1989 (5) TMI 309 - HC - VAT and Sales Tax

Summary

Issues:
1. Imposition of penalty for late filing of returns and non-depositing tax within prescribed time under the U.P. Sales Tax Act.
2. Justification of penalty imposition by the assessing authority and subsequent appeal decisions.
3. Consideration of reasonable cause for late filing and non-depositing of tax.
4. Application for extension of time and its relevance to penalty imposition.
5. Impact of interest deposited by the assessee on penalty imposition.
6. Bona fides of the assessee in filing returns and depositing tax.
7. Modus operandi of submitting returns from a different office and its acceptance.
8. Dispute over penalty imposition based on the timing of return despatch.
9. Analysis of delay in filing returns and its significance in penalty imposition.

The judgment involves the imposition of penalties on a public limited company for late filing of returns and non-depositing tax within the prescribed time under the U.P. Sales Tax Act. The company had a factory in Uttar Pradesh and a branch in Allahabad, which was separately registered. The assessing authority imposed penalties, which were upheld but reduced by the Deputy Commissioner (Appeals) and the Tribunal. The primary issue was whether there was a reasonable cause for the delays. The court analyzed the provisions of section 15-A(1)(a) of the Act, emphasizing the necessity of showing a lack of reasonable cause for penalty imposition. The counsel for the assessee argued that the Tribunal did not establish the absence of reasonable cause. The court referenced a previous case to support the requirement of such a finding for penalty imposition.

Furthermore, the court considered the relevance of applying for an extension of time and whether its absence could justify penalty imposition. The court agreed that the mere non-filing of an extension application does not equate to the absence of a reasonable cause. The assessee's argument that interest deposited under section 8(1) of the Act compensated for any revenue loss due to late filings was also discussed. The court referred to a previous decision where it was held that if the tax due is deposited with interest, penalty imposition is unwarranted.

The court also examined the assessee's bona fides in filing returns and depositing tax, noting instances where bank drafts were prepared before the due date. The court rejected the grounds put forth by the Revenue, emphasizing that the assessee's actions demonstrated good faith. Additionally, the court addressed the modus operandi of submitting returns from a different office, which was accepted, and dismissed the argument that penalties should differ based on return despatch timing. The court found the delays in filing returns to be nominal, with only one significant delay of 45 days. Ultimately, the court set aside the Tribunal's decision, ruling in favor of the assessee and knocking off the imposed penalties.

In conclusion, the court allowed the revisions, set aside the Tribunal's orders, and removed the penalties imposed on the assessee. The parties were directed to bear their own costs, and the order was to be sent to the Tribunal for necessary action as per section 11(8) of the Act.