Case Law Details
National Asphalt Products and Construction Company Vs State of Tamil Nadu (Madras High Court)
The issue under consideration is whether sales tax officer is justified in levying penalty at twice the amount of entry tax?
High Court states that, under the Act penalty may be imposed for failure to register as a dealer Section 9(1) read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out. For all the foregoing reasons, this Court is of the affirmed view that the proposed levy of penalty is unjustifiable and opposed to the proposition laid down by the Hon’ble Apex Court in the aforesaid decisions. Accordingly, the impugned notice is set aside. Consequently, the Writ Petition stands allowed.
FULL TEXT OF THE HIGH COURT ORDER/JUDGEMENT
With the consent of both the parties, the present Writ Petition is heard through Video Conferencing on 18.08.2020.
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