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TMI Blog2003 (7) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (annexure P.1 in C.W.P. No. 1819 of 2003) and imposed penalty of Rs. 2,25,000 under section 9(2) of the Central Act read with section 10(6) of the State Act and also levied interest amounting to Rs. 1,41,729 under section 11-D of the State Act. Appeals filed by the petitioner were dismissed by the Deputy Excise and Taxation Commissioner (Appeals), Patiala Division, Patiala, and the Tribunal vide their orders dated November 5, 2001 (annexure P.3) and August 5, 2002 (annexure P.5) respectively. Thereafter, respondent No. 2 issued demand notice, annexure P.6. Similarly, for the quarter ending on September 30, 2000, respondent No. 2 passed order dated November 27, 2000 (annexure P.1 in C.W.P. No. 1820 of 2003) and imposed penalty of Rs. 1,43,900 under section 9(2) of the Central Act read with section 10(6) of the State Act and also levied interest amounting to Rs. 14,390 under section 11-D of the State Act. Appeals filed against that order were dismissed by the Deputy Excise and Taxation Commissioner (Appeals), Patiala Division, Patiala, and the Tribunal. Thereafter, respondent No. 2 issued demand notice, annexure P.6. 3.. The petitioner has challenged the impugned orders mainly on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered dealer within the State of Punjab in such manner and form and to such authority as may be prescribed. 10(4). Before any registered dealer furnishes the returns required by sub-section (3), he shall in the prescribed manner, pay into Government treasury or the Reserve Bank of India or at the District Excise and Taxation Office, the full amount of tax due from him under the Act according to such returns and shall furnish along with the returns receipt from such treasury, bank, or District Excise and Taxation Office showing the payment of such amount: Provided that no payment of such amount shall be accepted at the District Excise and Taxation Office made through a bank draft or crossed cheque drawn on a local Scheduled Bank in favour of the Assessing Authority. 10(6). If a dealer fails to pay in the manner laid down in subsection (4), the amount of tax due from him under the Act in accordance with the returns or revised returns submitted by him under sub-section (4) or sub-section (5), as the case may be, the Commissioner or any other person appointed to assist him under subsection (1) of section 3, may after giving such dealer a reasonable opportunity of being heard, dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) If a dealer fails to pay in the manner laid down in subsection (4), the amount of tax due from him under the Act in accordance with the returns or revised returns submitted by him under sub-section (4) or sub-section (5), as the case may be, the Commissioner or any other person appointed to assist him under subsection (1) of section 3, may after giving such dealer a reasonable opportunity of being heard, direct him to pay, by way of penalty, in addition to the amount of tax due from him, a sum not exceeding one and half times but not less than ten per centum of the amount of tax to which he is assessed or is liable to be assessed on the basis of such returns or revised returns excluding such amount of tax, if any, as has already been paid by him under the aforesaid sub-section.' It will be thus clear from the requirements laid down in subsection (6) of section 10 that penalty could be levied where there is failure to pay tax due under the Act in accordance with the return. When no return is filed at all for a period, no tax can be said to be due. The use of the words 'amount of tax due from him under the Act, in accordance with the returns or revised returns submitted by him und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be not possible to conclude that penalty could be imposed or interest could be levied where neither returns were filed nor the tax was paid on the basis of such returns. However, sub-section (5) of section 11 of the Act provides for an assessment where a dealer did not furnish return in respect of any period. It empowers the Assessing Authority to proceed within five years after the expiry of the prescribed period after giving the dealer a reasonable opportunity of being heard to assess, to the best of his judgment, the amount of tax, if any, due from the dealer. Sub-section (8) of section 11 provides for the imposition of penalty where the tax assessed is not paid by a dealer within the time specified in the notice of assessment. It would be thus clear that in a situation where a dealer fails to furnish the returns and also fails to pay tax accordingly, action could be taken under sub-section (5) of section 11 by making a best judgment assessment for determining tax payable by the dealer. Penalty could be then imposed if the dealer failed to pay the tax within the specified time. Sub-section (2) of section 11-D of the Act provides for charging of interest where the amount of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the liability of the assessee to pay interest on the amount of tax which had remained unpaid. Tax, interest and penalty are three different concepts. Tax becomes payable by an assessee by virtue of the charging provision in a taxing statute. Penalty ordinarily becomes payable when it is found that an assessee has wilfully violated any of the provisions of the taxing statute. Interest is ordinarily claimed from an assessee who has withheld payment of any tax payable by him and it is always calculated at the prescribed rate on the basis of the actual amount of tax withheld and the extent of delay in paying it. It may not be wrong to say that such interest is compensatory in character and not penal. In order to understand the case of the assessee, we may classify the registered dealers into the following different classes: (1) A registered dealer who files his return showing a higher taxable turnover than the actual turnover which is ultimately found to be taxable at the time of regular assessment and who pays tax under section 7(2) of the Act on the basis of the return. (2) A registered dealer who files a true and proper return and pays tax on the basis of such return within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the Act suggests that the Act expects that all assessees who are liable to pay sales tax should file a true return within the period prescribed under sub-section (1) of section 7 and should produce a treasury receipt or a receipt of any bank authorised to receive money on behalf of the State Government showing that full amount of tax due from them has been paid. ............... In the present case if we construe the words 'on the basis of return' occurring in sub-section (2) of section 7 of the Act as on the basis of a true and proper return which ought to have been filed under sub-section (1) of section 7, then all the three classes of persons, viz., (i) those who have not filed any return at all and who are later on found to be liable to be assessed, (ii) those who have filed a true return but have not deposited the full amount of tax which they are liable to pay and (iii) those who have filed a return making a wrong claim that either the whole or any part of the turnover is not taxable and who are subsequently found to have made a wrong claim, would be placed in the same position and they would all be liable to pay interest on the amount of tax which they are liable to p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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