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TMI Blog2000 (10) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... had initiated proceedings for imposition of penalty under section 8-D(6) of the Act and vide separate orders, each dated March 31, 1990 imposed a sum of Rs. 38,944.26, Rs. 5,12,158.26 and Rs. 6,90,172.92, respectively as penalty. Feeling aggrieved by the said order, the applicant had preferred separate appeals under section 9 of the Act before the Assistant Commissioner (Judicial), Sales Tax, Meerut, who vide order dated July 5, 1990 had upheld the imposition of the penalty in each of the three years in question. Still feeling aggrieved, the applicant had preferred second appeals under section 10 of the Act before the Tribunal. The Tribunal vide impugned order has partly allowed the appeals. It has reduced the amount of penalty to 100 per cent of the amount of tax liable to be deducted under section 8-D(1) of the Act. The said reduction in the quantum of penalty was made by the Tribunal on the supposition that the Sales Tax Officer had imposed penalty to the extent of twice of the amount which ought to have been deducted under section 8-D(1) of the Act. However, the amount of penalty imposed by the Sales Tax Officer was only to the extent of the amount of tax which ought to have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e borrowed capital by resort to rule 19A(3)(b). However, on the view that we propose to take, it is not necessary to consider as to whether the borrowed capital was repayable after a period of more than seven years. Rule 19A(3) provides for exclusion of borrowed capital while computing the capital employed for purposes of section 80J. In the case of Kota Box Manufacturing Company v. Income-tax Officer, Kanpur reported in [1980] 123 ITR 638 (All.) [App]; 1978 UPTC 392 a division Bench of this Court held that rule 19A(3), so far it seeks to exclude borrowed capital for purposes of computation of the capital employed is ultra vires of rule-making power. This being so, the borrowed capital could not be excluded for computing the relevant amount of capital employed. Sri Ashok Gupta appearing for the department urged that as we are deciding this matter on a reference, it would not be proper for us to proceed to answer the question on the basis that rule 19A(3) is ultra vires the rule-making power. It is settled that in a reference one cannot declare any provisions of the Act or the Rules ultra vires. But, we are doing nothing of the sort here. All that we propose to do is to take notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant to flout or contravene the provisions of section 8-D(1) of the Act. In the alternative, he submitted that the amount of penalty, which has been imposed is equivalent to the amount of tax which ought to have been deducted under section 8-D(1) of the Act, is excessive and no reasons whatsoever has been given by the authorities for imposing the said amount as penalty. 8.. On the other hand, Shri B.K. Pandey, has submitted that the applicant was under statutory obligation to deduct tax at source at 4 per cent at the time of making payment to the contractors towards the discharge of any liability on account of valuable consideration for transfer of property in goods in pursuance of the works contract entered into between the parties and failure to deduct the tax automatically attracted the penal provisions as provided under section 8-D(6) of the Act. He further submitted that the penalty to the extent of 100 per cent of the amount of tax which ought to have been deducted at source under section 8-D(1) of the Act is just, fair and reasonable and calls for no interference. 9.. The submission at the first instance appears to have some force but it cannot be gone into in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncern.........................Can it be said that a question whether a provision of the Act is ultra vires of the Legislature arises out of the Tribunal's order? As the Tribunal is a creature of the statute, it can only decide the dispute between the assessee and the Commissioner in terms of the provisions of the Act. The question of ultra vires is foreign to the scope of its jurisdiction. If an assessee raises such a question, the Tribunal can only reject it on the ground that it has no jurisdiction to entertain the said objection or decide on it. As no such question can be raised or can arise on the Tribunal's order, the High Court cannot possibly give any decision on the question of the ultra vires of a provision...............' (Emphasis* supplied). Even as the authorities under the Act cannot go into the vires of the very statutes under which they are constituted and draw their power and jurisdiction from so is the High Court in the matters arising before it from proceedings under the Act and examine the constitutionality of the statute and its provisions. The High Court can, of course, deal with the question of constitutionality in judicial review of legislation under arti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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