2017 (5) TMI 1172 - HC - VAT and Sales Tax

Penalty - interest - PVAT Act - Whether the VAT Tribunal Punjab Chandigarh has grossly erred in upholding the order of the Excise & Taxation Officer-cum-Notified Authority as upheld by the Deputy Excise & Taxation Commissioner (Appeals) Patiala imposing penalty u/s 53, u/s 60 and levying interest u/s 32(1) of the Punjab VAT Act? Held that - It is apparent that the appellant did not challenge the order of this Court in so far as it dealt with the constitutional validity of Section 19 of the Act. The importance of this is that the appellant before us accepted the judgement of this Court at least on the issue of the constitutional validity of the Act. Due date or payment of interest - Held that - the due date for payment is not the date of the final assessment, but the date stipulated in Rule 36. Under Section 26(3), every person is bound to pay the full amount of tax due from him as per the provisions of the Act. Thus, liability for payment of interest under Section 32(1) is from the due date for payment. The due date for payment would be the date on which payment is liable to be made under Rule 36. Section 26(3) requires every person to pay the full amount of tax due from him as per the provisions of the Act and not the amount which according to the assessee is payable. The words full amount of tax due from him as per provisions of this Act refer to the amount actually payable under the Act and not the amount which according to the assessee is payable. Section 11-B of the Rajasthan Act is similar to Section 32(4) and not to Section 32(1) of the Act with which we are concerned. It is not possible to incorporate the provisions of sub-section (4) of Section 32 into sub-section (1) of Section 32. Sub-section (4) in fact is a separate and independent liability in addition to the liability under subsection (1) There is no reason to absolve the appellant of the liability under Sections 32(1), 53 and 60 - appeal dismissed - decided against assessee.

Summary

Issues Involved:
1. Imposition of penalty under Section 53 of the Punjab Value Added Tax Act, 2005.
2. Levy of interest under Section 32(1) of the Punjab Value Added Tax Act, 2005.

Detailed Analysis:

1. Imposition of Penalty under Section 53:

The appellant challenged the imposition of penalties under Sections 53 and 60 of the Punjab Value Added Tax Act, 2005 (the Act). The VAT Tribunal Punjab upheld the orders of the Excise & Taxation Officer-cum-Notified Authority and the Deputy Excise & Taxation Commissioner (Appeals), Patiala, which imposed these penalties. The appellant argued that penalties should not be charged due to the interim order dated 31.01.2006, which prevented coercive recovery steps until the final decision on the constitutional validity of Section 19 of the Act.

The court dismissed this argument, stating that interim orders do not create rights contrary to statutory liabilities. They only temporarily suspend the recovery process. Therefore, when the interim order was vacated, the liability for penalties related back to the original due date of the tax.

2. Levy of Interest under Section 32(1):

The appellant contested the levy of interest under Section 32(1), arguing that interest should only be charged from the date of the assessment order (04.11.2013). The court rejected this contention, clarifying that the due date for payment of tax is prescribed by the Act and the Punjab Value Added Tax Rules, 2005. Specifically, Rule 36 mandates the filing of quarterly self-assessed returns and the payment of tax within stipulated periods from the expiry of each quarter. Therefore, the due date for payment is not the date of the final assessment but the date stipulated for filing returns and making payments as per Rule 36.

The court emphasized that under Section 26(3), every person is required to pay the full amount of tax due as per the Act, not merely the amount they declare in their returns. This ensures that taxpayers cannot delay payments by underreporting their liabilities and later paying the correct amount after the assessment without incurring interest.

Additionally, the court noted that the appellant's challenge to the constitutional validity of Section 19 was dismissed by the Division Bench and the Supreme Court, thereby affirming the appellant's liability under the Act.

Conclusion:

The court concluded that the appellant is liable for both penalties under Sections 53 and 60 and interest under Section 32(1) of the Act. The appeals were dismissed, affirming the orders of the lower authorities. The judgment underscores that statutory liabilities must be complied with as per the prescribed timelines, and interim orders do not absolve taxpayers from their obligations under the law.