STATE OF GUJARAT Vs. D K PATEL AND CO

JUDGEMENT

(1.) THE question which arises to be considered in this reference is whether the amount of set-off which becomes available to an assessee under rule 41 of the Bombay Sales Tax Rules, 1959, can be taken into consideration as "payment of tax" before the assessment at the time of applying the test of 20 per cent contemplated by sub-section (3a) of section 36, which provides for penalty in certain cases.

(2.) SHORT facts of this case are that the opponent-assessee is a dealer registered under the Bombay Sales Tax Act, 1959 (hereinafter referred to as the "act"), and does the business of reselling timber and manufacturing sizes therefrom for sale. During the course of its assessment for S. Y. 2025, the tax which was found payable by it was determined for the assessment year at Rs. 3,771. 98. The opponent-assessee had paid up along with the returns the amount of Rs. 1,405. During the course of the assessment it was found that the opponent-assessee was entitled to a set-off under rule 41 of the Rules, of the amount of Rs. 1,872. 98. Rule 41 contemplates drawback, set-off etc. , of tax paid by the manufacturer on the purchase of goods used for manufacture of taxable goods for sale. Since the tax payable was assessed at Rs. 3,771. 98 and the amount of tax paid along with the return was Rs. 1,405, the Sales Tax Officer came to the conclusion that sub-section (3a) of section 36 of the Act was attracted because the tax assessed exceeded the sum already paid prior to the assessment by more than 20 per cent of the sum so paid. Under the circumstances, the Sales Tax Officer imposed the penalty of Rs. 132. While calculating the above-referred difference of 20 per cent the Sales Tax Officer did not take into account the amount of Rs. 1,872. 98 which was found due to the opponent-assessee as set-off under rule 41. Therefore, the grievance of the assessee is that this amount of set-off should have been treated as the amount "paid" before the assessment of tax and, therefore, he has incurred no penal liability under sub-section (3a) of section 36. The Tribunal accepted this contention of the assessee and, therefore, the State has preferred this reference.

(3.) ON this question, Shri Nanavati contended that the words "sum actually paid prior to such assessment" which are found used in sub-section (3a) of section 36 means "the sum which is paid under section 38 and no other". It was contended by him that the set-off which is found due to an assessee is surely not "the sum paid" pursuant to the provisions of section 38 of the Act and, therefore, the amount of set-off which is found due to the assessee cannot be taken into consideration at the time of judging whether the test of 20 per cent deficiency contemplated by sub-section (3a) of section 36 is complied with or not.