KHEMKA & CO. versus STATE OF MAHARASHTRA

Citation: [1975] 3 S.C.R. 753 · Decided: 27-02-1975 · Supreme Court of India · Bench: A.N. RAY · Disposal: Disposed off

Cited by 5 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

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KHEMKA &CO. 
v. 
STATE OF MAHARASHTRA 
27th February, 1975 
753 
[A. N. RAY, CJ., H .. R. KHANNA, K. K. MATHEW, M. H. BEG, Y. V. 
CHANDRACHUD, JJ.]. 
Central Sales Tax Act 1956-S. 9(2)-Scope of Bombay Sales Tax Act-S. 
16(4)-1/ penalty under tlie Central Act could be levied under s. 16(4) of tire 
Bombay Act. 
· 
Section 9(2) of the Central Sales-tax Act, 1956 provides that the authorities 
for the time being empowered to assess, re-assess. collect and enforce payment 
of nny tax under the general sales-tax law of the appropriate State shall, on behalf 
of the Government of India, assess, re-assess, collect and enforce payment of tax, 
including any p~nalty, payable by a dealer under this Act as if the tax or penalty 
payable by such a dealer under this Act is a tax or penalty payable under the 
11eneral S<•les-tax law of the State. Section 16 of the Bombay Sales-tax Act pro· 
~ides for payment and reco.verv of tax. Sub-section ( 4) states that if the tax is 
not paid by any dealer within the prescribed time, the dealer shall pay a penalty 
in addition to sales-tax assessed. 
·The assessee unsuccessfully contended before various sales-tax nuthoriries as 
well as before the High Court that levy of penalty under s. 16(4) of the Bombay 
Sales-tax Act for delay or default in payment of tax under the Central Sales Tax 
Act was without jurisdiction as it was not warranted by the provisions of s. 9 (2) 
of the Central Sales-tax Act, 1956. 
In lhe Mysore case which was similar to the Bombay case, however, the High 
Court allowed the assessee's claim that the. levy of penalty under lb~ Mysore 
Sa!e5·tax Act•in respect of sales-tax payable under the Central Sales-tax Act was 
11ltra i·ires. 
It was contended before this Court that there was no provision in the Central · 
Sales-tax Act for. imposition of penalty for delay or default in payment of tax 
and. therefore, imposition of penalty -under the provisions of the State Act for 
delay or default in payment of tax was illegal. 
[per Ray, CJ. and Khanna, J.] (Beg, J. concurring in the final results). 
Allowing the appeal, 
HELD : The Mysore High Court correctly pointed out that the words "as if 
the tax or penalty payable by such a dealer under this Act" relate to tax or 
p·Jn<t!ty which is payable only under the Central Act. 
[763B] 
The provision in the State Sales Tax Act imposing penalty for non-payment 
of sales-tax within the prescribed time is not attracted to impose penalty on dea· 
!crs under the Central Sales Tax Act in respect of .tax and penalty payable under 
lhe Central Act. There is no lack of sanction for payment of tax. Any dealer 
\'.ho would not comply with the provisions for payment of tax would be subjected 
ta recovery proceedings under the Public Demands. Recovery Act. 
A penalty 
is a statutory liability. The Central Act contains specific provisions for penalty. 
Those are the only provisions for penalty available against the dealers under the 
Central Act. Each State Sales Tax Act contains provisions for penalties. These 
prov'.sions in some cases are also for failure to submit a return or failure to 
register. It is rightly said that those provisions cannot apply to dealers under 
the Central Act because the Central Act makes similar provisions. 
Th~ Central 
Act is a self-contained code which. by the charging section, creaks !!ability for 
tax and which by other sections creates a liability for penalty and imposes pen~lty. 
Section 9(2) of the Central Act creates the State authoritie• as ag~ncies to carry 
out the as~essment. re-assessment. collection and enforcement of tax and penalty · 
payable by a dealer under the Act. 
[765H: 766A ·Bl 
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2-564SCI/75 
,. 
I 
754 
SUPREME COURT REPORTS 
U 97 SJ 3 s.c.R. 
( J) The words 'as1<ss, re-assess, coJlect nnd enforce ·payment of tax includ-
ing nny penalty rayabk by a uealcr unJ~r this Ac!' mean that the tax as well as 
renalty is payable only undi;r the Central Act. 
By s. 9(2) of the Central Sales 
Tax Act the State Sales-TtlX Authorities arc created as agents of the Go\'ernment 
of frdi~. [7CJ D: BJ 
\2) The words "and for this purpose they may exercise all or any of the 
powers they haw under the general sales-tax law of the State" ins. 9(2) of the 
Central Act 
1-.~late to "assess, re-assess, collect and enforce payment of tax in· 
duding any p(:nalty payable by a dealer under this Act." In that context the last 
limb of s. 9(2) of lhe Central A,ct, namely, "and the provisions

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