2023 (9) TMI 175 - HC - VAT and Sales Tax

Interest and penalty for delayed payment of tax - tribunal set aside the penalty - HELD THAT - Given the said statutory provisions and powers conferred upon the Tribunal, it was within the powers of the Tribunal to look into the reasons which prevented the assessee in timely payment of tax and the delay also was too short a period so as to infer that the delay was with any mala fide intention. Another fact which needs consideration is the fact that penalty imposed is invoking the provisions under Section 15(4) of the A.P.G.S.T. Act. The proviso to the said Section clearly indicates that before passing of an order of penalty, the authority concerned is required to issue a notice to the assessee seeking his explanation as to the cause which led to the delayed payment of tax. The very insertion of the aforesaid Section 15(4) pre-supposes that upon a notice being issued before penalty orders are passed, if the assessee was able to provide plausible and justifiable reasons which led to the delayed payment of tax it would be then within the discretion of the authority to decide whether penalty at all is to be levied. The petitioners failed to make out any case warranting interference of this Bench with the order passed by the Sales Tax Appellate Tribunal - the question of law framed by the Court, while admitting the revisions, deserves to be decided in the negative.

Summary

Issues involved:
The judgment involves the issue of penalty for delayed payment of tax under section 15(4) of the APGST Act, 1957, and the authority's discretion in levying penalties based on the circumstances of each case.

Detailed Summary:

Issue 1: Penalty for delayed payment of tax under section 15(4) of the APGST Act, 1957

The revision cases involved a common assessee and the same grounds of revision, leading to a common order. The respondent, a cement manufacturing company, faced penalty proceedings for delayed tax payment from May 2002 to October 2002. The Assessing Authority proposed a penalty of Rs. 41,32,466 due to the delayed payment, rejecting the company's financial difficulties as a valid reason. The Appellate Deputy Commissioner (CT) allowed the appeal, stating that section 15(4) cannot be applied for short delays of 5 to 10 days. However, the Additional Commissioner (CT) revised the order, reinstating the penalty. The Sales Tax Appellate Tribunal later allowed the respondent's appeal, considering the financial circumstances and reasons for the delay in payment.

Issue 2: Authority's discretion in levying penalties based on circumstances

During the proceedings, the Senior Standing Counsel for the petitioner argued that penalties should be levied to prevent delayed tax payments, emphasizing the quasi-judicial duty of the assessing authority. The respondent's Senior Counsel highlighted the company's regular tax payments, financial difficulties leading to delays, and efforts to restructure debts. The Appellate Tribunal's detailed reasoning, citing legal precedents, emphasized the need for a case-by-case examination before imposing penalties under section 15(4) of the APGST Act. The Tribunal's wide powers under Section 21(4) allowed for a thorough review of the circumstances leading to delayed payments and the validity of penalty imposition.

Conclusion:
The High Court held that the Sales Tax Appellate Tribunal's detailed reasoning and consideration of the circumstances justified the decision to allow the respondent's appeal. The Court found no grounds to interfere with the Tribunal's order, dismissing the revisions and upholding the Tribunal's decision.