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2015 (1) TMI 1091 - HC - VAT and Sales TaxPenalty u/s 58 of Uttarakhand Value Added Tax Act, 2005 Tribunal imposed penalty at the rate of 20% for both the quarters Absence of power or not Held that - The only basis for imposing penalty can only be that there is no sufficient cause - once the sufficient cause is not there, then there can be no doubt that there will be no illegality if the minimum is imposed the same has been held in Union of India Versus M/s Rajasthan Spinning & Weaving Mills AND Commissioner of Customs and Central Excise Versus M/s. Lanco Industries Ltd. 2009 (5) TMI 15 - SUPREME COURT OF INDIA - according to the revisionist, this is a case where the revisionist s case is on better footing - revisionist filed the return on time, but there is no provision as such for granting extension of time to make the payment - what is contemplated is time to file the return - the revisionist had accepted the juridical basis for finding the penalty was leviable, which was the absence of sufficient cause - It is not open to the revisionist to raise the questions and, that too, as substantial questions of law in a challenge against the order of the Tribunal, which was rendered in appeals filed by the Department - the attempt to get the matter re-agitated in a case where the departmental appeals were already disposed of, appears to have been highly belated and, at any rate. Effect of amendment u/s 9 of Central Act carried out in 1976 w.e.f. 5.1.1957 Held that - in Manganese Ore (India) Ltd. versus The Regional Assistant Commissioner of Sales Tax, Jabalpur 1975 (11) TMI 164 - Supreme Court of India it has been held that since penalty is a substantive matter and unless the penalty is provided for in the Central Act, no penalty could be levied by virtue of Section 9 of the Central Act, under the State Law but by validating Act the law was amended with effect from 1956 and Section 9 (2A) of the Central Act was inserted - the penalty of the nature, which is imposed would be permissible under the State Law Relying upon Commissioner of Sales Tax, U.P., Lucknow versus New Central Jute Mills Co. Ltd. 1979 (4) TMI 148 - ALLAHABAD HIGH COURT thus, after Section 9 (2A) of the Central Act was inserted by the amendment in 1976, there is power to visit an assessee with penalty in the circumstances made out u/s 58 of the Act The contention of the revisionist is accepted that it is for the first time and apart from this there is no penalty levied thus, rather than remitting the matter the penalty is reduced @ 15% in both the quarters in place of 20% fixed by the Tribunal Decided partially in favour of revisionist.
Issues Involved:
1. Legality of penalty enhancement by the Commercial Tax Tribunal. 2. Justification for penalty enhancement without considering financial constraints and interest payment. 3. Applicability of penalty provisions under the Central Sales Tax Act. 4. Validity of Tribunal's decision in light of precedents from Apex Court and Allahabad High Court. 5. Condonation of delay in filing second appeals. Detailed Analysis: 1. Legality of Penalty Enhancement by the Commercial Tax Tribunal: The revisionist was penalized under Section 58 of the Uttarakhand Value Added Tax Act, 2005, for not paying the admitted tax along with the return for the fourth quarter of 2011-2012 and the first quarter of 2012-2013. Although the 1st Appellate Authority reduced the penalty, the Tribunal increased it to 20% for both quarters. The substantial question of law raised was whether the Tribunal was justified in mechanically enhancing the penalty without considering the reasonable cause for the delay, such as financial crisis and slack collection from debtors. 2. Justification for Penalty Enhancement Without Considering Financial Constraints and Interest Payment: The revisionist argued that the penalties should not have been enhanced since they had already paid the interest on delayed payments and accepted the penalties imposed by the 1st Appellate Authority. They contended that the Tribunal did not appreciate the financial difficulties faced by the revisionist, who supplies goods to government concerns with extended bill recovery periods. The revisionist also pointed out that this was the first instance of penalty imposition and that an application for extension of time had been submitted. 3. Applicability of Penalty Provisions Under the Central Sales Tax Act: The revisionist argued that penalties for Central Sales transactions should be governed by the Central Sales Tax Act, 1956, and not under Section 58(1)(vii) of the Uttarakhand VAT Act. They cited the absence of provisions in the Central Act for levying penalties similar to those under the State Act. However, the Department countered this by referencing Section 9(2A) of the Central Act, which allows State Authorities to impose penalties under the State Law for matters connected to Central Sales. 4. Validity of Tribunal's Decision in Light of Precedents from Apex Court and Allahabad High Court: The revisionist cited judgments from the Apex Court and Allahabad High Court, arguing that penalties should not be imposed without considering the circumstances, such as fraud or willful suppression. However, the court noted that Section 58 of the VAT Act does not require such conditions and rejected this contention. The court also highlighted that the revisionist had accepted the juridical basis for the penalty, which was the absence of sufficient cause. 5. Condonation of Delay in Filing Second Appeals: The Tribunal dismissed the second appeals filed by the revisionist due to a delay of 236 days, which the revisionist attributed to legal advice. The court found this explanation insufficient and noted that the appeals were filed belatedly after the Department's appeals were disposed of, suggesting an afterthought. The court cited judgments from the Kerala and Jammu & Kashmir High Courts, which state that wrong legal advice is not a valid ground for condonation of delay. Conclusion: The court concluded that the Tribunal's decision to enhance the penalty was within its discretion, but reduced the penalty from 20% to 15% for both quarters, considering it was the first instance of penalty imposition. The revisions regarding the penalty enhancement were partially allowed, while the revisions concerning the condonation of delay were dismissed. The court upheld the applicability of Section 9(2A) of the Central Act, allowing the imposition of penalties under the State Law for Central Sales transactions.
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