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TMI Blog2010 (4) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... r, on the facts and under the circumstances of the case, the Tribunal was justified in holding that the penalty under section 9(2A) of the Central Act read with section 36(2)(c) read with Explanation (2) can be levied, for the months for which returns were in fact filed in time? (d) Whether, on the facts and under the circumstances of the case, the Tribunal was justified in holding that the penalty under section 9(2A) of the Central Act read with section 36(2)(c) can be imposed for the first time in appeal proceedings even when no tax was found due in appeal by the appellate authority? (e) Whether, on the facts and under the circumstances of the case, the Tribunal was justified in holding that the appellate authority had the original jurisdiction of imposing the penalty for the first time even though there was no concealment nor any tax determined to be payable in an order under section 55? The facts The applicant herein is a manufacturer of computers and in the context of his business activities, the applicant is a registered dealer under the provisions of the Bombay Sales Tax Act, 1959 (hereinafter referred to as, "the Bombay Act") as also the Central Sales Tax Act, 1956 (her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation (2) of the Bombay Act subject to affording an opportunity to show cause as to why penalty under section 36(2)(c), Explanation (2) should not be levied for failure to submit the returns within the prescribed time for the months of May, June, July, August and October of 1986 and January, February and March of 1987. The Deputy Commissioner, after hearing the appellant/assessee on penalty, passed a separate order dated June 24, 1991 directing payment of penalty in the sum of Rs. 82,000 under section 9(2A) of the Central Act read with section 36(3)(c), Explanation (2) of the Bombay Act. Being aggrieved by the aforesaid order the applicant filed a second appeal being No. 1169 of 1991 before the Tribunal. In the aforesaid second appeal the applicant raised an objection about denial of benefit of concessional tax at eight per cent under section 8(5) of the Central Act in respect of the inter-State sales of computers to the educational institutions. Similarly levy of penalty under section 36(3) was also challenged. The aforesaid second appeal was decided by the Tribunal by its judgment dated February 26, 1993 granting remission of penalty but denying benefit under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal rejected all these contentions and dismissed the appeal filed by the applicant against the order of penalty. Not satisfied with the above order passed by the Tribunal, the applicant filed Reference Application (Reference Application No. 8 of 1995) raising substantial questions of law arising from the said judgment and prayed for reference to this court under section 61 of the Bombay Act. The said reference application was dismissed by the Tribunal by its judgment dated July 31, 1999. The applicant not satisfied with the above order moved this court by filing an application under the first proviso to sub-section (1) of section 61 of the Bombay Act. The said application was allowed by this court by its order dated July 25, 2003 directing the Tribunal to draw a statement of case and refer the questions of law as prayed by the applicant to this court. Pursuant to the said order, the Tribunal referred the questions of law extracted in the opening part of this order for consideration of this court. Submissions The learned counsel Mr. Joshi for the applicant submitted that the relevant period involved in the present reference is May 1, 1986 to April 30, 1987. The assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y order in any appeal or revision proceedings, it appears to the Commissioner makes it amply clear that the satisfaction has to be arrived at in any appeal by the Commissioner and not by the Appellate Deputy Commissioner that too for the first time. Mr. Joshi, learned counsel for the applicant, further submitted that section 55 of the Bombay Act as it was holding the field during the material time provided for an appeal under sub-section (1)(b) to the Deputy Commissioner against the order passed by the Assistant Commissioner. The applicant accordingly approached the concerned Appellate Deputy Commissioner against the order levying interest under section 36(3)(b) which, according to the appellant, was not leviable during the period prior to April 21, 1987 since this provision came on the statute book only with effect from April 21, 1987. It had no retrospective effect. Mr. Joshi submits that sub-section (2) had provided an option to the applicant to approach the Tribunal or the Commissioner in second appeal against the order passed in the first appeal by the Assistant Commissioner or the Deputy Commissioner. As such the applicant was rightly in first appeal before the Deputy Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity of being heard, by order in writing, impose upon the dealer by way of penalty, in addition to any tax assessed or reassessed or found due in the appeal or revision proceedings, as the case may be, a sum not exceeding one and one half times the amount of the tax. Explanation.