TMI Blog2010 (4) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... ever thought of nor imposed by the assessing authority. Hence questions (a) to (e) referred by the Sales Tax Tribunal by its order dated February 21, 2004 are answered accordingly in favour of the assessee/ appellant and against the Revenue. Decided in favour of the assessee/ appellant and against the Revenue. - 2 of 2005 - - - Dated:- 1-4-2010 - DAGA V.C. AND TATED K.K. , JJ. The judgment of the court was delivered by K.K. TATED J. The Maharashtra Sales Tax Tribunal by its order dated February 21, 2004 made this reference under sub-section (2) of section 61 of the Bombay Sales Tax Act, 1959 on the following questions of law: (a) Whether, on the facts and upon the circumstances and upon true interpretation of section 36(2)(c) of the Bombay Sales Tax Act, 1959, the Tribunal was justified in holding that the Deputy Commissioner of Sales Tax (Appeals III) can initiate the action for imposition of penalty for the first time? (b) Whether, on the facts and under the circumstances of the case, and upon proper interpretation of section 36(2)(c), Explanation (2), the Tribunal was correct in holding that the Deputy Commissioner (Appeals) has jurisdiction for imposition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d appeal was decided by the Appellate Deputy Commissioner vide its order dated June 24, 1991. The applicant during the course of appellate hearing produced some C forms on the basis of which the Deputy Commissioner granted some relief in the tax as also reduced penalty levied under section 36(3), however, concessional tax rate of eight per cent under section 8(5) of the Central Act in respect of the inter-State sales of computers made to educational institutions was denied holding that the computer could not be held to be a scientific equipment/instrument within the meaning of notification dated February 21, 1972 issued under section 8(5) of the Central Act. The applicant's contention with regard to levy of interest under section 36(3)(b) was upheld holding that differential tax duty as per the assessment/rectification order did not pertain to the period after April 21, 1987 as the provision relating to levy of interest did not have retrospective effect. The Deputy Commissioner thus fully deleted the levied amount under section 36(3)(b) vide its order dated June 24, 1991 and partly allowed appeal awarding refund in the sum of Rs. 1,93,273. The Deputy Commissioner while dispo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncessional rate of eight per cent under section 8(5) of the Central Act. The applicant was required to carry another appeal before the Tribunal bearing Appeal No. 102 of 1992 against the separate order dated June 24, 1991 passed by the Appellate Deputy Commissioner under section 36(2)(c), Explanation (2) wherein penalty was imposed. The said appeal was heard and dismissed by the Tribunal vide its judgment dated December 23, 1994 and order of penalty was affirmed. The applicant challenged the aforesaid penalty order on various grounds contending that the Deputy Commissioner had no power and/or jurisdiction to levy penalty for the first time in exercise of appellate powers. It was also contended that the relevant assessment period ended on April 30, 1987 and that the assessee had not effected any transactions after April 21, 1987. It was also challenged on the ground that no extra tax was found payable while deciding the appeal against the order of assessment. Alternatively, it was urged that non-filing of returns for the months of October 1986, January and February 1987 was erroneously shown as cause for levying penalty in the sum of Rs. 60,770 especially, when returns wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner while disposing of appeal could not have taken steps to substitute deletion of interest with that of levy of penalty under section 9(2A) of the Central Act read with section 36(2)(c), Explanation (2) of the State Act under separate order. The said appellate authority, thus could not have issued a show-cause notice dated June 5, 1991 to the applicant calling upon its Explanation by July 3, 1991. The applicant had no option but to submit its written objections which was submitted on June 19, 1991. In the alternative it was pointed out that some of the returns referred by him in the showcause notice were admittedly filed well within prescribed time as such no penalty was called for those months. Mr. Joshi, learned counsel for the applicant submitted that the penal provisions contained in section 36(2)(c) needs to be strictly construed. He further submitted that the appellate authority, i.e., Appellate Deputy Commissioner, did not have any power to impose penalty for the first time in exercise of appellate powers. He submits that plain reading of section 36(2)(c) of the Bombay Act shows that the power of imposing penalty during the material time, namely, the period up to Apri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid decision the first appellate authority, namely, the Appellate Deputy Commissioner, did not have any power to impose penalty for the first time nor was he justified in resorting to Explanation (2) to section 36(2)(c) for some alleged delay in submission of the return, especially when the assessing authority had passed the order under section 33(3) on the basis of the returns for all months submitted by the applicant in time or may be after some delay. He mainly relied on paragraphs 12 and 13 of the said