2011 (11) TMI 612 - HC - VAT and Sales Tax

Summary

Issues involved: Challenge to penalty order u/s 15A(1)(a) of the U. P. Trade Tax Act for assessment year 1996-97.

Issue 1: Correctness of penalty despite timely tax deposit and interest payment.
The revisionist challenged the penalty of Rs. 2,99,200 imposed under section 15A(1)(a) of the Act despite depositing the entire tax amount along with penal interest within five days. The Tribunal confirmed the penalty, leading to the question of whether the penalty was justified in such circumstances.

Issue 2: Consideration of financial constraints as grounds for penalty deletion.
The revisionist cited financial crunch as the reason for the delay in payment, arguing that the paucity of funds should be considered as a valid ground for deleting the penalty. This raised the issue of whether financial difficulties can be a valid defense against penalty imposition.

Issue 3: Application of circular and legal precedent on penalty imposition.
The Tribunal's decision to confirm the penalty at 10% under section 15A(1)(a) of the Act was questioned in light of circular No. 245 dated April 23, 2002, and the legal precedent set by the case of Krishna Arhat Kendra v. Commissioner of Sales Tax [2003] UPTC 522. The issue was whether the penalty amounting to Rs. 2,99,200 was legally sustainable.

Judgment Summary:
The revisionist sought to challenge the penalty order imposed under section 15A(1)(a) of the U. P. Trade Tax Act for the assessment year 1996-97. The revisionist had deposited the admitted tax and filed the return with a slight delay due to financial constraints. Despite the timely payment of the entire tax amount along with interest, the assessing authority initiated penalty proceedings. The Tribunal upheld the penalty, emphasizing the delay in payment. However, the High Court, after considering the arguments and legal precedents, found in favor of the revisionist. Citing the case of Govind Sugar Mills Limited, the court held that since the tax and interest for the delay were paid before any penalty proceedings, imposing further penalty was unjustified. The court set aside the Tribunal's order, allowing the revision in favor of the assessee.