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TMI Blog2018 (12) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... tes to A.Y. 2010-11. Admittedly, this was the first year of business and assessment for the assessee as it was granted registration w.e.f. 20.05.2010; the assessee made payments to building contractors on which it made deductions of tax on source (T.D.S in short); however, that amount of T.D.S. was not deposited within time prescribed by law; nevertheless, the assessee deposited the same before issuance of any show-cause or other notice in that regard. Thus, the assessee, made deposits of various amounts i.e. Rs. 31,606/- (together with interest of Rs. 31,606/-), on 30.11.2011; Rs. 24,026/- (together with interest of Rs. 24,026/-), on 30.11.2011; Rs. 66,572/- (together with interest of Rs. 31,715/- vide three challans dated 21.2.2011, 9.4.2011 and 18.06.2011), and; Rs. 1,33,233/- (together with interest of Rs. 1,68,090/-), on 30.11.2011. Further admittedly, the entire amount of default of T.D.S. was cleared by the assessee together with interest. 4. Thereafter, a notice was first issued to the assessee under Section 34(8) of the Act proposing to impose penalty for the delay in deposit of T.D.S. amount for the A.Y. 2010-11. The assessee set up a defence stating it had already clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty should not have been levied. Reliance has also been placed on two earlier decisions of this Court in Sales/Trade Tax Revision No. 335 of 2015 (Commissioner of Commercial Tax Vs. Rajendra Kumar Gupta Memorial Trust) decided on 24.07.2015, as followed in Sales/Trade Tax Revision No. 99 of 2016 (M/s Shell India Markets Pvt. Ltd. Vs. Commissioner of Commercial Tax) decided on 01.04.2016. 7. Sri B.K. Pandey, learned Standing Counsel on the other hand submits that once commission of default is admitted the imposition of penalty under Section 34(8) of the Act became necessary. The discretion was confined to the quantum of penalty to be imposed, only. The provision mandates the assessing officer to necessarily pass an order in writing and to direct the defaulting assessee to pay the penalty. He has placed reliance on another decision of this Court in the case of C.C.T. Vs. Bareilly Highways Projects Limited, 2017 NTN (64) 1, wherein this Court held, the fact that the defaulting assessee may have deposited the interest along with the belated tax amount, would not make material difference on the penalty that may be imposed. Once it was found that the tax deducted had not been de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pears to exist a difference of opinion in the judgments cited by the learned counsel for the applicant-assessee and learned Standing Counsel to the extent the decisions of C.C.T. Vs Rajendra Kumar Gupta Memorial Trust and M/s Shell India Markets Pvt. Ltd. Vs. C.C.T and other judgments noted above, appear to hold once the assessee had cleared the default of tax together with interest, no prejudice may be claimed by the revenue as may justify imposition of penalty, while in the case of C.C.T. Vs. Bareilly Highways Projects Limited (supra), another learned Single Judge held deposit of tax made belatedly along with interest may not be a lead to penalty under Section 34(8) of the Act being dropped. That conclusion was reached largely in absence of any earlier decision on the point being placed before the Court. Though the element of concealment was rightly held to be irrelevant, yet, that does not form any part of the reasoning in the two earlier judgments relied upon by learned counsel for the assessee. 12. Though it is true 'concealment' is not an ingredient of penalty under section 34(8) of the Act, however, therefore, imposition of penalty is not automatic or mandatory mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whereas the nodus in hand is the obverse. G.P. Singh in his treatise titled, Principles of Statutory Interpretation remains steadfast in the opinion that when both words are used in the same section, "shall" imposes an obligation or imperative whilst "may" connotes directive or discretionary power. ..............." 14. It is difficult to read the word 'may' first used in section 34(8) of the Act to signify a mandatory action by the assessing officer, though the plain grammatical meaning of the word 'may' suggests otherwise as to existence of a discretion or an option to do or to not do a certain thing. If the legislature intended to provide a mandatory penalty upon each and every default, then, it would have used the word "shall" in the first part of that sub-section also. The legislature having used both "may" and "shall" in the same sub-section in the context of the same penalty, it would be doing violence to the language used by the legislature to not recognize and give full effect to the difference in the plain grammatical meaning of the two words, that otherwise exists. 15. It may have been otherwise if the legislature had used the word "shall" in the earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plain language of the sub-section would otherwise discourage a bona fide assessee from rectifying his own default, especially in cases where the revenue may not be even aware of the default or its cure on self-act of the assessee as in the instant case. 19. Thus on the question of interpretation, the imposition of penalty under section 34(8) of the Act as also quantification of the penalty amount (where that penalty may be found imposable), is found to be directory and not mandatory. Only the enforcement of the penalty order is found to be mandatory. The judgment of this court in the case of C.C.T. Vs. Bareilly Highways Projects Limited (supra) does not interpret the penalty under section 34(8) of the Act as mandatory. It cannot be read to that effect. 20. Even as to applicability of that judgment, it is wholly distinguishable. First, it only holds, in determining the penalty, it may be relevant but not itself sufficient to drop the penalty if the assessee had cleared the default together with interest. It did not hold that in such facts penalty would remain necessarily imposable. Second, though noted, it did not examine the consequence (on levy of penalty), of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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