2015 (5) TMI 209 - HC - VAT and Sales Tax

Initiation of proceedings under Section 45A - Imposition of penalty of double the amount of tax Held that - Admittedly, the appellant did not file return or remit tax during the period from April 2005 to January 2006 and November, 2006 and December 2006. This invited proceedings under Section 45A of the KGST Act. Though the maximum penalty of double the amount of tax was levied at the first instance, that is seen reduced by the first appellate authority and what is now levied is only equal amount of tax. The learned Single Judge has also waived the penal interest levied on the appellant. Therefore, maximum leniency has been shown to the appellant. In such circumstances, we do not find any reason to interfere with the judgment in appeal. - Be that as it may, having regard to the waiver of the penal interest ordered by the learned Single Judge, we direct that the said benefit would still be available to the appellant, provided the appellant remits the amount due within three months from the date of receipt of a copy of this judgment. - Decided against assessee.

Summary

Issues:
1. Appellant's failure to file returns and remit tax under the KGST Act.
2. Imposition of penalty under Section 45A of the Act.
3. Appeal against penalty reduction and waiver of penal interest.

Analysis:
1. The appellant, operating a bar hotel, failed to file returns and remit tax for specific periods, leading to penalty proceedings under Section 45A of the KGST Act. The penalty was initially set at double the tax amount but was later reduced to an equal amount by the first appellate authority. The appellant challenged this penalty through a Writ Petition (C)No. 18011/2008.

2. The learned Single Judge, in the initial judgment, rejected the appellant's claim of a technical breach but ordered the waiver of penal interest if the appellant remitted the due amounts within three months. The appellant's senior counsel cited precedents to argue against penalty imposition for reasons beyond the assessee's control. However, the court noted that these arguments were not raised before the assessing or appellate authorities, leading to a lack of merit in the appellant's contentions.

3. The court found that the appellant's reasons for non-compliance, such as business losses and external factors, were not presented during previous proceedings. Despite the appellant's failure to file returns and remit tax for specific periods, the penalty was reduced to an equal amount of tax, and the penal interest was waived by the learned Single Judge. The court, after considering the leniency shown to the appellant, dismissed the appeal but maintained the benefit of penal interest waiver if the appellant remitted the amount due within three months from the judgment's receipt.