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2015 (9) TMI 1154

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.... R. C. No. 254 of 2001 are noted. The petitioner, in T. R. C. No. 254 of 2001, is a dealer registered on the rolls of the Commercial Tax Officer, Barkatpura Circle, Hyderabad. For the month of February, 1996, in the assessment year 1995-96, the petitioner filed their returns, under rule 17 of the Andhra Pradesh General Sales Tax Rules, 1957 (for brevity, "the Rules"), admitting a tax liability of Rs. 9,19,262. On the ground that tax was paid belatedly, i.e., beyond the month in which it fell due, the assessing authority issued notice dated March 29, 1996 calling upon the petitioner to show cause why penalty should not be imposed under section 15(4) of the Act. In his order dated April 8, 1996, the assessing authority held that, in reply to the show-cause notice, the petitioner had submitted a written explanation stating that, due to financial problems, they could not pay the tax in time; the explanation submitted by the dealer was not reasonable; their conduct in paying statutory taxes to the Government, throughout the financial year 1995-96, was disturbing; even in the earlier months of 1995 96, they had delayed payment of their monthly tax in time, inspite of several oral direct....

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....ted. In the order under revision, the Tribunal held that, under section 15(4)(a) of the Act, the penalty provided was for an amount equal to the tax; the penalty to be levied was fixed under the Act to be an amount equal to the tax due where the dealer had charged tax from the purchaser, but had failed to pay the same to the State; penalty, in other cases, was governed by section 15(4)(b) of the Act which provided for imposition of penalty for an amount not exceeding half the amount of tax; in other words, under section 15 (4) (b) of the Act, the maximum penalty which could be levied was half the amount of tax; penalty could be levied at less than the maximum having regard to the circumstances of the case; however section 15(4)(a) of the Act left no discretion to the authority to impose penalty for any lesser amount than the tax due under the Act; if imposition of penalty was justified, in the circumstances, the assessing authority had no discretion to levy a lesser penalty than the tax due; he had to levy the same amount as penalty which was equal to the tax due under the Act; in the present case, even though the assessing authority did not specify whether he was imposing penalty....

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....on of the dealers in withholding payment of tax to the State in time, though they had charged and collected the same from the purchasers; imposition of penalty was justified; a lesser penalty could not be imposed as section 15(4)(a) of the Act prescribed a fixed penalty; and it was not the maximum penalty, as in the case of the penalty prescribed under section 15(4) (b) of the Act. The Tribunal found no justification in the petitioners claim for reduction of the penalty imposed under section 15(4)(a) of the Act which provided for the imposition of a fixed penalty where tax was charged but was not paid to the State in time. Before us Sri S. Dwarakanath, learned counsel for the petitioner, would submit that section 15(4) (a) of the Act is not attracted where a dealer charges tax at a lesser rate than what is prescribed under the Act; and where a dealer, who has not charged tax, admits his liability and pays tax later; while these cases would undoubtedly fall within the scope of clause (b) of section 15(4) of the Act, even cases, where a dealer has charged but has not collected tax from their customers before the due date of payment of tax, would also fall within the ambit of clause ....

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....e did not argue against the levy of penalty under section 15(4)(a) of the Act is a mistake when the very appeals are filed aggrieved by the levy of penalties. Moreover, the expression 'tax charged from the purchasers' logically means the collection from the purchasers. The appellants might have charged sales tax but realization of bills can be delayed . . ." According to Sri S. Dwarakanath, learned counsel, the afore-extracted paragraph, filed in the "memo of case law" before the Tribunal, indicates that the petitioners have not collected tax from their customers before the last date on which sales tax was liable to be paid by them; and, as such, they would not fall within the ambit of section 15(4)(a) of the Act. Learned counsel would rely on R. S. Joshi, Sales Tax Officer, Gujarat v. Ajit Mills Limited [1977] 40 STC 497 (SC) and State of Mysore v. Mysore Spinning and Manufacturing Co. Ltd. [1960] 11 STC 734 (SC). On the other hand, Sri M. Govind Reddy, learned Special Standing Counsel for Commercial Taxes, would submit that, at no stage prior to these proceedings, had the petitioners herein ever contended that they had not collected tax from their customers, and this ha....

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....sion "charged tax" in section 15(4)(a) of the APGST Act must be read as "charge and collected tax", as it is not even clear whether or not the petitioner had collected tax from their customers before the due date. We shall, however, deal with this contention also, as we are satisfied that, even if the petitioner had not collected tax from their customers, penalty can, none theless, be imposed on them under section 15(4)(a) of the Act, as they have charged their customers to tax. Section 15(4)(a) of the Act, as it then stood, stipulated that if any dealer, who is liable to pay tax, fails to submit a return as required by the provisions of the Act or the Rules made thereunder or any dealer who fails to pay the tax due on the basis of the return submitted by him under section 13 or fails to pay the tax provisionally assessed shall be liable to pay, by way of penalty, (a) an amount equal to the tax where the dealer has charged tax from the purchaser; and (b) in any other case, an amount not exceeding half of the amount of tax. Before analysing the scope of section 15(4) of the A. P. G. S. T. Act it is necessary to refer to the judgments cited by Sri S. Dwarakanath, learned counsel fo....

