TMI Blog1981 (2) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the sum of Rs. 5,493.99, but as shown in the order of assessment was in the sum of Rs. 7,670.99. The Sales Tax Officer further held that the amount of tax paid by the dealer into the Government treasury was less than eighty per cent of the amount of tax assessed by him and, therefore, under the explanation to sub-section (2) of section 36 the respondents should be deemed to have concealed the turnover or knowingly furnished inaccurate turnover liable to tax, and levied upon the respondents a penalty under clause (c) of the said sub-section in the sum of Rs. 7,600. He negatived the respondents' contention that in calculating the amount of tax paid by them before assessment, the amount of set-off allowed to them should be taken into account. In appeal the Assistant Commissioner of Sales Tax confirmed the imposition of penalty but reduced the amount to Rs. 3,500. The respondents then went in second appeal to the Sales Tax Tribunal. The Tribunal allowed the appeal and deleted the penalty under section 36(2)(c) of the Act imposed upon the respondents. The Tribunal has not given any reason in its order for arriving at this decision. At the instance of the Commissioner of Sales Tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them pay a sum of Rs. 790 less than eighty per cent of the tax assessed. For such misinterpretation an imposition of penalty either in the sum of Rs. 7,600 or Rs. 3,500 seems to us to be shocking. We are, however, not concerned with this aspect of the matter in the present reference. During the relevant period explanation (1) to section 36(2)(c) was amended with effect from 1st September, 1969. Both the learned counsel are agreed that the amendments are not relevant for the purpose of deciding this reference and as the material part of the explanation prior to the amendment remains unaffected by the amendment, we may for the purpose of the present reference refer to it only. That explanation is as follows: "Explanation.-(1) Where a dealer furnishing returns has been assessed by the Commissioner under sub-section (3) or (4) of section 33, or reassessed under clause (b) of sub-section (1) of section 35 and the total amount of tax paid by the dealer for any year is found to be less than eighty per cent of the amount of tax as so assessed or reassessed then, for the purpose of clause (c), lie shall be deemed to have concealed the turnover, or knowingly furnished inaccurate turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff admissible by the following rules: (32) Net amount payable as tax (30-31) * * * (33) Less-(i) Amount paid with returns. (ii) Amount, if any, credited by refund adjustment order. (iii) Amount, if any, paid into the Government treasury as an advance payment of tax under sub-clause (v) of clause (aa) of sub-rule (2) of rule 22. " The form of the assessment order makes it abundantly clear that the total amount of tax which is assessed is the amount mentioned at the foot of column (30). Against the total amount of tax payable as per this column, there is given a credit for the amounts to which a dealer has become entitled by way of set-off. That amount is mentioned in column (31), and it is the result so arrived at, after deducting the amount of set-off, from the total amount of tax, that is shown as the net amount payable as tax. That is not the amount which is assessed. What is assessed is the amount found payable by way of sales tax, general sales tax, retail sales tax and purchase tax, the aggregate of which is brought under Part VI. The set-off is deducted in order to arrive at the amount which a dealer has to pay. Against such amount the dealer is given credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions as may be specified in the rules a drawback, set-off or refund of the whole or any part of the tax- * * * (ii) paid or levied or leviable in respect of any earlier sale or purchase of goods under this Act or any earlier law, be granted to the purchasing dealer." It is pertinent to note that the set-off in respect of which the State Government is authorised to make rules is in respect of the whole or any part of the tax paid or levied or leviable in respect of any earlier sale or purchase of goods. Rule 43 shows that the purchasing dealer becomes entitled to set-off in respect of the amount of tax which his selling dealer has recovered or collected from him. The whole basis of giving the set-off in these circumstances to a dealer is that a dealer does not become entitled to a set-off unless his vendor is a registered dealer and as such liable to pay tax to the State Government. The State Government, therefore, proceeds on the basis that the tax which is recovered would be paid to it by the collecting dealer. This is also clear if we turn to section 46 which prohibits a person from collecting any sum by way of tax in respect of any sale or purchase unless such person i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -off or refund as if the amount thereof stood on the same footing as tax paid by a dealer into the Government treasury. We have already seen that both in the form of return and in the form of assessment order various amounts other than the amount paid by a dealer into the Government treasury are treated as tax paid by a dealer. The set-off admissible is also placed in the same category and is treated on the same footing as if it were a tax paid by a dealer. It is pertinent to note that the explanation does not use the words "the total amount of tax paid by a dealer into a Government treasury" or the words "the total amount of tax paid by a dealer to the Government". We have seen that the relevant set-off rules speak of the amount of tax collected or recovered from a dealer by his vendor. The amount so recovered is itself treated both by the section and the rules mentioned above as the amount of tax. It is on this basis that the penal provision of clause (h) of section 63(1) has been enacted. In the Sales Tax Act, 1959, as in force in the State of Gujarat, sub-section (3A) of section 36 makes provisions similar to the explanation with which we are concerned. Though the language is d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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