2008 (4) TMI 695 - HC - VAT and Sales Tax

Non-deposit of the entry tax within the stipulated period - penalty proceedings initiated under section 15A(1)(a) - Held that - Imposition of penalty under section 15A(1)(a) of the Act was patently erroneous especially where the tax along with interest had been deposited and reasonable cause had been shown for the delay which has not been disputed by the Department. Consequently initiation of penalty proceeding under section 15A(1)(a) was patently illegal and therefore the order of penalty was wholly erroneous. In view of the aforesaid the revisions are allowed. The order passed by the Trade Tax Tribunal Lucknow the order passed by the Deputy Commissioner (Appeals) Trade Tax and the order passed by the assessing authority under section 15A(1)(a) of the U.P. Trade Tax Act are all quashed.

Summary

Issues:
Proceedings under section 15A(1)(a) of the U.P. Trade Tax Act for non-deposit of entry tax within stipulated period.

Analysis:
The case involved six revisions filed under section 11 of the U.P. Trade Tax Act against proceedings initiated under section 15A(1)(a) for non-deposit of entry tax within the prescribed period. The applicant, engaged in sugar manufacturing, failed to deposit entry tax for September 2000 to February 2001 on time due to financial crisis but later paid with interest. The assessing authority imposed a penalty under section 15A(1)(a), leading to appeals and a second appeal before the Trade Tax Tribunal. The Tribunal remanded the matter for fresh penalty determination, prompting the applicant to file a revision. The court considered the provisions of section 15A(1)(a) and section 8(1) of the Act, emphasizing the necessity of reasonable cause for penalty imposition.

The court referred to relevant precedents to establish that penalty cannot be levied without a reasonable cause. It highlighted that the absence of a reasonable cause must be proven by the Revenue. The court cited cases where penalty was not justified due to trivial delays and financial constraints, emphasizing that penalty should not be imposed when tax is deposited with interest. The court also noted that the burden of proving the absence of a reasonable cause lies on the Revenue.

The court emphasized that penalty under section 15A(1)(a) cannot be imposed if tax is deposited along with interest and reasonable cause for delay is shown. It cited various judgments to support its stance that penalty should not be levied in such circumstances. The court concluded that the imposition of penalty in the present case was unjustified, as the applicant had demonstrated a reasonable cause for the delay and no willful non-deposit was established by the Department. Consequently, the court quashed the penalty order and allowed the revisions, nullifying the orders passed by the Trade Tax Tribunal, Deputy Commissioner (Appeals), and the assessing authority under section 15A(1)(a) of the U.P. Trade Tax Act.