2004 (10) TMI 572 - HC - VAT and Sales Tax

Summary

Issues:
- Penalty under section 15A(1)(a) of the U.P. Trade Tax Act, 1948 for delayed deposit of admitted tax.

Analysis:
The judgment involves seven revisions under section 11 of the U.P. Trade Tax Act, 1948, challenging the Tribunal's order dated May 18, 1995, regarding penalty for delayed tax deposit in various months. The applicant's explanation for the delay included financial crisis due to the disintegration of the U.S.S.R., resulting in a significant outstanding amount from a creditor. The assessing authority issued penalty notices despite the applicant's financial difficulties. The Tribunal partially allowed the appeals for certain months but upheld penalties for others. The key issue was whether the penalty under section 15A(1)(a) was justified given the circumstances.

The court examined section 15A(1)(a) of the Act, emphasizing the requirement of establishing a failure to deposit tax without reasonable cause. Citing precedents like Triveni Sheet Glass Works Limited v. Commissioner of Trade Tax, U.P., the court highlighted that penalties should not be imposed when tax and interest are deposited, especially in cases of financial hardship. The court referred to Commercial Auto Sales Pvt. Limited v. Commissioner of Trade Tax, U.P. Lucknow, where minimal delays in tax payment did not warrant penalties. The court stressed that penalties should not be levied without proof of absence of reasonable cause, as seen in various judgments.

In this case, the court noted the applicant's financial crisis as a valid reason for the delay in tax deposit, which was subsequently rectified by depositing the tax along with interest. The court found no mala fide intention and concluded that the penalty was not justified. Referring to the decision in Krishna Arhat Kendra v. Commissioner of Sales Tax, the court deleted the penalty based on the established reasonable cause. Consequently, all revisions were allowed, and penalties under section 15A(1)(a) of the Act were set aside, following the principles laid down in previous judgments.