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TMI Blog2003 (9) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... ax due as per the return. However, so far as the tax payable for the last month of the financial year, i.e., for the month of March, the appellant is liable to pay not less than 90 per cent of the tax payable on the taxable turnover for the month of March on or before the end of that month, in cash or through demand draft under the said rule. The appellant had remitted a sum of Rs. 3,00,000 towards advance tax for the month of March on March 25, 2002. The appellant had effected sale of goods of the value of Rs. 57,00,000 on March 28, 2002, on which he is liable to pay tax (both sales tax and additional tax) of Rs. 5,24,400. Thus, the total advance tax payable for the month of March as per the provisions of rule 21(7) of the Rules was Rs. 8,24,400. As already noted, the appellant had paid only a sum of Rs. 3,00,000 which is very much less than 90 per cent of the tax due. The appellant had remitted a sum of Rs. 5,24,400 by way of sales tax and additional tax for the month of March only on April 10, 2002 as in the case of returns for the other months of the year. Since the appellant omitted to remit not less than 90 per cent of the tax due for the month of March, 2002, before Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, there is no merit in the contention that the maximum penalty that can be imposed under section 45A of the Act is only Rs. 10,000. It is against this judgment, the present appeal is filed. 3.. Sri K.I. Mayankutty Mather, learned counsel appearing for the appellant, submitted that the provisions of section 45AA is not attracted in the instant case, since there was no notice of demand which is the foundation for invoking the said section, and that there are no circumstances warranting the exercise of powers under section 45A of the Act. He also submitted that penalty cannot be imposed merely upon proof of default and that the order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party's conduct is contumacious or dishonest or acted in conscious disregard of its obligation and that the quantum of penalty is a matter of discretion. The counsel has also relied on the decision of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 and of the division Bench decision of this Court in P.D. Sudhi v. Intelligence Officer, Agricultural Incomet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax for the month of March has to be paid on or before March 31, 2002, to remit the advance tax on March 25, 2002 knowing fully well that there will be bulk sales before the close of the year is a clear indication of the wilful conduct of the appellant considered in the background of non-remittance of tax of Rs. 5,24,400 for the remaining period. 6.. The learned single Judge considered the explanations of the appellant about the default as follows: 5............The petitioner is a limited company and the sickness of the manager cannot be said to be ground for not complying with a rigorous statutory requirement which is introduced in the statute to achieve certain purpose. Therefore, I feel the petitioner's explanation that the manager of the company was sick and therefore, petitioner could not make payment of advance tax, was rightly rejected by the assessing officer. This is only a lame excuse evident from the fact that the petitioner made no effort to make the payment even on any of the succeeding working days. Though the petitioner says 31st March, 2002 was a holiday, the same also cannot be accepted because on the last day of the financial year Government counters work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory provision. Therefore, the violation of rule 21(7) in regard to nonpayment of advance tax or deficiency in payment of advance tax is specifically covered by section 45AA and so much so, the specific provision should exclude the general provision. So a penalty in the case if violation of rule 21(7) in regard to payment of tax has to be treated as violation of section 45AA and penalty has to be considered if leviable only under section 45AA of the Act. It is a well-settled position that misquoting of a section will not invalidate an order, if the authority issuing the same was competent to do so. As already stated, going by the allegations that constituted the offence and the order of the officer limiting the penalty to the extent of deficiency of advance tax, the order has to be considered as one passed under section 45AA and the quoting of section 45A(1)(g) alone by itself will not affect its validity. In fact the order can be treated as an order passed under section 45A(1)(g) read with section 45AA of the Act. In other words, all the sections under which order is issued are not quoted therein is the only deficiency about the order. Therefore I feel the order issued under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on or before March 31, 2002 was wilful and penalty was rightly imposed. 10.. We note that the learned single Judge did not independently consider the question whether penalty under section 45A attracting sub-section (1)(g) can be imposed beyond Rs. 10,000 treating the infraction of rule 21(7) on a par with evasion of tax. The learned Judge only held that the present case attracted the special provision contained in section 45AA of the Act. The main grievance, as understood from the arguments of the counsel for the appellant, is against the imposition of penalty above Rs. 10,000 and at Rs. 50,000 by invoking section 45AA of the Act. 11.. Now let us see the provisions of section 45AA of the Act, inserted by the Finance Act, 1994, which reads as follows: 45AA. Penalty for default of payment of tax. (1) Where an assessee makes default in payment of tax or any other amount due under this Act within the time specified in the notice of demand, he shall, in addition to the tax or other amount in arrears and the amount of interest payable under sub-section (3) of section 23, be liable to pay, by way of penalty such amount and in the case of a continuing default, amount at such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any such violation, the assessing authority and the Appellate Assistant Commissioner is given the power to impose the penalty on being satisfied of such contravention of an amount not exceeding twice the amount of sales tax or other amount evaded or sought to be evaded, where it is practicable to quantify the evasion, or an amount not exceeding ten thousand rupees in any other case. Thus, in cases where the contravention of section 45A(1), clauses (a) to (g) results in evasion of tax or attempt to evade payment of tax, then the penalty under section 45A(1) can be imposed up to double the tax evaded or sought to be evaded. In other cases of contravention the maximum penalty that can be imposed is only Rs. 10,000. 14.. Thus, the further question to be considered is only as to whether the non-payment of advance tax under rule 21(7) before 31st March can be equated to a situation of evasion of tax or an attempt to evade the tax contemplated under section 45A(1) of the Act. 15.. The expressions used are evaded , sought to be evaded and evasion . The said expressions have not been defined in the Act. The dictionary meaning of the word evasion , is the act or process of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. 17.. The Supreme Court in Associated Cement Co. Ltd. v. Commercial Tax Officer [1981] 48 STC 466, relying on the principles applied by it in Gursahai Saigal v. Commissioner of Income-tax, Punjab [1963] 48 ITR 1, observed as follows: ..........It is the duty of the court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose having a full view of it. Wherever the intention to impose liability is clear courts ought to have no hesitation in giving what we may call a commonsense interpretation to the machinery sections so that the charge does not fail. 18.. We have already referred to the dictionary meaning of the word evasion as deliberately avoiding something which is legally required to be done. In the present case, what is required to be done under the last limb of rule 21(7) is to remit not less than 90 per cent of the tax due for the month of March, 2002 on or before the last day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elligence Officer [1992] 85 STC 337, on the facts of this case, are satisfied in that it has been categorically held by the learned single Judge that the default is not technical, that it is serious and that it was deliberate and wilful. The decision of the Supreme Court in Maruti Wire Industries Pvt. Ltd. v. Sales Tax Officer [2001] 122 STC 410 and other decisions relied on by the counsel for the appellant related to the levy of penal interest under section 23(3) of the Act, which has no relevance in the matter of levy of penalty under section 45A of the Act, for the provisions regarding imposition of penal interest under section 23(3) and penalty under section 45A of the Act are different. Here, we may note that another learned single Judge of this Court in Zakir Hussain v. Additional Sales Tax Officer, Trichur 1993 KLJ 42, considered a similar question where penalty was levied under section 45A of the Act for delay in filing the return. The assessing authority imposed a penalty of Rs. 47,000 which was reduced to Rs. 23,500 by the first revisional authority and confirmed by the Board of Revenue. The contention of the petitioner before the High Court was dealt with as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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