judgment which read as under (pages 187 and 188 in 101 STC): 12. We now turn to the questions referred to us by the Tribunal. However, before we proceed to consider the same, it may be expedient to set out section 36(2)(c) of the Act which provides for imposition of penalty in certain cases. This sub-section, so far as relevant, at the material time, read as follows: '36 Imposition of penalty in certain cases and bar to prosecution. . . . . (2) If, while assessing or reassessing the amount of tax due from a dealer under any provisions of this Act or while passing any order in any appeal or revision proceedings, it appears to the Commissioner that such dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner. He relied on the judgment in the case of Commissioner of Sales Tax, Maharashtra State, Bombay v. Malabar Products reported in [1995] 99 STC 546 (Bom) in support of his submission. In this case this court had an occasion to consider the expression prescribed date employed in sub-section (5) of section 33 to mean in the context of the scheme of the assessment under section 33 and the various sub-sections thereof when read harmoniously to mean that the power under that sub-section can be exercised even on the basis of the late return as well. On the basis of this Mr. Joshi urged that the question of law referred to this court for its opinion under section 61(2) needs to be answered in favour of the applicant and against the Revenue. Per contra Mr. V.A. Sonpal, A Panel Counsel submitted that the main question raised by the applicant in the present reference is whether the Deputy Commissioner hearing the appeal could issue show-cause notice and levy penalty for the first time in exercise of the appellate powers. He submitted that the Deputy Commissioner had all powers as provided in section 20(5) of the Bombay Act which were of the Commissioner. In other words his cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y appeal or revision proceedings, it appears to the Commissioner that such dealer (a) . . . (b) . . . (c) has concealed the particulars of any transactions or knowingly furnished inaccurate particulars of any transaction liable to tax; the Commissioner 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 proceedings as the case may be, a sum not exceeding one and one half times the amount of the tax. Explanation. (1) . . . Explanation. (2) Where a dealer fails without sufficient cause to furnish returns in respect of any period by the prescribed date, then, for the purpose of clause (c), he shall be deemed (until the contrary is proved) to have concealed the whole turnover liable to tax as assessed or reassessed or determined in an order passed under section 55 or clause (a) of sub-section (1) of section 57. As against the above section, let us see now the said section as amended with effect from April 21, 1987. In order to appreciate this, it is also necessary to extract the said section after its amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for the proper and correct quantification of the tax liability. The above change in clause (c) ibid has made sea of difference. Before the amendment came into force on April 21, 1987 the provisions of Explanation (2) to section 36 ibid, which is a rule of evidence could not be resorted to unless there was charge against the assessee of concealing and knowingly furnishing inaccurate particulars of any transaction liable to tax and in that case initial onus lay on the Department and on discharge of the initial burden, the assessing authority with the help of Explanation (2) could charge the assessee of having concealed the whole turnover liable to tax as assessed or reassessed or determined in an order passed under section 55, 57 or 62 unless he proved to the satisfaction of the Commissioner that such failure was for sufficient cause. In the case in hand, when the assessing authority passed the assessment order on September 1, 1990, the amended provisions were not on the statute book. Therefore, unless there was charge of concealment or knowingly furnishing inaccurate particulars of any transaction liable to tax, the levy of penalty by the assessing officer, taking resort to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciding the gross turnover of the sales and purchases, respectively, while passing the order of assessment under section 33(3). Similarly on the facts and circumstances of the present case, at the costs of the repetition we hold that the Tribunal was not justified in holding that the penalty under section 9(2A) of the Central Act read with section 36(2)(c) could be imposed for the first time in appeal proceedings even when no tax was found due in appeal by the appellate authority. The Appellate Deputy Commissioner had no power or jurisdiction to impose for the first time penalty that was never thought of nor imposed by the assessing authority. Hence questions (a) to (e) referred by the Sales Tax Tribunal by its order dated February 21, 2004 are answered accordingly in favour of the assessee/ appellant and against the Revenue. Similarly the Tribunal was not correct in holding that the Deputy Commissioner (Appeals) had jurisdiction for imposition of penalty under section 9(2A) of the Central Sales Tax Act read with section 36(2)(c) of the State Act on the facts and in the circumstances of the present case. On proper interpretation of section 36(2)(c) Explanation (2), the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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