2015 (9) TMI 1154 - HC - VAT and Sales Tax

Levy of penalty - sales tax was paid belatedly, i.e., beyond the month in which it fell due - Andhra Pradesh General Sales Tax Act, 1957 - delay in payment of sales tax due to financial problems - Held that - It is not necessary for us, in the present proceedings, to examine whether or not imposition of penalty under section 15(4)(a) of the Act is mandatory or whether the competent authority has the discretion not to impose penalty even in cases of violation of the said provision. We shall proceed on the premise that exercise of power under section 15(4)(a) of the Act, which requires an amount equal to tax to be levied as penalty where a dealer has charged tax from the purchaser, is discretionary. The assessing authority and the appellate authority/Tribunal have noted that the petitioner was irregular in payment of sales tax dues even in the earlier months of the year. While no penalty was levied on the earlier months, the fact that the petitioner was regularly delaying payment of tax was taken into consideration in imposing penalty on him for the subject month. The previous conduct of the dealer is not an irrelevant factor in deciding whether or not penalty should be imposed on a dealer. We may not be understood to have held that in all cases where penalty is imposed, the previous conduct of the dealer should be taken into consideration. All that we have held is that the authority cannot be said to have acted illegally if, while exercising his discretion to impose penalty, he has taken the previous defaults of the dealer, in making belated payment of tax to the State, into consideration. Section 16(3) of the APGST Act requires the dealer to pay interest, at the stipulated rate, for belated payment of tax, penalty or any other amount due under the Act. Interest is levied for the period of the delay. The very fact that interest is also levied for belated payment of the penalty amount, goes to show that levy of interest is not in substitution of the penalty which can be imposed under section 15(4) of the Act. The petitioner s contention that, as interest is leviable under section 16(3) of the Act, penalty should not be imposed under section 15(4)(a) of the Act is, therefore, not tenable. - Petition dismissed - Decided against the assessee.

Issues Involved:
1. Legality of the penalty imposed under section 15(4)(a) of the Andhra Pradesh General Sales Tax Act, 1957.
2. Interpretation of the terms "charged" and "collected" in the context of section 15(4)(a).
3. Whether the past conduct of the petitioner can be considered for imposing penalty.
4. Applicability of interest under section 16(3) of the Act in relation to penalty.

Detailed Analysis:

1. Legality of the Penalty Imposed under Section 15(4)(a):
The assessee challenged the penalty imposed by the assessing authority, which was upheld by the Appellate Deputy Commissioner and the Sales Tax Appellate Tribunal. The penalty was levied for delayed payment of tax for February 1996. The assessing authority found the explanation of financial problems unreasonable and noted habitual delays in tax payments. The Tribunal confirmed that under section 15(4)(a) of the Act, the penalty is equal to the tax due when a dealer has charged tax but failed to pay it to the State. The Tribunal found no grounds to interfere with the penalty imposed.

2. Interpretation of "Charged" and "Collected":
The petitioner argued that "charged" in section 15(4)(a) should be read as "charged and collected," implying that penalty should only apply if the tax was both charged and collected from customers. The Tribunal and the High Court rejected this interpretation, stating that the Legislature intentionally used "charged" and not "collected." The High Court emphasized that the terms "levy," "charge," and "collection" have distinct meanings in tax statutes, and the penal provision under section 15(4)(a) is triggered by charging tax, irrespective of whether it was collected.

3. Consideration of Past Conduct for Imposing Penalty:
The petitioner contended that past delays in tax payments should not influence the penalty for the current month. The High Court held that while the assessing authority did not impose penalties for previous months, considering the habitual delays was not illegal. The previous conduct of the dealer is relevant in deciding whether to impose a penalty. The Court clarified that the authority's consideration of past defaults was within legal bounds.

4. Applicability of Interest under Section 16(3):
The petitioner argued that since interest is levied for delayed payment under section 16(3), imposing a penalty under section 15(4)(a) is redundant. The High Court dismissed this argument, explaining that interest and penalty serve different purposes. Interest compensates for the delay in payment, while the penalty under section 15(4)(a) is punitive for failing to pay the charged tax on time. The imposition of interest does not preclude the levy of a penalty.

Conclusion:
The High Court upheld the Tribunal's decision, dismissing the tax revision cases. The Court affirmed that the penalty under section 15(4)(a) was justified, the interpretation of "charged" did not require it to be read as "charged and collected," and the past conduct of the petitioner was appropriately considered. The imposition of interest under section 16(3) does not negate the penalty under section 15(4)(a). The petitioner's appeals were dismissed with no costs.

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