- (1.) THIS is a revision application by the assessing authority under Sec. 14 (1) of the Rajasthan Sales Tax Act, 1954 against an order dated 29-1-66 by the Deputy Commissioner, Commercial Taxes (Appeals) Ajmer setting aside penalties imposed by the assessing authority under sec. 16 (l) (b)and 16 (l) (c) of the Rajasthan Sales Tax Act by his order dated 31-1 64 in the case of M/s Mohanlal Sripal Kataria of Kekai.
(2.) THE assessing authority had imposed penalties of Rs. 500/- u/s 16 (1 ) (b) and Rs. 25/- u/s 16 (1) (c) for delays in payment of tax and filing of returns on the part of the dealer. THE Deputy Commissioner set aside the first of the penalties on the ground that penalty u/s 16 (1 ) (b) could be imposed only if tax was due, and had not been paid after it has become due and payable. THE second penalty was set aside because there was no provision for submission of monthly returns at the relevant time and the assessing authority had acted under a mistaken notion that the dealer was required to file returns monthly and had failed to do so in January 1964. | The departmental representative argued that the dealer was in a class of dealers who were required to pay tax monthly on the laid down in sub sec. (2-A) of sec. 7 of the Rajasthan Sales Tax Act in accordance with Notification No 6 (40) FD/rt/63, dated 6-7-63 issued under the said sub-section. Tax was, therefore, payable by him on that basis and since he had not paid the tax so payable within time the penalty under sec. 16 (l) (b) was justified. The learned counsel for the assessee invited attention to the Board's D. S. judgment in 'the Marketing Co. of India Ltd. , v/s State of Rajasthan' 1969 Tax Reporter - February issue page 41 (i) in which it had been held that sec. 16 (1) (b) case into play only after tax had been determined either by the assessing authority by a process of assessment, or by the assessee under sec. 7 (2) in accordance with his return. In the present case there had been no assessment and no return had become due at the time the penalty was imposed. None of the conditions indicated in the Board's judgment cited by him had arisen, and penalty could not be imposed. Regarding sec. 7 (2-A) he said that, that section hardly made the payments required before the filing of the return, to be tax 'due', which word occurred in sec. 16 (l) (b) at the relevant time, although it was omitted later by Rajasthan Act 13 of 1964, with effect from 4-5-64. Tax could become due only either by assessment or in accordance with a return. Even if any tax was regarded as payable under sec. 7 (2a), the relevant notification dated 6-7-63, allowed a time of 21 days after the close of each month of the dealer's year of account for making payment. According to the statement in the order of the assessing authority, the dealer had made payment after 22 days. There was thus virtually no delay. The assessing authority had himself not found any occasion to impose any penalty for delay in payment of tax in the assessment order passed by him for the period in question. He pleaded, therefore, that the Deputy Commissioner's decision to set aside the penalty was justified. I have considered the matter. In the Board's judgment in Cement Marketing Company case, cited by learned counsel for the assessee, the effect of the new sub-sec. (24) inserted in sec. 7 by Rajasthan Act 13 of 1964 had not been considered. It is true that before the insertion of that sub-section, tax became payable ony either in consequence of an assessment or on the dealer himself framing and submitting a return. The new subsection however, introduced a third situation. In respect of categories of dealers notified by Government under that sub-section, payments on the basis laid down in that sub-section issued under the sub section. The sub section begins with the words "notwithstanding anything contained in sub-sec. (2)". The effect obviously is that even before payment of tax with reference to a return is due in accordance with the provision in sub-sec. (2) of sec. 7, proportionate amounts on the basis of the previous return shall be payable in accordance with notification under the sub-section. 'tax due' under sec. 16 (1) (b) obviously means the amount of tax of which payment may be due in accordance with any provisions of the Act. The question is whether the payments required under sec. 7 (2a) are payment of tax 'due'. The subsection itself refers to the payment required under it as 'advance tax', when it says the difference, if any, of the tax payable according to the return and the advance tax paid shall be deposited with the return. . . . . . . . . ". I do not think that this 'advance tax' could be treated as tax 'due', within the meaning of sec. 16 (1) (b) as it stood prior to 4-5-64. It is a sort of advance payment towards the tax which would be payable in due course on the basis of the return, but is not in itself 'tax due'. The advance payment is to be based on the last return and has to be made even though in the relevant month there may have been much lower sales or perhaps no sales and hence no tax due. The amount is not thus tax 'due' in respect of the month. It is true that the first sentence of sec. 7 (2 A) refers to the requirement to pay 'tax' at intervals shorter than those prescribed under section 7 (1) but this has to be construed in the context of the following part of sec. 7 (2a), which amply clarifies the nature of the payment required. There is at least one other sec. in the Rajasthan Sales Tax Act which requires a provisional payment of tax, before the tax has actually become due, namely sec. 22 A (4 ). The advance payment is required under that section on suspicion of avoidance or evasion of tax in respect of goods leaving or entering the State. Surely, non-payment of the required amount under that Section would not be regarded as non-payment of tax, and penalty under sec. 16 (l) (b) would not be attracted for such non-payments. The same conclusion will in my opinion apply to the advance payment required under sec. 7 (2a ). It may be argued that sec. 7 (2a) requires payment of monthly 'tax' by a sort of legal fiction. Firstly, as I have said, that does not appear to be the import of the sub-section read as a whole. Secondly, no legal fiction can create a 'tax' outside the scope of the particular statute. A 'tax' under the Sales Tax Act can be on a sale or purchase. The payment required under sec. 7 (2a) in advance of return has not been related to tax liability for the relevant month, but has been expressed as based on the last return, that is, return for a previous period. It is thus not a tax in respect of the sales or purchase of the month for which the payment is required. No legal fiction can, in my opinion, convert such a payment into a 'tax'. Moreover it is one of the accepted principles of interpretation that 'when there is an enactment which may entail penal consequences, you ought not to do violence to the language in order to bring people within it, but ought rather to take care that no one is brought within it who is not brought within it by express language' ('caries on Statute Law' sixth Edition-page-522. Penalty imposed under sec. 16 (l) (b) on the basis that amount required to be paid under sec. 7 (2a) read with the notification issued thereunder, before a return was due, had not been paid, cannot, therefore, in mv opinion, be sustained. A penalty under sec. 16 (l) (g) as it stood at the relevant time (ie.) for wilfully acting in contravention of any provisions of the Act not otherwise provided for could be imposed if circumstainces justified. The penalty under sec. 16 (1) (c) imposed on the basis that a monthly return was required has also been correctly set aside by the Deputy Commissioner because no return was obviously called for on a monthly basis, as seems to have been assumed by the assessing authority in his order dated 31-1-64. It may be mentioned that notification No. F. 5 (9) EST)/62 dated 23-11-62 requiring the submission of monthly returns by certain classes of dealers had been superseded by notification No. F. 5 (40) RT/63-I dated 3-5. 62. The point, however, is that the dealer's year of accounts relevant to this matter commenced on 17-10-63 and ended on 3-11-64, as shown on the assessment order. One quarter, therefore, ended in January. A return was due in that month and tax was also due on the basis. If there was any delay in filing the return due on the quarterly basis, or in paying tax due with reference to such return, then certainly penalties under sec. 16 (1) (b) and 16 (l) (c) could be imposed. As the orders of the assessing authority as well as the appellate authority have not been passed after examining matter properly, the orders of both the authorities are set aside and the case is remanded to the assessing authority to examine the matter in the light of observations in paras 11 to 13 and pass fresh orders, after giving an opportunity to the dealer to be heard. The revision application is disposed of accordingly. . ;