Penal default for non-filing and unauthorised tax collection upheld; wilfulness and deemed registration did not defeat liability.

Failure to file the prescribed return was treated as a penal default under the statutory scheme, so proof of wilfulness was not required to sustain penalty; the penalty was upheld, though moderated in view of the single transaction. Collection of tax without registration was also held unauthorised because deemed registration was unavailable where the application for registration was filed beyond the prescribed time from commencement of business; that penalty too was sustained, again at a reduced rate. The stated principle is that penal liability for non-filing or illegal tax collection does not depend on wilfulness, and deemed registration cannot be relied on without a timely application.

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Issues: (i) Whether penalty was exigible for failure to file the return, and whether the absence of wilfulness saved the assessee from penalty; (ii) Whether the assessee could rely on deemed registration under the sales tax rules to avoid penalty for collection of tax when not registered.

Issue (i): Whether penalty was exigible for failure to file the return, and whether the absence of wilfulness saved the assessee from penalty.

Analysis: The return admittedly had not been filed. The relevant statutory scheme treated failure to submit the prescribed return as a default attracting assessment and penalty under the provision corresponding to sub-sections dealing with assessment on best-judgment basis and consequential penalty. In that setting, the question of wilfulness as a condition for penalty was held to be irrelevant. The Tribunal's view that penalty could not be sustained for want of wilfulness was therefore not accepted. At the same time, the quantum of penalty required moderation in view of the single transaction involved.

Conclusion: Penalty for non-filing of the return was held exigible, and the deletion of penalty was set aside, with the penalty refixed at 100%.

Issue (ii): Whether the assessee could rely on deemed registration under the sales tax rules to avoid penalty for collection of tax when not registered.

Analysis: The assessee collected tax on the date of the first sale while not being a registered dealer. The application for registration was made only later, beyond the statutory period counted from commencement of business. Deemed registration under the rule governing non-disposal of a timely application was held unavailable where the application itself was not filed within the prescribed time from commencement. Consequently, collection of tax without registration was treated as unauthorised, making penalty under the penal provision for illegal collection of tax sustainable. Having regard to the isolated transaction, the penalty was moderated in amount.

Conclusion: The plea of deemed registration was rejected and penalty for illegal collection of tax was upheld, with the amount refixed at 100%.

Final Conclusion: The revision succeeded for the department, the Tribunal's deletion of both penalties was overturned, and the assessee remained liable to penalties under both provisions at the reduced rate fixed by the Court.

Ratio Decidendi: Where the statute treats failure to file a return or unauthorised collection of tax as a penal default, liability does not depend on proof of wilfulness, and deemed registration cannot be invoked unless the application for registration was made within the prescribed time from commencement of business.

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