2007 (4) TMI 664 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of penalty provisions u/s 15A(1)(a) of the U.P. Trade Tax Act, 1948 regarding non-deposit of tax on turnover of gutkha, exemption claims, and justification for penalty imposition.

Summary:
The judgment pertains to fifteen revisions u/s 11 of the U.P. Trade Tax Act, 1948 challenging penalty orders confirmed by the Tribunal for the period May 1997 to March 1998. The applicant, engaged in the business of gutkha, claimed exemption on the turnover but did not admit tax liability or deposit tax, leading to penalty proceedings u/s 15A(1)(a) initiated by the assessing authority. Appeals were dismissed by the Deputy Commissioner and Tribunal, prompting the revisions.

The applicant contended that gutkha should not be taxed under the Act due to its classification under the Central Sales Tax Act and Central Excise Tariff. Reference was made to a similar case where no tax was assessed on gutkha turnover, and penalty was deleted. The standing counsel argued that the applicant failed to deposit tax on gutkha turnover within the specified time, justifying the penalty imposition.

Upon review, the court noted that the penalty provision u/s 15A(1)(a) applies when tax is not deposited without reasonable cause. It emphasized the need for provisional assessment orders to determine incorrect returns before levying penalties. Citing a precedent involving a similar business, the court held that the penalty imposition was unjustified as the assessing authority did not pass provisional assessment orders for the disputed period.

In light of the above, the court found the penalty under section 15A(1)(a) unsustainable due to a reasonable cause and set it aside. The decision was guided by a previous ruling on a similar issue, leading to the allowance of all revisions, setting aside the Tribunal's order, and quashing the penalty under section 15A(1)(a) of the Act.