2019 (5) TMI 910 - HC - VAT and Sales Tax

Imposition of penalty u/s 15 A(1)(a)of the U.P. Trade Tax Act - absence of reasoning in the impugned order - HELD THAT - Reason is the very life of law. When the reason of a law once ceases, the law itself generally ceases - Such is the significance of reasoning in any rule of law. Giving reasons furthers the cause of justice as well as avoids uncertainty. As a matter of fact it helps in the observance of law of precedent. Absence of reasons on the contrary essentially introduces an element of uncertainty, dissatisfaction and give entirely different dimensions to the questions of law raised before the higher/appellate courts. The court should provide its own grounds and reasons for rejecting claim/prayer of a party whether at the very threshold i.e. at admission stage or after regular hearing, howsoever concise they may be. It is the duty cast upon the Appellate Authority that even if it is in agreement with the view taken by the first Appellate Authority, it should give its own reasons/findings which may indicate that there has been application of mind and also the consideration of grounds raised in the appeal by the revisionist. In absence of reasons it is difficult to come to a conclusion that there has been any application of mind by the Tribunal and such an order in the opinion of the Court cannot be sustained and deserves to the set aside. Revision allowed.

Summary

Issues Involved:
1. Legality of the penalty imposed under Section 15-A(1)(a) of the U.P. Trade Tax Act.
2. Consideration of reasonable cause for delayed tax payment.
3. Requirement for recording reasons in judicial orders.

Issue-wise Detailed Analysis:

1. Legality of the penalty imposed under Section 15-A(1)(a) of the U.P. Trade Tax Act:
The impugned order dated 26.08.2010 by the Commercial Tax Tribunal, Bench-1, Lucknow, upheld the penalty imposed on the applicant by the Joint Commissioner(A)-5, Commercial Tax, Lucknow, for the assessment year 2004-05. The penalty amounted to ?34,21,902/- due to the delayed payment of tax. The applicant argued that the penalty was unjustified as the delay was due to the finalization and audit of accounts, which was a reasonable cause. The court noted that the penalty under Section 15-A(1)(a) could only be imposed if the tax was not deposited without reasonable cause. The court found that the authorities did not consider whether there was a reasonable cause for the delay and proceeded on the presumption that any delay automatically warranted a penalty, which is contrary to the statute.

2. Consideration of reasonable cause for delayed tax payment:
The applicant contended that part of the tax amounting to ?28,21,725/- was deposited late due to the time consumed in finalizing and auditing accounts. This fact was not disputed by the State. The court emphasized that the authorities were required to consider whether there was a reasonable cause for the delayed payment and to record a finding on this aspect. The authorities failed to do so, rendering the penalty order arbitrary and illegal. The court highlighted that the intention to evade tax was not established, and therefore, the penalty was not justified.

3. Requirement for recording reasons in judicial orders:
The court underscored the importance of recording reasons in judicial orders, stating that it is a fundamental principle of natural justice. The absence of reasons renders an order arbitrary and unsustainable. The court cited various judgments, including those of the Hon'ble Supreme Court, to support this principle. It was noted that the Tribunal did not provide any reasons for upholding the penalty, nor did it consider the submissions made by the applicant. The court reiterated that every judicial order must be supported by reasons to ensure transparency, fairness, and proper application of mind. The failure to provide reasons indicated a lack of application of mind and rendered the order liable to be set aside.

Conclusion:
The court concluded that the penalty imposed under Section 15-A(1)(a) of the U.P. Trade Tax Act was illegal and arbitrary due to the failure of the authorities to consider the reasonable cause for delayed payment and to record reasons for their decision. The order dated 26.08.2010 by the Commercial Tax Tribunal was set aside, and the revision was allowed. The court directed that any excess amount deposited by the applicant be refunded within two months from the date of the certified copy of the order being produced.