1999 (9) TMI 928 - HC - VAT and Sales Tax

Summary

Issues:
- Imposition of penalty under section 15-A(1)(a) of the U.P. Trade Tax Act, 1948 based on failure to deposit admitted tax.
- Consideration of financial constraints and B.I.F.R. declaration of the assessee as a sick company.
- Interpretation of legal provisions regarding penalty imposition and deposit of tax with interest.
- Application of relevant case law on penalty imposition for failure to deposit tax.

Analysis:
The judgment pertains to two revisions filed against a common order passed by the Tribunal, allowing the second appeal of the department and upholding the penalty imposed under section 15-A(1)(a) of the U.P. Trade Tax Act, 1948. The issue at hand revolves around the failure of the assessee to deposit admitted tax for the months of June and July in the assessment year 1997-98. The application for extension of time due to financial constraints and a pending revival proposal to B.I.F.R. was rejected, leading to the imposition of significant penalties. Subsequently, the entire tax amount was deposited along with interest, prompting appeals and further legal proceedings.

The Deputy Commissioner (Appeals) dismissed the appeals considering the financial constraints of the assessee, citing relevant case law. However, the department filed second appeals, which were allowed by the Tribunal, leading to the filing of the revisions by the assessee. The legal question primarily revolves around whether the revisionist was liable for the penalty imposed by the assessing authority, considering the circumstances and legal provisions.

The Tribunal's decision was challenged based on the argument that the revisionist was declared a sick unit by B.I.F.R., which was not duly considered. The judgment delves into the interpretation of section 15-A(1)(a) of the Act, emphasizing that penalty can only be imposed if the assessing authority is satisfied that the dealer failed to deposit tax without reasonable cause. The judgment highlights the importance of considering financial constraints and reasonable causes for delayed payments, as well as the provisions for interest under section 8(1) of the Act.

Referring to relevant case law, the judgment concludes that the mere deposit of tax along with interest after the penalty order cannot be sufficient grounds for sustaining the penalty. Consequently, both revisions are allowed, the Tribunal's orders are set aside, and the Deputy Commissioner (Appeals) orders are restored, with no costs imposed.

In summary, the judgment provides a detailed analysis of the legal provisions, case law, and factual circumstances to determine the liability for penalty under the U.P. Trade Tax Act, ultimately ruling in favor of the assessee based on the considerations of financial constraints and the B.I.F.R. declaration.