-(1) Where a dealer furnishing returns has been assessed by the Commissioner under sub-section (3) or (4) of section 33, or assessed under sub-section (3) of section 41, or reassessed under clause (b) of sub-section (1) of section 35, or in whose case an order has been passed under section 55 or clause (a) of sub-section (1) of section 57, 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 or found due in appeal or revision, then, for the purpose of clause (c), he shall be deemed to have concealed the turnover, or knowingly furnished inaccurate turnover liable to tax, unless he proves to the satisfaction of the Commissioner, that the payment of a lesser amount of tax was not due to gross or wilful neglect on his part. Explanation.-(2) Where a dealer fails without sufficient cause to furnish returns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er since those powers were bestowed on him by the statute itself. According to him, for the purpose of clear understanding of the reference, the Deputy Commissioner needs to be construed as the Commissioner. In support of this submission he relied on the judgment in H.B. Munshi, Commissioner of Sales Tax, Bombay v. Oriental Rubber Industries Pvt. Ltd. reported in [1974] 34 STC 113. Mr. Sonpal further submitted that it is well-settled that the proceedings in appeal are extension of the original assessment proceedings and that the appellate authority had all the powers which were available to the assessing authority. According to him, while challenging the order of the Assistant Commissioner the Deputy Commissioner who passed the assessment order, had all the powers of assessment as if it was the revisional proceeding. He submitted that the powers of the appellate authority were co-terminus with the assessing authority. In support of this proposition, he relied on the judgment in the matter of Indoswe Engineers (P.) Ltd. v. State of Maharashtra [1996] 101 STC 177 (Bom). According to him, the powers of the appellate authority are co-terminus with the assessing authority and as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings, it appears to the Commissioner or the Tribunal that such dealer has: (a) . . . (b) . . . (c) failed to disclose any transaction of sale or purchase or has failed to show in the return the appropriate liability to pay tax or has claimed inaccurate deduction or drawback, set-off, refund, remission or reimbursement or has failed to disclose fully and truly all material facts necessary for the proper and correct quantification of the tax liability, then the Commissioner or, as the case may be, the Tribunal, may, after giving the dealer an opportunity of being heard, by order in writing, impose upon the dealer by way of penalty, in addition to any tax assessed or reassessed or found due in the appeal or revision or rectification proceedings, as the case may be:- (i) to (iii) . . . Explanation (1).- . . Explanation (2).-Where the dealer fails to furnish returns in respect of any period by the prescribed date, then for the purpose of clause (c), he shall be presumed (until the contrary is proved) to have failed to disclose the whole turnover of sales or purchases as assessed or reassessed or determined in an order passed under section 55, 57 or 62." Consideration A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted September 1, 1990 on account of the failure of the assessing authority to impose penalty under section 36(2)(c) read with Explanation (2) of the State Act which required to be corrected by the Deputy Commissioner of Sales Tax (Appeals) while deciding the appeal preferred by the applicant. Hence, the Tribunal was not justified in holding that the appellate authority had jurisdiction in exercise of revisional powers to impose the penalty for the first time even though there was neither concealment nor any tax determined or found to be payable in the year under section 55 of the State Act. On the above premises, in the facts and under the circumstances of the present case, and on the correct interpretation of section 36(2)(c) of the Bombay Sales Tax Act, 1959 the Tribunal was not justified in holding that the Deputy Commissioner of Sales Tax (Appeals) in exercise of appellate powers had jurisdiction to initiate action for imposition of penalty for the first time. In the above mentioned facts and circumstances, as per section 55(6)(a) and (b), the appellate authority concerned did not have any power of imposing penalty for the first time and expression confer or cancel such order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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