INDOSWE ENGINEERS P LTD Vs. STATE OF MAHARASTRA

JUDGEMENT

(1.) BY this reference under section 61 (1) of the Bombay Sales Tax Act, 1959, read with section 9 (2) of the Central Sales Tax Act, 1956, made at the instance of the assessee, the Maharashtra Sales Tax Tribunal has referred the following questions of law to this Court for opinion : " (i) Whether, on the facts and under the circumstances of the case and upon true and correct interpretation of section 55 (6) (b) and section 36 (2) (c) of the Bombay Sales Tax Act, 1959, the Tribunal was justified in holding that the first appellate authority can invoke rule of evidence contained in Explanation (2) to section 36 (2) (c) and confirm the penalty levied by the Sales Tax Officer under section 36 (2) (c) of the Act ? (ii) Whether, on the facts and circumstances of the case, the Tribunal erred in holding that the presumption of deemed concealment was not rebutted even after acceptance of the closed and adjusted books of accounts by the Sales Tax Officer ? (iii) Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that even when the assessment of the applicant was made on the basis of returns, which were filed late, still Explanation (2) to section 36 (2) (c) is attracted and the appellate authority could invoke that Explanation for confirming the penalty levied by the Sales Tax Officer under section 36 (2) (c) of the Act ?"

(2.) THE assessee M/s. Indoswe Engineers (P) Ltd. , is a manufacturer of non-ferrous extrusions and extruded products. It is registered as a dealer both under the Bombay Sales Tax Act, 1959 ("the Bombay Act") and the Central Sales Tax Act, 1956 ("the Central Act" ). It was assessed for the period July 1, 1977 to June 30, 1978, under both the Bombay Act and the Central Act by the Sales Tax Officer, Pune, on December 31, 1981. THE tax position as per the assessment orders passed by the Sales Tax Officer is as under : Bombay Act Central Act Returned Determined Returned Determined Tax assessed 3,16,539 3,21,758 1,76,802 1,61,934 Set-off 1,11,839 44,676. . . . . .-------- -------- --------- -------- Net amount payable 2,04,700 2,77,082 1,76,802 1,61,934 Add : Additional tax under section 15a-I 16,482 16,625. . . . . .--------- -------- -------- -------- Total tax payable 2,21,182 2,93,707 1,76,802 1,61,934 Tax paid 2,21,182 2,21,182 1,76,802 1,76,802 --------- -------- -------- -------- Balance of tax due Nil 72,525 Refundable 14,868 Add : Penalty under section 36 (2) (c) 25,000 27,000 -------- -------- 97,525 12,132

(3.) AGGRIEVED by the orders of the Sales Tax Officer levying penalty under section 36 (2) (c) of the Bombay Act, in the orders of assessment both under the Bombay Act and the Central Act, the assessee appealed to the Assistant Commissioner. At the time of hearing, it was contended before the Assistant Commissioner by the assessee that if the amount of set-off was also considered as tax paid with the returns, the total payment made by the assessee would be more than 80 per cent of the amount of tax assessed. Reliance was placed in support of this contention on the decision of this Court in Commissioner of Sales Tax v. Empico Traders [1981] 47 STC 426 where it was held that for the purpose of levying penalty under section 36 (2) (c), expression "tax paid" appearing in Explanation (1) to that section could not be restricted only to the amount of tax paid by the dealer into the Government treasury but would also include the amount of set-off granted to that dealer under rule 43 of the Bombay Sales Tax Rules, 1959. It was contended that in view of the above decision and the uncontroverted factual position, Explanation (1) to section 36 (2) (c) would not be attracted and hence penalty levied with the aid of said Explanation should not be sustained. The Assistant Commissioner found force in the above submission of the assessee that Explanation (1) to section 36 (2) (c) was not attracted to the facts of the case and hence accepted the same. He, however, felt that the assessee having filed the returns beyond the prescribed date, the rule of evidence contained in Explanation (2) could be invoked and penalty could be sustained with reference to the same. He, therefore, issued a show cause notice to the assessee on October 5, 1982, asking him to show cause why penalty under section 36 (2) (c) should not be sustained with the aid of Explanation (2) thereto. By the said notice, the assessee was asked to show cause that the failure to furnish return within the prescribed time was not without any reasonable cause and, in the event of its failure to do so, to show cause why penalty should not be imposed in respect of the said default. In reply to the said notice, the assessee informed the Assistant Commissioner that the tax paid by him being not less than 80 per cent of the tax assessed, no penalty was leviable under section 36 (2) (c) of the Act. The assessee also appeared before the Assistant Commissioner in pursuance of the above notice through his Sales Tax Practitioner and objected to the proposal of the Assistant Commissioner to impose penalty under section 36 (2) (c) of the Act by invoking the rule of evidence contained in Explanation (2) to the said section. It was contended that the Assistant Commissioner had no jurisdiction to do so. It was also submitted that assessment having been completed under section 33 (3) of the Act on the basis of the returns furnished by the assessee, though belatedly, Explanation (2) had no application. The Assistant Commissioner did not accept any of the above contentions of the assessee and confirmed the penalty by his order dated August 31, 1983, with the aid of Explanation (2 ). He however, reduced the quantum of penalty from Rs. 25,000 to Rs. 20,000 and from Rs. 27,000 to Rs. 22,500 under the Bombay Act and the Central Act respectively.