PHILIPS ELECTRONICS INDIA LTD Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) WRIT petitioners are all persons who are dealers as the expression occurs in Section 2 (12) of the Karnataka Value Added Tax Act,2003 (for short, the Act) and also dealers who are registered under Section 22 of the Act.

(2.) PETITIONERS have a common grievance and complaint against the validity of the penalty orders, which penalty has been imposed on the petitioners under the provisions of subsection (1) of Section 72 of the Act. Such penalty is levied on the petitioners either for their failure to file returns of the turnover, which is a periodic return to be filed every month, in terms of Section 35 of the Act or for their failure to have paid the tax, which they have collected and which had become payable within the permittede time, as stipulated in sub-section (1) of Section 35 of the Act.

(3.) WRIT petitioners are complaining that the quantum of penalty levied on them under the provisions of sub-section (1) of Section 72 of the Act, has assumed an oppressive proportion; that it has virtually turned out to be confiscatory in nature of a part of their income; that in the guise of levying the penalty for either a delayed filing of return or a delayed payment of tax on the return so filed i. e. for their failure to comply with the twin requirements of filing of return and paying tax within the stipulated periods, the penalty levied is unreasonably high; that it has assumed a disproportionate level; that levying penalty is harsh, as the penalty is levied irrespective of the cause for the delay; that the orders are also bad for not taking into consideration the genuine explanation which the petitioners had offered; that the penalties are levied notwithstanding the absence of a failure on the part of the petitioners in securing compliance with the requirements of Section 35 of the Act; that while the orders levying such penalties are per se bad, legislative provisions under which the authorities are enabled to levy and collect such a penalty i. e. the provisions of sub-section (1) of Section 72 of the Act, which achieves such result of levying penalty unreasonably and at disproportionate levels, is a provision which is violative of Articles 14 and 19 (l) (g) of the Constitution of India; that in the guise of making a provision for ensuring compliance with the levy and collection of tax on the sale of goods, a subject within the domain of the State legislature under Entry 54 of List II of the seventh schedule to the Constitution of India, what is actually collected as penalty is something which goes beyond even the scope of the main subject-matter of Entry 54 of List II; that such penalties partake the character of not only levying tax on income, but also leading to disproportionate levels as to throw out the petitioners from their very business and interfering with the rights of the petitioners to have their trade and business of their choice guaranteed under Article 19 (l) (g) of the Constitution of India.