADIA S.H. JJ. Sanjay R. Hegde and Anil Kumar Mishra, Advocates, for the respondent. Dhruv Mehta, Mohit Chaudhary and Harsh Vardhan Jha, Advocates, for the appellant. -------------------------------------------------- The judgment of the Court was delivered by Dr. AR. LAKSHMANAN, J. -These appeals were filed against the order dated November 15, 1999 in S.T.A. Nos. 31 and 32 of 1996 on the file of the High Court of Karnataka vide which, the High Court dismissed the appeal filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing for the appellant and Mr. Sanjay R. Hegde, learned counsel appearing for the respondent-State. 7.. Mr. Dhruv Mehta, learned counsel appearing for the appellant, made the following submissions: (1) The proceedings for quantification of tax under section 12(3) of the Act and the levy of penalty under section 18-A of the Act are distinct and separate proceedings requiring separate procedures to be followed. In support of the above proposition, he relied upon the following judgments: (a) Addl. Commissioner of Income-tax v. J.K. D'Costa [1982] 133 ITR 7 (Delhi). (b) Commissioner of Income-tax v. Nihal Chand Rekyan [2000] 242 ITR 45 (Delhi). (2) It was submitted that unless there is a specific and separate order under section 18-A of the Act, no revisional order under section 22-A can be passed on the ground of the alleged non-levy of penalty and such an order cannot direct the levy of penalty under section 18-A of the Act. He relied on the following judgments in support of the above proposition: (a) Khemchand Rajkumar v. State of Tamil Nadu [1974] 33 STC 78 (Mad.). (b) Shetkari Sahakari Sakhar Karkhana Ltd. v. State of Maharashtra [1996] 102 STC 157 (Bom). (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 18-A of the Act. 8.. In view of the above submissions, the learned counsel submitted that the impugned order of the High Court is liable to be set aside. 9.. Mr. Sanjay R. Hegde, learned counsel appearing for the respondent-State, submitted that the order passed by the revisional authority cannot be treated as being without jurisdiction, illegal or improper or prejudicial to the appellant herein since the appellant had been made aware of the proposed action for levy of penalty, had been heard in the matter and the order had been passed in accordance with law and all these essentials of law and natural justice have been complied with in this case and therefore, the impugned order cannot be faulted with on any ground whatsoever. 10.. He would further submit that the argument of the learned counsel for the appellant that the revising authority is not competent to levy penalty for the first time when no penalty has been levied by the assessing authority is wholly untenable, without statutory basis and unreasonable from any point of view. The non-levy of penalty by the assessing authority is itself an illegality caused by a failure to exercise jurisdiction and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a dealer who is exempted from sales tax by virtue of recognition granted under the provisions of this Act, shall not collect any amount by way of tax or purporting to be by way of tax on the sales or purchases of goods made during the period to which such composition or recognition applies. Section 18-A: Penalty for collection in contravention of section 18. If any person contravenes any of the provisions of section 18, the assessing authority may, after giving such person reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum (not less than one half but not exceeding an amount equivalent to): Provided further that no prosecution for an offence under section 29 shall be instituted in respect of the same facts on which a penalty has been imposed under this section. Section 22-A: Revisional powers of Additional Commissioner and Commissioner. (1) The Additional Commissioner may on his own motion call for and examine the record of any proceeding under section 20 or section 21 of this Act and if he considers that any order passed therein by any officer who is not above the rank of a Joint Commissioner, is erroneous in so far as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings recorded by the appropriate authority referred to in sub-section (1) or (2), involves an issue on which the High Court has given its decision adverse to the revenue in some other proceedings and an appeal to the Supreme Court against such decision of the High Court is pending, the period spent between the date of the decision of the High Court and the date of the decision of the Supreme Court shall be excluded in computing the period referred to in clause (c) of sub-section (3). Explanation II. In computing the period of limitation for the purpose of sub-section (3), any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. Explanation III. For the purposes of this section, 'record' shall include all records relating to any proceedings under this Act avail- able at the time of examination by the Additional Commissioner or the Commissioner." 14.. Section 18-A of the Act prohibits excess collection of tax by an assessee. If any person contravenes section 18, penalty is provided under section 18-A of the Act. The question is when at the time of assessment, if no penalty is imposed by the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1974] 33 STC 78 (Mad.). 17.. In the case of State of Haryana v. Dasaunda Singh Waryam Singh [1996] 103 STC 128 (P H) Ashok Bhan, J., followed the judgments in Deputy Commissioner of Commercial Taxes, Madurai Division, Madurai v. K.M. Thomas Co. [1973] 31 STC 529 (Mad.) and Bhavnagar Chemical Works' case [1991] 83 STC 409 (Guj). Other State Enactments: provisions based on which the above cases were decided: (i) Section 32(1) of Tamil Nadu General Sales Tax Act, 1959: Special powers of the Deputy Commissioner. The Deputy Commissioner may, of his own motion, call for and examine an order passed or proceeding recorded by the appropriate authority under section 4-A, section 12, section 12-A, section 14, section 15, or sub-sections (1) and (2) of section 16 and if such order or proceeding recorded is prejudicial to the interests of Revenue, may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may initiate proceedings to revise, modify or set aside such order or proceedings and may pass such order thereon as he thinks fit. (ii) Section 34(1) of Tamil Nadu General Sales Tax Act, 1959: Special powers of Joint Commissioner of Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of satisfying himself as to the legality or to the propriety of any proceedings or of any order made therein and may pass such order in relation thereto as he may think fit: Provided that no order, shall be so revised after the expiry of a period of eight years from the date of the order: Provided further that the aforesaid limitation of period shall not apply where the order in a similar case is revised as a result of the decision of the Tribunal or any court of law: Provided further that the assessee or any other person shall have no right to invoke the revisional powers under this sub-section. (vi) Under the Tamil Nadu General Sales Tax Act, 1959, sections 32 and 34 provide that the revisional authority "may make such inquiry or cause such inquiry to be made and subject to the provisions of this Act, may initiate proceedings to revise, modify or set aside such order or proceeding and may pass such order thereon as he deems fit". (vii) Under the Gujarat Sales Tax Act, section 67(1)(a) provides that "the Commissioner of his own motion within three years (or on application made to him within one year) from the date of any order passed by any Officer un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also to reassess and pass orders on a point not decided, or dealt with in the order of assessment. 20.. We have also perused the assessment proceedings. It has been concluded in the said proceedings that the assessee had filed an incorrect return and therefore, the amount of tax payable by the assessee concerned was determined. The said determination has not been questioned and, therefore, has become final. The assessing authority had not considered the question of the excess sales tax illegally collected by the assessee and therefore, the assessee had not been dealt with in respect of its said violation of section 18 of the Act. On a departmental statutory review of the assessment order, the revising authority having come to the conclusion that the assessment order was erroneous and prejudicial to the interest of the State decided to initiate suo motu revision proceedings under section 22-A of the Act. 21.. It would be seen that the revisional proceedings were commenced, on the sole ground relating to levy of penalty and the said aspect of the matter was specifically put to the assessee by means of annexure R-1, notice. Hence, in any view of the matter, the revisional proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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