Madhya Pradesh High Court
Bharat Aluminium Company Ltd. vs Commissioner Of Sales Tax on 19 March, 1996
Equivalent citations: 1996(0)MPLJ1091
Author: A.K. Mathur
Bench: A.K. Mathur, Chief Justice
JUDGMENT A.K. Mathur, C.J.
1. This is a reference at the instance of the Assessee under Section 44(1) of the M. P. General Sales Tax Act and the following question of law has been referred by the Tribunal for answer of this Court, which reads as under :
"Whether, under the facts and circumstances of the case, the Tribunal is right in holding that for the purposes of quantification of penalty under Section 17(3)(b)(ii) of the Act, 'part of the month' is the same as 'full month' and, the rate of penalty is 1% on the amount tax deposited late, even for 'part of the month'?"
2. The brief facts giving rise to this reference are thus :
In assessment case No. 48/80-81 for the period 1-4-1980 to 31-3-1981, the Assistant Commissioner, Sales Tax, Bilaspur passed an assessment order on 31-7-1984. Three quarterly returns were filed belatedly and the Assessee committed a default on payment of tax monthly which was not deposited in time; therefore, the Assessing Authority under Section 17(3) of the Act levied the penalty of Rs. 40,000/- by order dated 31-7-1984. Then an appeal was preferred by the Assessee before the Appellate Deputy Commissioner of Sales Tax, Bilaspur, who reduced the penalty by Rs. 9,800/- from Rs. 40,000/- i.e. to Rs. 30,200/-, by order dated 23-11-1985. Thereafter, second appeal was preferred by the Assessee and in that a question was raised that what meaning should be assigned to expression 'part thereof appearing in Section 17(3)(ii) of the Act, that whether 'part thereof should be treated full month or not. However, the Tribunal also gave a notice to the Assessee that why the penalty may not be increased. Thereafter, the Tribunal heard the matter and enhanced the penalty from Rs. 30,200/- to Rs. 1,07,741/-. Therefore, the assessee requested the Tribunal to make a reference and accordingly, this reference has been made by the Tribunal before this Court.
3. The question before us for our consideration is that what meaning should be given to the expression 'part thereof appearing in Section 17(3)(ii) of the Act which was prevalent at that time, which reads as under :-
"Section 17(3)(ii) : In the cases referred to clause (b), in addition to the amount of tax, if any, payable by him a sum equal to one percent of the tax for every month or part thereof for the first six months and 1.5 percent for the next six months of the first year during which the default continued and thereafter 2 percent of the tax for every month or part thereof during which the default continued but not exceeding in aggregate 25 percent of the tax which may be assessed on him under Section 18 and where no tax is payable a sum not exceeding five hundred rupees."
Section 17(3) lays down that if a dealer fails without sufficient cause to comply with the requirements of a notice issued under sub-section (1); or (b) a registered dealer fails without sufficient cause to pay the amount of tax in the manner prescribed under sub-section (2) of Section 22 or to furnish his return under sub-section (1) or revised return under sub-section (2) for any period in the manner and by the date prescribed thereunder or while furnishing the return fails to furnish along with the return, the proof of payment as required by sub-section (1-A); or (c) a registered dealer fails to furnish return that, if any of these defaults have been committed then they are exposed to the penalty as prescribed in clauses (i), (ii) and (iii). We are concerned with clause (ii) which has been reproduced above. In case, any default is committed by the assessee as mentioned in clause (b) then in addition to tax, if any, payable by him a sum equal to one percent of tax for every month or part thereof for the first six months and 1.5 percent for the next six months of the first year during which the default continued and thereafter 2 percent of the tax for every month or part thereof during which the default continued is payable by way of penalty but not exceeding in aggregate 25 percent of the tax which may be assessed on him under Section 18 and where no tax is payable a sum not exceeding five hundred rupees. The idea is that if the assessee fails to file the return or deposit the tax without any sufficient cause etc. then in that case, he can be directed to pay the penalty as described in clause (ii). In case it is less than a month then whether a full month is to be counted for levy of penalty or not. In this connection, it may be relevant to mention that expression 'part thereof is very significant. 'Part thereof means that if one month has not been completed then delay should be computed proportionately and accordingly, the penalty should be levied and it cannot be taken to be a full month for the expression 'part thereof. The part thereof means that if delay is not full month and it is for ten days or fifteen days or any period which is less than a month, as the case may be, the penalty should be proportionately levied to the extent of delay caused in filing the return or depositing the tax, as the case may be. Therefore, the view taken by the Tribunal that the expression 'part thereof means whole of the month and calculation of the penalty on that basis is not correct. The Assessing Authority as well as the First Appellate Authority have correctly approached the matter and correctly interpreted the expression 'part thereof in levying the penalty for default. In this connection, we are supported by the view taken by Allahabad High Court in Brooke Bond India Ltd. v. Commissioner of Sales Tax, 1982 (51) STC 357, wherein a similar question under U. P. Sales Tax Act came up for interpretation and their Lordships have interpreted the aforesaid expression 'part thereof. Under Section 7 (1-B) of the U. P. Sales Tax Act, the expression 'part thereof appeared and their Lordships have interpreted the expression 'part thereof to mean that it should be proportionately adopted for part of month and not for the whole of the month, and like view has been expressed in Sakthi Sugar Ltd. v. Asstt. Commissioner of Commercial Taxes, 1985 (59) STC 52 and Lamina Suspension Products (P) Ltd. v. State of A. P., 1991 (187) ITR 105. Therefore, we are of the opinion that the view taken by the Tribunal is not correct and hence, we answer this reference in favour of the assessee and against the Revenue.