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TMI Blog2019 (12) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... realised from the petitioner Company. The Proviso also makes it clear that before imposing the penalty the petitioner Company was required to be heard in the matter, meaning thereby, that the Company could make out a case, that it was not liable to pay any penalty what so ever, which the authority concerned was required to record in the assessment order, with his reasons to differ, in case the authority disagreed. A plain reading of the impugned assessment orders clearly show that the mandate of Proviso to Section 45(5) of the J.V.A.T. Act, has not been followed by the Assessing Authority. There is no discussion at all about the defence of the Company and without stating anything about the reasons that might have been shown before the Assessing Authority by the counsel for the Company, the assessment orders / demand notices have been passed. The assessment orders can safely be termed as absolutely non-speaking orders, sans giving the facts only about the functioning of the Company and quoting the provision of law - the impugned orders / demand notices cannot be sustained in the eyes of law. Matter remanded back to the Assessing Authority to pass the reasoned order afresh, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed, not only for the amount of penalty, rather also for the deductible 2% of the tax amount. Subsequently, the demand notices were also issued on 16.11.2016, 23.04.2016 and 30.08.2017, as contained in Annexure-6 in W.P.T. No.759 of 2017, and Annexure-3 to the other writ applications. Subsequent thereto the garnishee orders had also been issued, and it is an admitted position that pursuant to the garnishee orders some amounts have also been deposited by the petitioner Company. 5. Learned senior counsel appearing for the petitioner submitted that the impugned assessment orders as contained in Annexure-2 and the demand notices as contained in Annexures-3 and 6 to these writ applications as also the consequent garnishee orders cannot be sustained in the eyes of law, inasmuch as, the VAT payable on the coal purchased, has already been deposited by the petitioner Company to the CCL, from which purchase of coal was made, and the CCL, in turn, has deposited the tax in the State-exchequer. It is submitted that this is an admitted position, and there is no revenue loss to the State-exchequer due to the non-deduction of TDS by the petitioner @ 2%. Learned senior counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction has been conferred on a statutory authority to levy penal damages by reason of an enabling provision, the same cannot be construed as imperative. Even otherwise, an endeavour should be made to construe such penal provisions as discretionary, unless the statute is held to be mandatory in character. (Emphasis supplied). 7. Learned senior counsel further placed reliance upon the decision of the Hon ble Apex Court in Nirlon Ltd. Vs. Commissioner of Central Excise, Mumbai, reported in (2015) 14 SCC 798, wherein where it was found that the entire exercise was revenue neutral and there was no mala fide intention on the part of the assessee, the penalty imposed was set aside. Placing reliance on these decisions, learned senior counsel submitted that the impugned action of the State Revenue Authorities cannot be sustained in the eyes of law. 8. Learned counsel for the State, on the other hand, has opposed the prayer and has submitted that a plain reading of Section 45(5) of the J.V.A.T. Act would show that the provision is mandatory in nature, and in that view of the matter, the Revenue Authorities had no way out, but to impose the penalty, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation of the tax statute, there is no scope of any equitable considerations, and in view of the fact that Section 45(5) of the J.V.A.T. Act is mandatory in nature, the fact whether the State-exchequer was put to loss or not, or the bona fides of the petitioner, cannot be looked into, and once it is found that the petitioner Company had defaulted in deducting the TDS, imposition of penalty was imperative. Learned counsel for the State, however, very fairly conceded that the impugned orders / demand notices, so far as the demand of the 2% tax amount has also been made from the petitioner Company, is bad in the eyes of law, as this certainly amounts to double taxation, as the entire tax amount had already been paid to the State-exchequer through the CCL. But so far as the imposition of penalty is concerned, according to learned counsel for the State, there is no illegality in the same. 10. Learned senior counsel for the petitioner, in reply has submitted that the decision of the Hon ble Apex Court in Guljag Industries's case (supra), shall not be applicable to the facts of this case, inasmuch as, the said case was a clear case of evasion of tax, whereas the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person contravening the provisions is given an opportunity of being heard by the prescribed authority. *** *** *** . 12. A plain reading of this provision clearly shows that the deduction of the TDS from the bills raised by the CCL for supply of coal, was mandatory on the part of the petitioner Company, which the Company had not carried out, though the fact remains that the State has not been put to any loss thereby, and this is a case of revenue neutral, so far as the tax liability is concerned, as admittedly, the State has already realised its due tax from CCL. However, the fact remains that the wordings of sub-Section (5) of Section 45 of the J.V.A.T. Act shows that the penalty was required to be realised from the petitioner Company. The wordings of the Act also show and there was discretion upon the Assessing Authority as regards the quantum of the penalty, which could be any amount up to twice the amount of the tax deductible under sub-Section (1). The Proviso also makes it clear that before imposing the penalty the petitioner Company was required to be heard in the matter, meaning thereby, that the Company could make out a case, that it was not liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with law, keeping in view the ratio of the decision of the Hon ble Apex Court in Hindustan Steel Ltd.'s case (supra), that penalty is not ordinarily to be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation, and that the penalty is not to be imposed merely because it is lawful to do so. The Assessing Authority shall also take into consideration the ratio of the decision of the Hon ble Apex Court in Employees' State Insurance Corporation's case(supra), that only because a provision has been made for levy of penalty, the same by itself would not lead to the conclusion that penalty must be levied in all situations. The Assessing Authority shall also exercise its discretion, in accordance with law, as regards the quantum of penalty, if the penalty is found leviable, and shall not go for the highest amount of penalty in a mechanical manner. 18. It goes without saying that in case the Assessing Authority comes to the finding that the penalty was not leviable, the amount already deposited by the petitioner Company pursuant to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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