2018 (11) TMI 1026 - HC - VAT and Sales Tax

Penalty u/s 8-D (6) of U.P. Trade Tax Act, 1948 - assessee have cleared the default of TDS together with interest prior to issuance of any notice before penalty - Held that - At present though it is admitted to the assessee that the net amount of TDS required to be deposited by the assessee was ₹ 1,44,068/- for the A.Y. 1990-91, however, the amount of interest that became due on that amount (since the assessee failed to make timely deposit of the same) is not borne out from any of the order accompanying the present revision application - The amount of interest would have bearing on the outcome of this revision inasmuch as if it is found that the assessee had deposited the entire amount of TDS together with due interest before issuance of penalty notice under Section 8-D(6) of the Act the penalty may not be imposable at all inasmuch as in such case, the assessee necessarily would have to be held to have cleared the default on its own without the same coming to the notice of the relevant authority. Since the Tribunal has not recorded any finding as to the date when the penalty proceedings were instituted or the amount of interest that became due against the assessee and the date when the entire due amount had been paid the present order of the Tribunal is set aside and the matter remitted to the Tribunal to pass a fresh order - revision placed on remand.

Summary

Issues:
Penalty imposition under Section 8-D(6) of the U.P. Trade Tax Act, 1948 for A.Y. 1990-91.

Analysis:
The assessee contended that despite deducting the tax amount due from payments to contractors, there was a delay in depositing the same with the revenue. The total TDS amount due was &8377; 1,44,068, out of which the assessee deposited &8377; 1,82,651, claiming an excess deposit with interest liability. The assessee argued that since the default was rectified before any penalty notice was issued, no loss was incurred by the revenue, and thus, no penalty should be imposed. The assessee relied on previous court decisions where penalties were deleted when TDS amounts were deposited with interest before penalty notices were issued.

The opposing party argued that the penalty was initiated in compliance with a specific direction, and the penalty order was passed before the interest default was rectified by the assessee. The Tribunal upheld the mandatory nature of deduction under Section 8-D(6) of the Act, citing a previous court decision.

The court noted that while the TDS amount due was admitted by the assessee, the interest amount was not clearly mentioned in the orders. The presence or absence of interest payment before the penalty notice would impact the penalty imposition. The court set aside the Tribunal's order and remitted the matter back to determine the interest due date and penalty initiation date for a fresh decision.

Regarding the raised question of law on minimum penalty prescription under the Act, the assessee was given the opportunity to present new arguments before the Tribunal for consideration. The court left this issue open for further deliberation.

In conclusion, the court disposed of the revision by remitting the matter for a fresh decision based on the observations made regarding interest payment and penalty initiation date.