Actor Vijay's BMW Entry Tax Case: Madras High Court Rules Penalty For Non-Payment To Be Calculated From Date Of Order For Payment, Not Date Of Import

The bench of Justice R Suresh Kumar directed that the penalty for non-payment of entry tax could be levied only from 29th January, 2019 when a division bench of the court had directed that car importers were liable to pay entry tax. The court held that the penalty was to be calculated from the date of the order till the actual payment of the entry tax and not from the day of actual import.

The court observed as under:

After 29.01.2019 whenever these petitioners paid the tax, only for the said period penalty can be imposed and even after 29.01.2019 till date, if any of these petitioners have not paid the tax in full as demanded by the respondent Revenue, it is open to the Revenue to invoke Section 15 and impose the penalty as stated therein and such penalty can also be recovered from such defaulted importer. 

The actor contended that the Commercial Tax Department had imposed entry tax amounting to Rs. 7,98,075/- along with a penalty of Rs. 30,23,609/- on the actor for delayed payment of entry tax. This order was challenged by the actor in the present case where the actor contended that penalty was to be calculated only at 2% per month while in the present case, he was fined at 400%. The revenue department also issued a recovery notice stating that on failure of payment of entry tax along with penalty, coercive steps will be taken under the Revenue Recovery Act. It was then that the actor approached the court challenging the imposition of penalty.

The actor contended that the impugned order was passed without proper adjudication of the issue. He further submitted that the assessment orders passed by the department were time barred as they were not filed within the time limit prescribed by under the Entry Tax Act. 

He had also submitted that he sold the car in 2009 and was no longer in possession of the car. Thus, according to him the order was unjustified and arbitrary. However, the state opposed this plea by stating that the sale would not absolve the actor from payment of tax as he was the original importer of the vehicle. 

The Department also submitted that the actor had failed to discharge his liability voluntarily and had even failed to give proper replies to the notices served on him. The department had therefore sought for dismissal of the petition.

Casee Title: C Joseph Vijay v. Assistant Commissioner (ST) (FAC)