2014 (2) TMI 487 - HC - VAT and Sales Tax

Penalty under section 15-A (1)(e) of the U.P. Trade Tax Act - Tax u/s 3-F - Imposition of tax on transfer of right to use on the application - Tribunal passed an interim order on the second appeal staying realisation of the disputed amount of tax upto 80% - While the second appeal was still pending before the tribunal and yet to be finalised, the Assistant Commissioner passed order on 8.9.1997 by which it imposed a penalty on the assessee under section 15-A (1)(e) of the Act taking a view that the assessee had not deposited the tax within time - Held that - since the assessee had taken recourse to the statutory remedy available to him under the Act and had filed an appeal as well as stay application, it is not possible for this court to come to the conclusion that the assessee had without reasonable cause failed to deposit within time allowed the tax which was due. To come to this conclusion would mean that it would render statutory remedy itself nugatory and of no use. The facts that the tribunal did not pass orders on the stay application filed by the petitioner for six months, cannot be said to be a fault attributable to the assessee. The assessee on his part had within time prescribed applied for the statutory remedy and it was statutory authority who did not pass necessary orders speedily - in order to give meaning of section 15-A (1)(e) of the Act, 3 which has to be read in certain manner and if a party had applied within time and within time allowed to deposit due tax, it could not be said that it had failed to pay the tax due from him - The delay, if any in passing of the stay order in this case was attributable to the tribunal. The assesee had not failed to comply with the demand of section 15-A (1)(e) of the Act. The order imposing penalty on the assessee is thus set aside - Decided in favour of assessee.

Summary

Issues:
1. Imposition of penalty under section 15-A (1)(e) of the U.P. Trade Tax Act for assessment year 1993-94.
2. Justification of penalty imposition due to delay in tax payment and stay order processing.
3. Interpretation of "without reasonable cause" in failing to pay tax within the allowed time.
4. Adverse inference drawn by the Trade Tax Tribunal regarding the delay in payment.
5. Reasonableness of the assessee's actions in not depositing tax due to interim order.

Analysis:
Issue 1: The revisionist, a company engaged in fertilizer manufacturing, challenged the penalty imposed under section 15-A (1)(e) of the U.P. Trade Tax Act for the assessment year 1993-94. The penalty was related to the transfer of right to use and tax imposition under section 3-F of the Act.

Issue 2: The revisionist filed appeals and stay applications within the prescribed time, but the tribunal delayed passing orders on the stay application. The tribunal affirmed the penalty citing a six-month gap in payment, leading to the imposition of the penalty under section 15-A (1)(e) of the Act.

Issue 3: The court analyzed the clause (e) of sub-section (1) of section 15-A, which pertains to failing to pay tax without reasonable cause within the allowed time. The court emphasized that taking statutory remedies and filing appeals cannot be considered as failing to pay tax without reasonable cause.

Issue 4: The Trade Tax Tribunal drew an adverse inference against the revisionist for the delay in payment, despite the revisionist filing the second appeal and stay application within the prescribed time. The court considered the reasonableness of the revisionist's actions in not depositing the tax due to the interim order granted by the superior authority.

Issue 5: The court referred to a previous judgment to support its decision, stating that the delay in passing the stay order was not the fault of the revisionist. The court set aside the penalty imposition, emphasizing that the revisionist had not failed to comply with the requirements of section 15-A (1)(e) of the Act.

In conclusion, the court allowed the revision, setting aside the penalty imposed on the revisionist. The judgment highlighted the importance of statutory remedies and timely actions in tax matters, emphasizing that delays caused by statutory authorities should not lead to penalties if the taxpayer has acted within the prescribed legal framework.