*1* kps IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SALES TAX REFERENCE NO.17 OF 2000. IN REFERENCE APPLICATION NO.32 OF 1996. The Commissioner of Sales Tax, Maharashtra State, Mumbai. ..Applicant -Versus- M/s Leela Scotish Pvt.Ltd.. ..Respondents ........... Mr.S.K.Nair, “A” Panel counsel for the Applicant. None for the Respondents. .......... CORAM : V.C.DAGA & K.K.TATED, JJ. Closed for orders on : 28th January, 2010. Pronounced on : 01st April, 2010. P.C.: 1 Heard the learned counsel for the Applicant. 2 By this Reference under Section 61(1) of the Bombay Sales Tax Act, 1959 (herein after to be referred as “the BST Act, 1959”) made at the instance of the Applicant-Commissioner of Sales Tax, Maharashtra State, Mumbai; the Maharashtra Sales Tax Tribunal, Mumbai vide its judgment dated 13.11.1998 has referred the following questions of law for the opinion of this Court:- “1. Whether on the true and correct interpretation of Explanation (I) to sub-section (2) of Section 36 of *2* the Bombay Sales Tax Act, 1959, the Tribunal was correct in holding that the words “that there was gross or willful neglect on the part of the assessee” constitute a condition precedent for invoking the said Explanation (I)? 2. Whether on the true and correct interpretation of Explanation (I) to sub section (2) of Section 36 of the Bombay Sales Tax Act, 1959, the Tribunal was justified in holding that the onus lies on the Revenue to establish for invoking the said Explanation (I) that there was gross of willful neglect on the part of the assessee? 3. Whether on the facts and in the circumstances of the case and on the true and correct interpretation of clause (c) of sub-section (2) of Section 36 of the Bombay Sales Tax Act, 1959 read with Explanation (I) thereunder, the Tribunal was correct in deleting the penalty levied under the said clause read with the said Explanation (I) in view of the Bombay High Court’s decision in the case of Indoswe Engineers (P) Ltd. Vs. State of Maharashtra (101 STC 177) ?” 3 In the present case, the Respondent is a manufacturer and exporter of ready-made garments. The Respondent was assessed for the period from 01.01.1987 to 31.12.1987 on 19.01.1991 under the BST Act, 1959 by the Assistant Commissioner of Sales Tax (Assessment). In the said assessment order dated 19.01.1991, the Assistant Commissioner levied purchases tax under Section 14(1) and 13AA and also levied the penalty under Section 36(2)(c) Explanation (I) of the BST Act, 1959 at Rs.5,00,000/-. 4 Being aggrieved by the aforesaid order of assessment, the Respondent-Assessee preferred an appeal before the Deputy *3* Commissioner of Sales Tax (Appeals), who vide its order dated 24.06.1993 reduced the said penalty from Rs.5,00,000/- to Rs. 20,000/- and relief in penalty was given at Rs.4,80,000/-. 5 Against the aforesaid order dated 24.06.1993 levying penalty under Section 36(2)(c) Explanation (I) of the BST Act, 1959, the Respondent preferred the Second Appeal No.1133/1993 before the Maharashtra Sales Tax Tribunal, Mumbai. The Tribunal vide its judgment dated 31.05.1996 deleted the penalty levied at Rs.20,000/- under Section 36(2)(c) Explanation (I) of the BST Act, 1959. The Tribunal while deleting the penalty observed that the condition precedent for imposition of such penalty namely there was gross or willful neglect on the part of the Respondent-Assessee has not been established by the Revenue. The Tribunal placed reliance on the judgment in the case of M/s Indoswe Engineers Pvt.Ltd. Vs. State of Maharashtra (101 STC 177). 6 Being aggrieved by the aforesaid judgment dated 31.05.1996, the Applicant-Revenue preferred Reference Application No.32/1996 before the Tribunal. The Tribunal vide its judgment dated 13.11.1998 allowed the reference and referred the above questions of law for the opinion of this Court. 7 The questions of law involved in the present Sales Tax Reference, are similar to that of the Sales Tax Reference No.2/2005 *4* which was decided by this Bench on 01.04.2010. In view of the judgment in the Sales Tax Reference No.2/2005, the questions of law referred in this reference are also answered against the Applicant-Revenue and in favour of the Respondent-Assessee. Reference is, accordingly, disposed of. (K.K.TATED, J.) (V.C.DAGA, J.)