LAXMANDAS RAMESH KUMAR Vs. STATE OF MADHYA PRADESH
LAWS(MPH)-1980-4-13
HIGH COURT OF MADHYA PRADESH
Decided on April 03,1980

LAXMANDAS RAMESH KUMAR Appellant
VERSUS
STATE OF MADHYA PRADESH Respondents





Cited Judgements :-

PANNALAL KANKARIYA AND SONS VS. ADDITIONAL ASSISTANT COMMISSIONER OF SALES TAX [LAWS(MPH)-1981-3-8] [REFERRED TO]


JUDGEMENT

- (1.)THE petitioner is a dealer registered under the Madhya Pradesh General Sales Tax Act, 1958, as also under the Central Sales Tax Act, 1956. For the period from 25th October, 1965, to 12th November, 1966, the petitioner was assessed to Central sales tax at Rs. 46,644 by the order of the Assistant Commissioner of Sales Tax dated 29th July, 1969. In penalty proceedings for the same period, the Assistant Commissioner by his order dated 15th September, 1969, imposed a penalty of Rs. 35,000 on the petitioner under Section 43 of the State Act for concealment of the turnover under the Central Act. The petitioner filed a revision against the order imposing penalty which was dismissed by the Commissioner of Sales Tax on 28th February, 1975. Similarly, for the period from 3rd November, 1967, to 21st October, 1968, a penalty of Rs, 9,200 was imposed on the petitioner under Section 43 of the State Act for concealment of the turnover under the Central Act by order of the Assistant Commissioner of Sales Tax dated 12th January, 1972. A revision against this order was dismissed by the Commissioner of Sales Tax on 30th August, 1974. The petitioner then filed two applications for rectification to the Commissioner of Sales Tax drawing attention to the decision of the Supreme Court in Khemka and Co. v. State of Maharashtra [1975] 35 S. T. C. 571 (S. C.), in which it. was held that penalty provisions under the State Act were not attracted for assessment of tax under Section 9 of the Central Act. The applications for rectification were allowed by order dated 27th July, 1976, passed by the Commissioner of Sales Tax and the penalties imposed for both the periods were cancelled. After the Central Act was amended by the Central Sales Tax (Amendment) Act, 1976, the Assistant Commissioner of Sales Tax by order dated 11th July, 1977, held that the Commissioner's order dated 27th July, 1976, passed in rectification proceedings became inoperative. Recovery proceedings for penalties imposed for both the periods were started against the petitioner. The petitioner then filed this petition under Article 226 of the Constitution for restraining the respondents to continue the recovery proceedings.
(2.)THE first contention raised by the learned counsel for the petitioner is that the amending Act had not the effect of reviving the orders of penalty which were cancelled by the Commissioner's order dated 27th July, 1976. The second contention of the learned counsel for the petitioner is that Section 43 of the State Act which provides penalty for concealment of turnover is not attracted under Section 9 of the Central Act even after the amendment. It is lastly contended that the orders of the Commissioner dismissing the petitioner's revisions against orders imposing penalty were erroneous in law.
(3.)BY Section 6 of the amending Act, Sub-section (2a) was inserted in Section 9 of the Central Act, which reads as follows :
(2a) All the provisions relating to offences and penalties (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence but excluding the provisions relating to matters provided for in Sections 10 and 10a) of the general sales tax law of each State shall, with necessary modifications, apply in relation to the assessment, reassessment, collection and the enforcement of payment of any tax required to be collected under this Act in such State or in relation to any process connected with such assessment, reassessment, collection or enforcement of payment as if the tax under this Act were a tax under such sales tax law.
Section 9 of the amending Act, which dealt with validation, is as under :
9. Validation.- (1) The provisions of Section 9 of the principal Act shall have effect, and shall be deemed always to have had effect, in relation to the period commencing on the 5th day of January, 1957, and ending with the date immediately preceding the date of commencement of this Act as if that section also provided (a) that all the provisions relating to penalties (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment on conviction for an offence but excluding the provisions relating to matters provided for in Sections 10 and 10a of the principal Act and the provisions relating to offences) of the general sales tax law of each State shall, with necessary modifications, apply in relation to (i) the assessment, reassessment, collection and enforcement of payment of any tax required to be collected under the principal Act in such State ; and (ii) any process connected with such assessment, reassessment, collection or enforcement of payment; and (b) that for the purpose of the application of the provisions of such law, the tax under the principal Act shall be deemed to be tax under such law.

