Strict construction of sales tax penalties: registration application and filed return defeated liability for non-deposit and non-registration.

A penal provision under the U.P. Sales Tax Act was construed strictly, and liability was held not to arise where a dealer had applied for registration and continued business while that application was pending. On that reading, carrying on business could not be treated as doing so without applying for registration, so section 14(1)(c)(ii) was not attracted. The Court also treated filing the return and depositing tax as separate acts: failure to pay tax with the return did not amount to failure to submit a return of turnover. Since the return had been filed, section 14(1)(c)(i) was likewise not made out.

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Issues: (i) Whether a dealer who has applied for registration under section 8-A of the U.P. Sales Tax Act, 1948 can be said to have carried on business without applying for registration so as to attract section 14(1)(c)(ii); (ii) Whether failure to deposit tax along with the return amounts to failure to submit a return of turnover so as to attract section 14(1)(c)(i).

Issue (i): Whether a dealer who has applied for registration under section 8-A of the U.P. Sales Tax Act, 1948 can be said to have carried on business without applying for registration so as to attract section 14(1)(c)(ii).

Analysis: The penal clause was read strictly. The relevant liability arises only where a person carries on business without applying for registration in accordance with section 8-A. Since the respondent had applied for registration and continued business only while that application was pending, the conduct did not fall within the mischief of the provision. The subsequent cessation of business after rejection of the application also supported the absence of a statutory breach.

Conclusion: The respondent did not violate section 14(1)(c)(ii); the finding was in favour of the respondent.

Issue (ii): Whether failure to deposit tax along with the return amounts to failure to submit a return of turnover so as to attract section 14(1)(c)(i).

Analysis: The Court treated the filing of the return and the deposit of tax as distinct acts. Non-payment of tax on the admitted turnover was not regarded as an omission to submit the return itself. As the respondent had filed the return, the ingredients of section 14(1)(c)(i) were not satisfied.

Conclusion: The respondent did not commit an offence under section 14(1)(c)(i); the finding was in favour of the respondent.

Final Conclusion: The acquittal was upheld because neither charged contravention was made out on a plain reading of the penal provision.

Ratio Decidendi: A penal provision under sales tax law must be construed strictly, and where the statute separately requires registration and submission of returns, a dealer who has applied for registration and has in fact filed the return cannot be convicted merely because tax was not deposited with the return.

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