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Judgment
B.M. Lal, J.—This is a referance u/s 44 of the Madhya Pradesh Sales Tax Act, 1958 (hereinafter referred to as the ''Act'') made by the Sales Tax Tribunal (Board of Revenue) at the instance of the applicant assessee to this Court for answering the following questions of law :
(i) Whether under the facts and circumstances of the case the imposition of penalty u/s 17 (3) was justified and valid in law ?
(ii) Whether for non-payment of tax, penalty can be imposed in this case in view of the retrospective amendment of S. 17 (3) of the Act by the Amending Act No. 13 of 1971 ?
?. The short facts leading to this reference are as under. The applicant assessee M/s Bhilai Motors, Raipur deal in automobiles, viz, trucks, tractors, etc. The applicant is a registered dealer under the Act as well as under the Central Sales Tax Act.
For the period 1-1-70 to 31-12-70, the gross turn-over was determined at Rs. 1. 02, 51, 321/- and as such the taxable turn-over was Rs. 56, 64.196/-. The Department assessed the tax to the tune of Rs. 5,53,763/-. The due date of filing the return and the payment of tax was 30-5-70, whereas the return was submitted after 52 days i. e., on 21-7-70 and instead of depositing the tax on 30-5-70, it was deposited in five installments i. e., Rs. 1,30,000/- on 14-7-70, Rs. 20,000/- on 22-7-70, Rs 614.83 P. on 21-7-70 and Rs. 59,000/- on 31-7-70; total Rs. 2.29,614.83 p. Similarly, in second return for which the due date of both the return and payment of tax was 30-8-70, it was submitted after 32 days i. e.. on 1-9-70 and the payment of tax was made in installments, i. e., on 1-9-70-Rs. 50,000/-, on 4-1-71-Rs. 25,000/-, on 15-3-72-Rs. 50,000/-, on 31-3-73-Rs. 44,6 0/- and on 18-6-72- Rs. 97, 445/-total Rs. 2,67,095/-.
The third return which was due on 30-8-70 was submitted on 10-12-70 and the amount of tax Rs. 32,254/- was paid on 11-2-71.
Thus, admittedly, while submitting all the returns, the applicant-assessee not only delayed the various returns but also delayed the deposit of the sales tax assessed.
The Assessing Authority, for submitting late returns imposed penalty of Rs. 10,000/-under Section 17 (3) of the Act against which the applicant-assessee preferred appeal. The argument advanced on behalf of the applicant-assessee explaining the delay was that there was strike in the factory of M/s Tata Engineering & Locomotive Ltd. on account of which supply of vehicles was suspended for days together and, therefore, the mandatory compliance of submitting the returns and depositing the sales tax, could not be done.
The Appellate Authority repelled the submission of the applicant and held that the aforesaid ground cannot be a reason for condoning the delay in submitting the return and depositing the sales-tax. The Appellate Authority while taking into consideration the delay in depositing of tax, calculated interest of the period for which the sales-tax was withheld and not deposited on due date and as such interest at the rate of 15 per cent was calculated on the amount of the tax assessed, which was worked out at Rs. 58,200/-. In this way the penalty was enhanced to Rs. 60,000/-.
The applicant-assessee, therefore, preferred second appeal before the Tribunal (Board of Revenue). The Board of Revenue, however, reduced the penalty from Rs. 60,000/- to Rs. 40,000/- against which, on application, the present reference has been made to this Court and the Tribunal has referred the aforesaid questions of law for our answer.
The learned counsel for the applicant-assessee argued that under the facts and circumstances of the case, the imposition of penalty u/s 17 (3) of the Act was not justified and valid in law. In support of his submission he argued that there was sufficient cause and good cause for non-payment of tax in due time as there was strike in the factory of M/s Tata Engineering & Locomotive Ltd. on account of which supply of vehicles was suspended. This explanation has no relevancy with the delay in submitting returns and paying tax in time. Since, showing sufficient cause and good cause to explain the delay in filing the returns being purely a question of finding of fact, not involving any question of law, it, therefore, cannot be gone into in a reference case. The provisions of Section 17 (3) are very emphatic and delay in submitting returns and not paying tax in due time, entails penal consequences and therefore, if penalty is imposed, under the facts and circumstances of the instant case, that cannot be said to be unjustified being invalid in law.