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.... Sales Tax Act stipulated a penalty in cases where a dealer had collected any sum by way of tax either in excess of the tax payable or in contravention of section 46 of the said Act. In construing the expression "collection of tax", the Supreme Court held that the word "collected" used therein did not cover amounts gathered tentatively to be given back if found non-exigible from the dealer. The word "collected" was so construed as section 37(1) prohibited a dealer from collecting any sum by way of tax; and any amount gathered tentatively, to be given back if found non-exigible, could not be said to be collection of "tax" by the dealer. Section 11 of the Mysore Sales Tax Act, on the construction of which the decision of the appeals before the Supreme Court in Mysore Spinning and Manufacturing Co. Ltd. [1960] 11 STC 734 (SC), turned, was in the follow ing terms (page 740 in 11 STC): "S. 11. (1) No person who is not a registered dealer shall collect any amount by way of tax under this Act; nor shall a registered dealer make any such collection except in accordance with such conditions and restrictions, if any, as may be prescribed. (2) Every person who collects any amount by way of....

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....;deposit' was made. We are unable to agree in this construction of the expression 'collection' occurring in section 11(2) of the Act. Where an amount is received merely by way of deposit, on the express understanding or undertaking as in these cases, the company held the money as a mere custodian, and on the fulfilment of the condition became a trustee for the depositor. It is sufficient to state that when once the tax authorities determined that the proceeds of the sales in question were not within the taxable turnover of the company, the beneficial ownership became vested in the depositors and the company ceased to have any right to continue to hold the moneys. The fact that the physical control of the moneys passed from the 'depositor' to the 'dealer' did not render the receipt a 'collection' within section 11(2) of the Act. We should not be understood as saying that collections by a dealer from a purchaser of amounts not lawfully demandable by him are not 'collections' within section 11, merely because the purchaser could in law make a claim for refund and enforce that right in appropriate proceedings. But such a case is far removed ....

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....ha Aiyer's the Law Lexicon, (reprint edition, 2002). The expression "levy" does not mean actual collection of the amount. (National Tobacco Co. of India Ltd. [1972] 2 SCC 560 and N. B. Sanjana, Assistant Collector of Central Excise, Bombay v. Elphinstone Spinning and Weaving Mills Co. Ltd. AIR 1971 SC 2039). In taxing statutes the words "levy" and "collect" are not synonymous terms. While "levy" would mean the assessment or charging or imposing tax, "collect" would mean the physical realisation of the tax which is levied or imposed or charged. Collection of tax is normally a stage subsequent to the levy of tax. The enforcement of levy can only mean realisation of the tax imposed or demanded. (Somaiya Organics (India) Ltd. v. State of Uttar Pradesh [2001] 123 STC 623 (SC); [2001] 5 SCC 519 and National Tobacco Co. of India Ltd [1972] 2 SCC 560). Sales tax, being an indirect tax, is passed on by a dealer to his customer. A dealer is said to have charged tax when he raises tax in the sales invoice. In cash sales, the charge to tax and its collection is, more or less, simultaneous. In credit sales, however, the dealer first charges the customer to tax and collects the consideratio....

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....voided. (Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd v. Custodian of Vested Forests AIR 1990 SC 1747, Shyam Kishori Devi v. Patna Municipal Corporation AIR 1966 SC 1678, A. R. Antulay v. Ramdas Sriniwas Nayak [1984] 2 SCC 500, Dental Council of India v. Hari Prakash [2001] 8 SCC 61, J. P. Bansal v. State of Rajasthan [2003] 5 SCC 134, and State of Jharkhand v. Govind Singh [2005] 1 SCJ 187). The primary rule of construction is that the intention of the legislation must be found in the words used by the Legislature itself. The question is not what may be supposed and has been intended but what has been said (Unique Butyle Tube Industries Pvt. Ltd. v. Uttar Pradesh Financial Corporation [2003] 113 Comp Cas 374 (SC); [2003] 2 SCC 455). Courts should not, ordinarily, add words to a statute or read words into it which are not there, especially when a literal reading thereof produces an intelligible result. (Delhi Financial Corporation v. Rajiv Anand [2006] 131 Comp Cas 235 (SC); [2004] 11 SCC 625). There is a line, though thin, which separates adjudication from legislation. That line should not be crossed or erased. Courts expound the law, they do not legislate. (State of Kerala v. Mathai V....

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.... not liable to act in the manner prescribed by the statute. It is not necessary for us, in the present proceedings, to examine whether or not imposition of penalty under section 15(4)(a) of the Act is mandatory or whether the competent authority has the discretion not to impose penalty even in cases of violation of the said provision. We shall proceed on the premise that exercise of power under section 15(4)(a) of the Act, which requires an amount equal to tax to be levied as penalty where a dealer has charged tax from the purchaser, is discretionary. The assessing authority and the appellate authority/Tribunal have noted that the petitioner was irregular in payment of sales tax dues even in the earlier months of the year. While no penalty was levied on the earlier months, the fact that the petitioner was regularly delaying payment of tax was taken into consideration in imposing penalty on him for the subject month. While the submission of Sri S. Dwarakanath, learned counsel for the petitioner, that, if the assessing authority was of the view that there was a delay in payment of tax he could have imposed penalty for that month is not without merit, the assessing authority cannot b....