- (1.) THIS order will dispose of two revision applications against the orders of the Sales Tax Officer, Bharatpur, dated 29. 3. 1963. These revisions are directed at the instance of the Sales Tax Officer, Special Circle, Jaipur. The facts of the case in brief, are that the opposite party, M/s Central India Machinery Manufacturing Co. Ltd. Bharatpur, who manufacture railway wagons filed their returns of the assessment year 1. 4. 1958 to 31. 3. 1959 on 19. 5. 1959 and deposited the tax on 31st July, 1959. In respect of the assessment year 1959-60, the returns for the four quarters were filed and the tax was deposited on the dates noted below: - Quarter Returns filed on Tax deposited on First Quarter 7. 8. 1959 8. 9. 1959 Second Quarter 30. 10. 1959 14. 9. 1959 Third Quarter 30. 8. 1960 30. 8. 1960 Fourth Quarter 16. 5. 1961 December, 1960.
(2.) THE Sales Tax Officer did not impose any penalty for the year 1958-59 for late submission of returns and late depositing of tax for the reasons that the firm had been in correspondence with the Railway authorities with regard to the payment of the tax. He also relied on M/s Tulsiram Pannalal versus THE State of Rajasthan (R. L. W. 1961 page 363) and held that no penalty could be levied for breach of any rules prior to their validation i. e. 17. 12. 1959. For the period after 17. 12. 1959 he imposed a penalty of Rs. 250/ -. THE main point taken in revision was that notwithstanding the ruling of the Rajasthan High Court in M/s Tulsiram Pannalal versus the State of Rajasthan, penalty could be legally imposed for the default committed by the opposite party. It was conceded that for the default in filing the returns late no penalty could be imposed, but it was contested that for the default in not depositing the amount of tax along with the returns, penalty was leviable and should have been imposed. The learned counsel for the State contested that under sec. 7 (2) of the Rajas-than Sales Tax Act, every assessee is liable to deposit the tax due as admitted by him in the returns filed by him along with the returns, if he does not do so he is liable to pay penalty under sec. 16 (l) (b) of the Act. It was further contended that the rule laid down in Tulsiram Pannalal versus State held good only so far as penalty imposed for breach of rules was concerned. The ratio decidendi in that authority was (hat the Rajasthan Sales Tax Rules which came into force on 1. 4. 1959 were held invalid in Civil Writ Petition No. l1 of 1958. On 6. 11. 1955 a Validating Ordinance was promulgated validating the rules retrospectively which was converted into Rajasthan Sales Tax Validation Act, 1959. The Validating Ordinance was challenged in M/s Tulsiram Pannalal versus State and their Lordships held "the retrospective legislation for the purpose of imposing a tax is permissible. This point is concluded by the decision of their Lordships of the Supreme Court in Union of India. Vs. Madanlal Kabra. The question, however, remains whether the penalties imposed in the two cases in writ Petition No. 169 of Rs. 101/- and in writ petition No. 205 of 1957 of Rs. 500/- are valid. Under Art. 20 (1) of the Constitution, no person can be convicted of any offence except for a violation of a law in force at the time of the commission of the act charged as an offence. This prohibition against post facto legislation which involves the imposition of a penalty is one of the fundamental rights guaranteed under the Constitution, as such for the purpose of Sec. 16 of the Act, the rules cannot be given retrospective effect". It was urged that this authority held good only so far as it made imposition of any penalty before the Validating Act came into force for the breach of rules unlawful. In the present case, it was urged that the breach of statutory obligation as given in sec. 7 (2) of the Act is not covered by this authority. To understand the argument, we may reproduce below the provisions of sec. 16 (l) (b) as it stood during the relevant period : "if any person has without reasonable cause failed to pay the tax due within the time allowed the assessing authority may direct that such person shall pay by way of penalty in addition to the amount payable by him, a sum not exceeding half of that amount. " Sec. 7 (2) reads as follows - "every such return shall be accompanied by a Treasury receipt or receipt of any bank authorised to receive money on behalf of the State Government showing the deposit of the full amount of tax due on the basis of return in the Government Treasury or bank concerned". Reading the two sections together, it is obvious that provisions of sec. 16 (l) (b) will be attracted only when the assessee without reasonable cause defaults in the payment of tax due from him within the time allowed. It was urged that though in Bawa Glass and Crockeries (Pvt.) Ltd,, Jaipur vs. State of Rajasthan (R. R. D. 1965 page 54), a single Bench of this Board had held that a "tax due" is a tax when it becomes a debt, having been determined by assessment and a notice of demand has issued ; yet it is no longer good law in view of the observations made by the Supreme Court in State of Rajasthan vs. Ghansilal (S. T. C. 1965 Vol. XVI, p. 318 ). In that authority, their Lordships have observed that "according to the terms of sec. 16 (1) (b), there must be a tax due and there must be a failure to pay the tax due within the time allowed. There was some discussion before us as to the meaning of the words "time allowed" but we need not decide in this case whether the words "time allowed" connote time allowed by an assessing authority or time allowed by a provision in the Rules or the Act, or all these things, as we are of the view that no tax was due within the terms of sec. 16 (l) (b) of the Act. Sec. 3, the charging section, read with sec. 5, makes tax payable, i. e. it creates the liability to pay the tax. That is the normal function of a charging section in a taxing statute. But till the tax payable is ascertained by the assessing authority under sec. 10, or by the assessee under sec. 7 (2), no tax can be said to be due within sec. 16 (l) (b) of the Act, for till then where is only a liability to be assessed to tax". The plain reading of the observations made by their Lordships of the Supreme Court leaves no room for doubt that their Lordships held a "tax due" under the provisions of sec. 7 (2) even at the time when an assessee files the return. It is, there-fore, clear that if an assessee does not deposit the tax at the time of filing of the returns without a reasonable cause and within the time allowed, he fails to pay the tax within the meaning of sec. 16 (l) (b ). I need not discuss the interpretation of the term 'time allowed' as it was not pleaded in the case. I, however, feel that even though an assessee is obliged to deposit the tax along with his returns on the basis of assessment made by himself or within the time allowed, yet it does not mean that in all cases a penalty must be levied on him for failure to do so. Sec. 16 while using the phrase 'the assessing authority may direct that such person shall by way of penalty etc' only gives a discretion to the assessing authority. The word may used in this context cannot be interpreted in revision only when it is shown to be perverse or injudicial. In this case the assessing authority failed to exercise his discretion because of wrong application of the High Court ruling to a case where penalty was imposed not because of breach of rules but of a substantive provision of law as explained above. Penalty would of course be leviable only when the assessee has failed to pay the tax without a reasonable cause. It was urged on behalf of the opposite party that there was a reasonable cause for late filing of the returns and late depositing the tax as there was a dispute between the assessee and the railway authorities on the question whether these sales were inter-state or intro-State affecting the rate of tax, and that issue was decided not before December, 1960. This may be an acceptable argument for the late filing of returns, but when the returns were filed, it is not understood why the tax was not deposited along with them. There is, therefore, a clear breach of sec. 7 (2), for which no reasonable cause has been shown. I think a penalty of Rs. 100/- would serve the ends of justice. In respect of the year 1959-60, though there has been similar default in net depositing the tax along with the returns, but a penalty of Rs. 250/-, has already been imposed by the assessing authority for the period after 17. 12. 1959. I think for previous defaults a nominal penalty of Rs. 25/- will meet the requirements of the case. In the result, I accept both these revisions and order as above. . ;