Poorna Electrical Industries vs State of Andhra Pradesh

Syed Shah Mohammed Quadri, J.—Clause (b) of sub-section (8) of section 14 of the Andhra Pradesh General Sales Tax Act, 1957, which deals with levy of penalty under sub-section (2) or sub-section (3) or sub-section (4) of that section, provides that the penalty shall not exceed one half of the tax or the fee due in a case where such failure was not wilful.

In the order levying penalty the assessing authority imposed penalty at five times the tax due. On appeal to the Deputy Commissioner (CT), the quantum of penalty was reduced to one half of the tax due in view of the finding that the failure was not wilful. On further appeal by the assessee to the Sales Tax Appellate Tribunal, the order of the first appellate authority was upheld in T.A. No. 568 of 1986 by order dated June 30, 1989. It is that order of the Tribunal which is questioned in this T.R.C.

Mr. A. K. Jaiswal, the learned counsel for the petitioner contends that as there has been no wilful suppression, the authority ought not to have levied penalty at all, in any event it is not a case where the authority should have levied the maximum penalty permissible in law.

In so far as the levying of the penalty is concerned, we are unable to accept the contention of the learned counsel but with regard to the quantum of the penalty, the contention, in our view, is not without any substance. We have already noted above the relevant provision under which the penalty is levied. A perusal of that provision makes it clear that it is only when the failure is not wilful that the quantum of penalty shall not exceed one half of the tax due. Therefore, the penalty, not exceeding one half of the tax due, is the maximum penalty. No circumstances have been indicated as to why levy of the maximum penalty in this case having found that the failure was not wilful, is justified. In the circumstances, we reduce the penalty to one-fourth (1/4th) of the tax due.

The tax revision case is accordingly allowed, but, in the circumstances of the case, there will be no order as to costs.

Petition allowed.