Penalty under sales tax law: pre-amendment provision fixed only a maximum for wilful default, not a minimum.

Section 14(8) of the Andhra Pradesh General Sales Tax Act, as it stood before the 1 July 1985 amendment, prescribed only a maximum penalty for wilful failure to disclose turnover correctly or to file returns in time, and did not fix any minimum penalty. It also provided a lower ceiling for non-wilful default and no penalty where the failure arose from a bona fide mistake. The Tribunal erred in proceeding on the assumption that a minimum penalty of two times the tax due existed. On that basis, the penalty could not be sustained, and the revisions were allowed with the penalty reduced.

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Issues: Whether, for assessment years prior to 1 July 1985, section 14(8) of the Andhra Pradesh General Sales Tax Act prescribed only a maximum penalty and no minimum penalty for wilful failure to disclose turnover correctly or to file the return in time, and whether the Tribunal was justified in reducing the penalty on the basis that a minimum penalty existed.

Analysis: Section 14(8), as it stood before amendment by Act 18 of 1985 with effect from 1 July 1985, provided that the penalty leviable for the relevant defaults shall not exceed five times the tax or fee due where the failure was wilful, one-half of the tax or fee due where the failure was not wilful, and that no penalty shall be levied where the failure resulted from a bona fide mistake. On a plain reading, the provision fixed only the maximum penalty in cases of wilful default and did not prescribe any minimum penalty. The Tribunal proceeded on the mistaken footing that a minimum penalty of two times the tax due existed.

Conclusion: The Tribunal's assumption about a minimum penalty was erroneous, and the penalty could not be sustained on that basis. The revisions were allowed and the penalty was reduced.

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