TaxTMI 
TaxTMI 
2015 (3) TMI 37
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....ad with ExplanationI thereunder, the Tribunal was correct in deleting the penalty levied under the said clause read with the said ExplanationI in view of the Bombay High Court decision in the case of Indoswe Engineers (P) Ltd. (101 STC 177) ? 2. Undisputed factual position in the present appeal appears to be as under : The respondent is a dealer under the Bombay Sales Tax Act, 1959 as well as the Central Sales Tax Act, 1956 (hereinafter respectively referred to as "the Bombay Act" and "the Central Act"). The respondent was a manufacturer of textile machinery and its spare parts, iron and steel hammers, M.S.Flats etc.. The respondent Company had been referred to Board for Industrial and Financial Reconstruction (BIFR, for short) and came to be declared sick w.e.f. 28.6.1991 and various financial concessions were given to the respondent by the Board. It also appears that the Company had been granted installments. 3. The assessee filed returns for financial years 1982-83 and 1989-90 under Bombay Act as well as Central Act. The Assessing Authority has assessed the respondent Company, the assessee, for tax under Section 33(3) of the Bombay Act as well as under Section 9(2) of t....
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....into relevant provisions as have been prevailing then particularly Section 36 of the Bombay Act. Section 36 reads thus: 36. Imposition of penalty in certain cases and bar to prosecution. (1) Where any person, dealer or Commission agent purchases any taxable goods under declaration given by him under section 8A, 11, 12 or under any notification issued under section 41, and fails to comply with the conditions, recitals or undertakings of such declaration, then the Commissioner may, after giving such person, dealer or commission agent a reasonable opportunity of being heard by order in writing, impose on him, in addition to any tax payable a sum by way of penalty not exceeding twice the amount of tax : Provided that, no penalty under this subsection shall be levied, if the person, dealer or the Commission agent has included the purchase price of such goods in the turnover of purchases as required by subsection (1) or (2) of section 14 or by subsection (2) of section 41 and has paid the tax thereon. (2) If while assessing or reassessing the amount of tax due from a dealer under any provisions of this Act or while passing any order in any appeal, revision or rectificat....
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....dealer or a person does not pay the tax within the time he is required by or under the provisions of this Act to pay it, then he shall be liable to pay by way of simple interest, in addition to the amount of such tax, a sum equal to two per cent, of the amount of such tax, for each month or for part thereof after the last date by which he should have paid such tax : Provided that, in the case of tax referred to in subclauses (ii) and (iii) of clause (a) of subsection (4) of section 38 no interest shall be payable under this clause for a period commencing on the date immediately following the date of order of assessment or, as the case may be, reassessment and ending on the date specified in the notice served under the said subsection (4). Explanation - ............. (b) ..................." 6. Looking at the circumstances, while taking the decision in the matter the Tribunal appears to have relied on the judgment rendered in Indoswe Engineers Pvt. Ltd. [1996 (Vol.101) STC 177]. The Tribunal appears to have considered that presumptions as occurring under the explanation I are rebuttable ones and further that onus of rebuttal appears to have been discharged by the record. The Trib....
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....n along with the setoff allowed, then the difference between the tax assessed and the tax paid would be less than 20% and no penalty would be leviable under Section 36(2)(c). The Sales Tax Officer accepted the reasons for dropping the proceedings for levy of penalty under Section 36(3), however, he considered the circumstances to be a default for imposing penalty under Section 36(2)(c) of the Bombay Act. Aggrieved by the said order of the Sales Tax Officer levying penalty under Section 36(2)(c) of the Bombay Act, the assessee had been in appeal before the Assistant Commissioner. The Assistant Commissioner considered that if the amount of set off was considered as tax paid with the returns, the total payment made by the assessee would be more than 80% and with reference to the decision in the case of Commissioner of Sales Tax v. Empico Traders [1981] 47 STC 426 wherein expression "tax paid" appearing under explanation I was held to be not restricted only to the amount of tax paid by the dealer but would also include set off of amount granted to the dealer. As such the Assistant Commissioner held that explanation I of Section 36(2)(c) is not attracted and penalty could not be levied ....
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....Court in the case of Hindustan Steel Ltd. Vs. State of Orissa, reported in [1970] 25 STC 211: "......An order imposing penalty for failure to carry out a statutory obligation is the result of a quasicriminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute........" The Division Bench further quoted the observations of the Supreme Court in the case of Commissioner of Income Tax V. Anwar Ali reported ....
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....not be sustained. It was observed that the explanations to section 36(2)(c) are mutually exclusive. The Division Bench has further observed thus : "....... It is wellsettled that the onus of proof placed on the assessee under the Explanations is not of the nature of onus on the prosecution in a criminal trial. It can be discharged by giving plausible explanation. It is a burden more akin to that in a civil case where the determination is made on a preponderance of probabilities. Judging from the above standards, it is difficult to say that the assessee failed to discharge the onus cast on him and rebut the presumption against him." 9. Taking into account aforesaid background, the observations as were occurring in the judgment of the Tribunal in second appeal appearing in para9 which presumably give rise to question No.1 as has been posed will have to be looked into. As has been considered by the Division Bench while deciding the Indoswe case (supra) the basic burden about concealment of the transactions or inaccurate furnishing of particulars of the transaction is on the Revenue and in case in the assessment it is found that the tax paid by the assessee is less than 80% of th....