(2) Notwithstanding anything contained in any judgment, decree or order of any court or tribunal or other authority, all penalties under the general sales tax law of any State imposed or purporting to have been imposed in pursuance of the provisions of Section 9 of the principal Act, and all proceedings, acts or things taken or done for the purpose of, or in relation to, the imposition or collection of such penalties, before the commencement of this Act shall, for all purposes, be deemed to be and to have always been imposed, taken or done as validly and effectively as if the provisions of Sub-section (1) had been in force when such penalties were imposed or proceedings or acts or things were taken or done and, accordingly, (a) no suit or other proceedings shall be maintained or continued in or before any court or any tribunal or other authority for the refund of any amount received or realised by way of such penalty ; (b) no court, tribunal or other authority shall enforce any decree or order directing the refund of any amount received or realised by way of such penalty ; (c) where any amount which had been received or realised by way of such penalty had been refunded before the commencement of this Act and such refund would not have been allowed if the provisions of Sub-section (1) had been in force on the date on which the order for such refund was passed, the amount so refunded may be recovered as an arrear of tax under the principal Act ; (d) any proceeding, act or thing which could have been validly taken, continued or done for the imposition of such penalty at any time before the commencement of this Act if the provisions of Sub-section (1) had then been in force but which had not been taken, continued or done, may after such commencement be taken, continued or done.

(3) Nothing in Sub-section (2) shall be construed as preventing any person, (a) from questioning the imposition or collection of any penalty or any proceedings, act or thing in connection therewith ; or (b) from claiming any refund, in accordance with the provisions of the principal Act read with Sub-section (1 ). Explanation.-In computing the period of limitation, if any, for questioning as provided in Clause (a) or for claiming as provided in Clause (b), the period commencing on the 27th day of February, 1975, and ending with the date of commencement of this Act shall be excluded.

(4) Any interest charged or paid or purporting to have been charged or paid, and any proceeding, act or thing taken or done or purporting to have been taken or done for charging or paying any interest, under the provisions of the general sales tax law of any State read with Section 9 of the principal Act, before the commencement of this Act, shall be deemed to be and to have always been as validly charged, paid, taken or done as if the amendment made by Clause (b) of Section 6 had been in force "when such interest was charged or paid or when such proceeding, act or thing was taken or done.
Explanation.-For the purposes of this section, 'general sales tax law' shall have the same meaning as in the principal Act. As stated in the objects and reasons, the amendments in Section 9 of the Central Act and the validation provisions in Section 9 of the amending Act. were made with the object to get over the majority judgment in the Khemka's case [1975] 35 S. T. C. 571 (S. C. ). The objects and reasons as appended to the Bill read as follows :
Sub-section (2) of Section 9 of the Central Sales Tax Act empowers the State sales tax authorities to assess, reassess, collect and enforce payment of Central sales tax. The sub-section also authorises the authorities under the State sales tax laws to exercise all the powers which they have under those laws (including, inter alia, the power to impose penalties) for the purposes of the Central Sales Tax Act also. In Khemka and Co. (Agencies) Private Ltd. v. State of Maharashtra [1975] 35 S. T. C. 571 (S. C.) the Supreme Court, by a majority of 3 : 2, held that the provisions of the State sales tax laws as to penalties do not apply for purposes of the Central sales tax. In view of this judgment, the State Governments are faced with the problem of having to refund the amounts collected in the past by way of penalties. The judgment has also resulted in a vacuum being created in regard to levy of penalties. It is, therefore, necessary to amend Section 9 of the Central Sales Tax Act to provide expressly that the provisions relating to offences and penalties under the general sales tax law of each State shall, with necessary modifications, apply in relation to the assessment, reassessment, collection and the enforcement of tax under the Central Sales Tax Act. It is also necessary to validate the penalties which have been levied in the past, for the purposes of the Central Sales Tax Act, on the basis of the provisions of the State sales tax laws.



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