VIJAYA INDUSTRIES Vs. COMMERCIAL TAX OFFICER CHITRADURGA

JUDGEMENT

(1.) The petitioner which is a registered partnership firm has challenged in this writ petition a notice of demand dated 2-3-1976 (Exhibit-'B') issued by the Commercial Tax Officer, Chitradurga demanding a sum of Rs. 5,650-05 as advance tax payable under section 12B (1) of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act) .

(2.) The petitioner filed a return ior the month of January 1976 in form No. 3 disclosing that there were purchases and sales of groundnuts and groundnuts seeds and the purchase of groundnuts was exempted from payment of tax as also the turnover regarding the groundnut seeds sold. Accordingly, he credited no tax- However, the Commercial Tax Officer issued the impugned notice stating that he was liable to pay a tax at 3 per cent on the turnover relating to the purchase of groundnuts and further stating that if he failed to pay the amount within ten days from the date of service of the notice, action would be taken to recover the same under section 13 (3) of the Act.

(3.) It is contended by Shri K. Srini- vasan, learned counsel appearing for the petitioner that the notice is illegal and not warranted by law. In my opinion, this contention is sound and must be upheld. Section 12B requires every dealer to send every month to, the assessing authority a statement containing such particulars as may be prescribed including the taxable turnover during the preceding month and that he should pay in advance the full amount of tax payable on the basis of the actual taxable turnover during the preceding month. Rule 17(1) provides that the statement should te in form-3 and should be sent in duplicate to the assessing authority so as to reach it within twenty five days after the close of the month of which the statement relates. It also requires that the statement should be accompanied by a receipt from a Government Treasury or crossed postal order or crossed cheque or crossed D-D. in favour of the assessing authority for the full amount of tax payable on the basis of the actual taxable turnover during the month of which the statement relates. Sub-rule (2) of Rule 17 states that if the amount sent by the dealer along with the statement is less than the amount of tax payable by him, the assessing authority shall serve upon the dealer a notice in form 5 and the dealer shall pay the sum demanded in the said notice within the time and in the manner specified in the notice- It appears from these provisions that the dealer should credit the amount of tax payable even according to his own statement filed as required under sec. 12 (B) (1) of the Act and if he does not admit any amount is payable as tax there is no obligation on his part to credit any amount. This is clear from the provision of sub-section (2) of section 12B wherein it is provided that if at the end of the year it is found that the amount of tax paid in advance by any dealer for any month, or for the whole year in the aggregate was less than the tax payable for that month or the tax for the whole year as finally assessed as the case may be by more than 15%, the assessing authority may direct such dealer to pay, in addition to the tax, by way of penalty, a sum not exceeding one and a half times the amount of tax so paid falls short of the tax payable for the month or for the whole, year, as the case may be. It is clear from this provision that if the petitioner does not admit and pay any tax in advance and at the end of the year he is assessed and is liable, to pay tax and has failed to make payment of any tax, then he would be liable for penalty which would extend to one and half times the tax payable during any month or for the entire year in the aggregate. Of course, before levying a penalty, the authority ' concerned has to give a reasonable opportunity to the dealer to show cause against such imposition of a penalty. Sub-rule (2) of Rule 17 authorises the authority to make a demand if the amount paid falls short of the amount payable on the basis of the statement filed and not in any other case. In a case where the dealer files a statement under section 12B (1) of the Act admitting no liability to pay the tax, the Commercial Tax Officer would have to wait till the end of the year to take action in accordance with section 12B (2). The notice of demand issued by the Commercial Tax Officer in the instant case before the final assessment is not warranted by law and accordingly liable to be quashed.