AYURVED SEVASHARAM LTD Vs. STATE OF M P

JUDGEMENT

(1.) BY this petition under article 226 of the Constitution of India, the petitioner challenges the imposition of penalty under section 45-B of the M. P. General Sales Tax Act, 1958 (Act No. 2 of 1959) (for short "the Act" ).

(2.) THIS petition relates to the assessment and levying of penalty under section 45-B for the period 1983-84 (July 1, 1983 to June 30, 1984) under the provisions of the M. P. General Sales Tax Act, 1958 (Act No. 2 of 1959 ). The petitioner was carrying on the wholesale business of selling hair-oils, tooth-powder and ayurvedic medicines, etc. The company was holding Registration No. Ind/1/xxiv/322 granted by the Sales Tax Officer, Circle-I, Indore, under the M. P. General Sales Tax Act.

(3.) THE petitioner's case before the respondent No. 5, the Additional Assistant Commissioner of Sales Tax, was that he had appointed stockists and dealers who purchased the goods. It is a trade practice that incentive bonus is given at the close of the year on the basis of targets achieved by them. If some stockists or dealer achieve the target they get maximum incentive bonus. In case the purchases are below the target, the incentive bonus is less depending upon their periodical purchases. The respondent No. 5 allowed the incentive bonus and deduction from gross and taxable turnover amounting to Rs. 7,13,761 was given on the basis of list submitted before him at the time of assessment. The petitioner had deposited the amount of tax collected by him in the Government treasury. The total deposit amounted to Rs. 7,65,881. 24 while the tax assessed was Rs. 7,19,577. 04 resulting in a refund of Rs. 46,302. 50 which was demanded by the petitioner but respondent No. 5 levied a penalty of Rs. 65,000 under section 45-B of the Act.