1974 (7) TMI 116 - HC - VAT and Sales Tax

Supreme Court: Penalties under Orissa Sales Tax Act unjust for registered dealer.

The Supreme Court held that penalties imposed under section 12(5) of the Orissa Sales Tax Act for quarters ending in June and September 1962 were ... - Issues:Imposition of penalty under section 12(5) of the Orissa Sales Tax Act for quarters ending June and September, 1962.Analysis:The petitioner, a partnership firm, was assessed to sales tax under section 12(5) of the Orissa Sales Tax Act for quarters ending on 31st March, 1962, to 30th September, 1962. Penalties were imposed for the quarters ending on 30th June, 1962, and 30th September, 1962, on the basis that the petitioner was an unregistered dealer. The petitioner had applied for registration on 14/16th February, 1962, but the registration certificate was granted on 16th December, 1962. Despite this delay, all taxing authorities assessed the petitioner as an unregistered dealer for the mentioned quarters and imposed penalties for two of them. The Tribunal initially declined to refer the case to the High Court, stating no legal question arose. However, upon application, a statement of facts was requested by the High Court.Section 12(5) of the Act empowers the Commissioner to assess tax due from a dealer who failed to apply for registration without sufficient cause. The Supreme Court has interpreted the provision to require a deliberate failure to apply for registration to avoid taxation. In this case, the registration certificate was eventually granted, even though the application was made well before the assessment period. Previous decisions under similar tax laws have held that the registration certificate is effective from the date of application. Therefore, the petitioner should be considered a registered dealer from 14/16th February, 1962, and cannot be treated as an unregistered dealer for the mentioned quarters, nor can penalties be imposed for two of them.Based on the analysis, it was concluded that no penalty is warranted for the quarters ending in June and September 1962. The reference was accepted with costs, and the petitioner was entitled to a refund of the reference fee. Judge B.K. Ray concurred with the decision, and the reference was answered accordingly.