The learned counsel for the applicant-assessee then submitted that the penalty could not be imposed u/s 17 (3) of the Act which was amended by the Amending Act No. 13 of 1971, giving retrospective effect, i. e. deeming to have formed part of the principal Act from the commencement thereof.
The provisions of Section 17 (3) of the Act have been amended giving retrospective effect from the date of commencement of the Act authorising imposition of penalty for non-payment of tax alongwith the return. Therefore, not only Section 17 (3) of the Act was amended retrospectively but any action taken or penalty imposed, was validated under the Act, as amended. In view of this amendment, it cannot longer be said that Section 17 (3) of the Act did not authorise the imposition of penalty for non-deposit of tax before the return was filed. This view is fortified in M/s Premier Refractories of India (Pvt.) Ltd., Katni Vs. Sales Tax Officer II, Jabalpur and others, . Therefore, the submission made by the learned counsel for the applicant-assessee has no substance and must be repelled.
By making delay in depositing the tax, it appears, the applicant has utilised the same in multiplying its business activities. It is not disputed that this sales-tax amount was realised by the applicant from its customers and therefore, the applicant had no right to keep this amount and utilising the same in its business activities and in such case, imposition of penalty cannot be said to be unjustified.
Nowadays, in mercantile world, when in business activities, frequency of multiplication of money has been increased tremendously, therefore, even imposition of penalty equal to the amount saved by way of interest on tax amount, would hardly matter to such dealers, as even the penalty imposed would be less than the monetary gain by floating that money in the business. As such, in such cases, it cannot be said that there is any punitive ingredient in imposition of penalty.
It appears from the facts of the instant case that the Taxing Authorities and the Tribunal as well, have failed to follow the statutory provision and shown leniency in imposing and reducing the penalty. In the present case, the imposition of penalty falls within the ambit of Section 17(3) (ii) of the Act under which an assessee may be directed to pay penalty equal to one percent of the tax for every month or part thereof for the first six months and 1.5 per cent 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 per cent of the tax which may be assessed u/s 18 of the Act. The total tax assessed is Rs.5,63,763/- and therefore, considering the period of default, u/s 17(3) (ii) of the Act, the penalty, if worked out would come to more than one lack rupees. We, therefore, fail to understand as to why the Taxing Authorities and the Tribunal have shown leniency by deviating the statutory provisions of Section 17 (3) (ii) of the Act and imposed only Rs. 40,000/- by way of penalty.
It is settled law that there is no equity about a tax and there is no presumption as to tax and nothing is to be read in, nothing is to be implied and one should only look fairly at the language used under the statute. Provisions of Section 17 (3) (ii) of the Act are quite clear requiring no further interpretation in imposing penalty. Therefore, the Taxing Authorities are supposed to act in consonance with the statutory provisions of Section 17 (3) (ii) giving full effect to them so that the tendency of non-depositing of tax in due time and utilizing the same in business activities, should be curbed.
The tendency of not paying tax in time of a few businessmen, brings disrepute to the business community as a whole and so also makes to suffer the common people at large, as the State, for meeting out the expenses to discharge the obligatory functions, imposes indirect taxes affecting common men and, therefore, the tendency of non-payment of tax delay in making payment of tax is a social evil which needs to be necessarily eradicated by making penal statutory provisions more stringent.
Before parting with the case, we would like to observe that, taxpayers, specially the Traders, are supposed to observe the rules of "Doctrine of Fiscal Discipline" strictly, inasmuch as in order to maintain equilibrium in State Finance, they must pay the tax in time so that the State finance economy or in larger sense National Economy, may not be jeopardised, resulting in creating budgetary imbalance.
As a result of the aforesaid discussion, we answer the questions referred to us in affirmative in favour of the Department and against the applicant-assessee as under:-
(i) Under the facts and circumstances of the case the imposition of penalty u/s 17 (3) was justified and valid in law.
(ii) For non-payment of tax, penalty can be imposed in this case in view of retrospective amendment of Section 17 (3) of the Act by the Amending Act No. 13 of 1971.
The applicant-assessee shall pay the costs of the non-applicant-Department. Counsel''s fee Rs. 750/-, if certified.