1976 (2) TMI 157 - HC - VAT and Sales Tax

1959 Act does not allow penalties on legal reps post dealer's death

The court held that the provisions of the 1959 Act do not allow for the imposition of penalties under section 16(4) of the 1953 Act on legal ... - Issues Involved:1. Whether the provisions of the Bombay Sales Tax Act, 1959, allow for the imposition of a penalty under section 16(4) of the Bombay Sales Tax Act, 1953, on the legal representative of a deceased dealer who continues the business after the dealer's death.Issue-wise Detailed Analysis:Imposition of Penalty on Legal Representative:The primary issue revolves around whether the legal representative of a deceased dealer can be penalized under section 16(4) of the 1953 Act, considering the provisions of the 1959 Act.Both counsel agreed that the 1953 Act did not provide for the imposition of penalties on the legal representatives of deceased dealers. This view was supported by a Division Bench ruling in Commissioner of Sales Tax v. Allimullah Haji Salamat [1968] 22 S.T.C. 165, which dealt with a dealer who died before the 1959 Act came into force.Argument by the Applicant:The applicant's counsel argued that the 1959 Act altered the legal position, creating a new liability for legal representatives under sections 19(1) and 34 of the 1959 Act. The 1959 Act aimed to consolidate and amend previous sales tax laws, and section 76 repealed all earlier sales tax acts, while section 77 provided saving clauses.Repeal and Saving Clauses:Section 77(1)(a) of the 1959 Act indicates that the provisions of earlier laws continue for purposes including penalty imposition for periods before the appointed day (1st January 1960). Therefore, penalties for periods before this date must be governed by the 1953 Act, not the 1959 Act. Section 77(3) further clarifies that the 1959 Act cannot be invoked to impose penalties retrospectively.Special Provisions in 1959 Act:The applicant's counsel contended that sections 19(1) and 34 of the 1959 Act should be interpreted to allow penalty imposition on legal representatives. Section 19(1) differentiates between continuing and discontinuing business after a dealer's death. Clause (a) makes the legal representative liable for tax due, while clause (b) includes liability for tax and penalty if the business is discontinued.The court noted the distinction in language between clauses (a) and (b) of section 19(1). The absence of the phrase 'including any penalty' in clause (a) suggests that legal representatives continuing the business are not liable for penalties.Definition of 'Tax':The court rejected the argument that 'tax' in section 19(1)(a) includes penalties. The definition of 'tax' in section 2(32) of the 1959 Act does not encompass penalties. Supreme Court rulings, including Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra [1975] 35 S.T.C. 571, support the view that tax and penalty are distinct concepts.Legislative History:The legislative history of section 19(1) reveals that the original Bill proposed liability for penalties on legal representatives continuing the business, but the Select Committee recommended against it. This resulted in the enacted version of section 19, which does not impose such liability.Section 34 of the 1959 Act:Section 34 applies the provisions of the 1959 Act or earlier laws to persons liable under section 19. However, since section 19(1)(a) does not impose penalty liability on legal representatives continuing the business, section 34 is not applicable.Conclusion:The court concluded that the 1959 Act does not authorize the imposition of penalties under section 16(4) of the 1953 Act on legal representatives continuing the business after the dealer's death. The question was answered in the affirmative, favoring the respondent-firm, with costs fixed at Rs. 250.Reference Answered Accordingly.