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1995 Supreme(Bom) 74
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
B.P.Saraf, D.K.Trivedi, JJ.
COMMISSIONER OF SALES TAX, MAHARASHTRA STATE
Versus
MALABAR PRODUCTS.
Sales Tax Reference No. 39 of 1987
Decided On: Decided On : 06-02-1995
K. J. Presswala - Applicant.
Assessment of a dealer who had filed returns late, i.e., beyond the prescribed date, has to be made under sub-section (3) or sub-section (4) of section 33 of the Act and not under sub-section (5). Explanation (I) to section 36(2)(c) is applicable only to assessments under sub-sections (3) and (4) of section 33 and not to assessments under sub-sections (2) and (5).
Headnote:
BOMBAY SALES TAX ACT, 1959 - SECTION 33(5) - ASSESSMENT OF TAX - RETURNS FILED AFTER PRESCRIBED DATE - APPLICABILITY OF EXPLANATION (I) TO SECTION 36(2)(C) - INTERPRETATION.
Fact of the Case:
The assessee, M/s. Malbar Products, a registered dealer under the Bombay Sales Tax Act, 1959, failed to submit returns for the period November 12, 1977 to October 31, 1978 within the prescribed time. The returns were filed belatedly and accepted by the Sales Tax Officer. The assessee was assessed under section 33(3) and a penalty was levied under section 36(2)(c) with the aid of Explanation (I) for concealment of turnover and furnishing inaccurate particulars of taxable turnover. The assessee challenged the penalty before the Assistant Commissioner and the Maharashtra Sales Tax Tribunal, contending that the assessment should have been made under section 33(5) and Explanation (I) was not applicable.
Finding of the Court:
The Court held that the assessment of a dealer who had filed returns late, i.e., beyond the prescribed date, had to be made under sub-section (3) or sub-section (4) of section 33 of the Act and not under sub-section (5). The Court interpreted section 33(5) to apply only in cases where no return for any period had been filed at all. The Court further held that Explanation (I) to section 36(2)(c) was applicable only to assessments under sub-sections (3) and (4) of section 33 and not to assessments under sub-sections (2) and (5).
Issues: 1. Whether the assessment of a dealer who had filed returns late, i.e., beyond the prescribed date, could only be made under section 33(5) of the Act? 2. Whether the case of the assessee was covered by the mischief of Explanation (I) to section 36(2)(c)? 3. Whether the Tribunal erred in not considering the alternative prayer of the department for converting the penalty imposed under section 36(2)(c) Explanation (I) to penalty under section 36(2)(c) Explanation (II) of the Bombay Sales Tax Act, 1959?
Ratio Decidendi: The Court relied on the scheme of assessment under section 33 and the various sub-sections thereof, as well as the provisions of section 36(2)(c) and Explanations (1) and (2) thereto, to conclude that all assessments made on consideration of the returns, whether furnished within the prescribed time or belatedly, and the evidence produced in support thereof, would be assessments under sub-section (3) of section 33 of the Act and not under sub-section (5) thereof.
Final Decision: The Court answered Question Nos. 1 and 2 in the affirmative and in favor of the Revenue, holding that the assessment was made under sub-section (3) of section 33 and Explanation (I) to section 36(2)(c) was applicable. The Court declined to answer Question No. 3 as it had become academic in light of the answers to Questions Nos. 1 and 2.
B. P. Saraf, J.
By this reference under section 61(1) of the Bombay Sales Tax Act, 1959, made at the instance of the Revenue, the Maharashtra Sales Tax Tribunal has referred the following questions of law to this Court for opinion :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the assessment of the respondent - dealer, who had filed all the returns late, i.e., beyond the prescribed time, could only be made under section 33(5) of the Act ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the case of the respondent - dealer is not covered by the mischief of Explanation (I) to section 36(2)(c) ?
3. When, admittedly, all the returns were not filed within the prescribed time, whether the Tribunal erred in law in not considering the alternative prayer of the department for converting the penalty imposed under section 36(2)(c) Explanation (I) to penalty under section 36(2)(c) Explanation (II) of the Bombay Sales Tax Act, 1959 ?"
The facts of the case relevant for determination of the controversy in this case are as follows : The assessee, M/s. Malbar Products, is a dealer registered under the Bombay Sales Tax Act, 1959 ("the Act") and carries on the business of manufacture, sale and supply of desiccated coconuts. This reference pertains to the period November 12, 1977 to October 31, 1978. The assessee did not submit his returns for this period within the prescribed time. They were filed belatedly. The return for the quarter ending February 7, 1978, was furnished on March 17, 1978, for the quarter ending May 6, 1978 on June 16, 1978, for the quarter ending August 31, 1978 on September 14, 1978 and for the quarter ending October 31, 1978 on January 6, 1979. All these returns were accepted and taken on record by the Sales Tax Officer. On January 9, 1981, after two years of the furnishing of the above returns, the Sales Tax Officer issued a notice to the assessee in Form 27 requiring him to produce evidence in support of his returns. In the above notice, it was also stated that all the four returns filed by the assessee were filed late and the assessee was asked to show cause why penalty should not be imposed under section 36(3) of the Act. In response to the above notice, the assessee appeared before the Sales Tax Officer and produced his books of account and documents as evidence in support of his returns. After considering the same, the Sales Tax Officer assessed the amount of tax due from the assessee. The amount of tax assessed including the Additional Tax worked out at Rs. 50,448 as against Rs. 23,789 paid by the assessee as per returns. A penalty of Rs. 390 was also levied under section 36(3) of the Act for failure to pay the taxes within time. The Sales Tax Officer also initiated proceedings for levy of penalty under section 36(2)(c) of the Act for concealment of turnover and furnishing of inaccurate particulars of taxable turnover. As the total amount of tax paid by the assessee was found to be less than eighty per cent of the amount of tax assessed, the Sales Tax Officer issued notice to the assessee to show cause why penalty should not be levied under section 36(2)(c) read with Explanation (I) thereto and after hearing the assessee, levied a sum of Rs. 16,000 as penalty under section 36(2)(c) of the Act read with Explanation (1) thereto.
The assessee appealed to the Assistant Commissioner of Sales Tax (Appeals), Nagpur Division, Nagpur. Though in the appeal, the assessee had challenged the order of assessment also, at the time of hearing, the challenge was restricted to the levy of penalty of Rs. 16,000 under section 36(2)(c). The Assistant Commissioner of Sales Tax (Appeals) did not find any infirmity in the imposition of penalty by the Sales Tax Officer under section 36(2)(c) read with Explanation (1) thereto. However, on consideration of the facts of the case, he reduced the quantum of the penalty from Rs. 1
