Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2015 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (3) TMI 131 - HC - VAT and Sales TaxImposition of the penalty for non-payment of sales tax pertaining to the parts used in the execution of the annual performance of maintenance contract - Bonafide belief of non payment - Held that:- In the decision of COFFEE BOARD, BANGALORE v. JOINT COMMISSIONER OF COMMERCIAL TAXES [1969 (10) TMI 58 - SUPREME COURT OF INDIA], it is held that when the amount of tax is paid by the assessee in advance for the whole year in the aggregate is less than the tax payable for the year or month as finally assessed being more than 15% is the difference in tax, a penalty which shall not be less than one and half of the tax so paid in short but not exceeding one and half times the amount by which the tax so paid falls short of the tax payable for the month or quarter or for the whole year, as the case may be, could be imposed after hearing the assessee. - It is not a case of payment of less tax. It is a case of nonpayment of tax in respect of the contract of FSMA and SSMA. The reason for nonpayment is, it forms part of the service to be rendered and tax is service tax and not the sales tax, for the value of the parts which are used in the services are declared and exemption is sought. The assessee is claiming exemption from 1992 - 93. However, the department is refusing to grant the exemption. - The assessee has gone upto the Supreme Court and it is only on 24.08.2005, the Supreme Court pronounced judgment holding the assessee liable to pay tax and clarifying the conflicts of it's own earlier judgments, which was the cause for bona fide doubts in the mind of the assessee in not paying the tax. Though the returns were filed for the year 2000 - 01, within the prescribed time, no assessment orders has been passed, till the passing of the judgment of the Supreme Court. The assessment order was passed on 21.03.2006, immediately the payment is made. Therefore, this nonpayment of tax along with the returns or at the end of the financial year cannot be said to be willful, deliberate or contumacious and that the assessee was acting deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. This aspect has been completely missed by the authorities while exercising the powers of imposing the penalty. It is settled law that penalty cannot be imposed merely because it is lawful to do so. A discretion is conferred on the authority while imposing penalty. It is a judicious discretion. The law on the point is also well settled. The authorities as well as the appellate tribunal did not keep in mind the settled legal position while imposing the penalty or upholding the penalty which is imposed. In that view of the matter, the order passed by the Tribunal cannot be sustained. The Tribunal proceeded on the basis that the assessee himself has taken a decision not to pay the amount of tax without any judicial support for nonpayment of tax. Assessee was relying on the earlier decisions of the Apex Court for denying the liability to pay tax and therefore, the Tribunal was not justified in the aforesaid observations. The Tribunal was of the view that once the judgment was delivered on 24.08.2005, the assessee should have paid the money immediately thereafter. The same having not been done, it amounts to deliberate noncompliance of the law. We find it difficult to accept this reasoning. On 24.08.2005, the Supreme Court passed the order; on 21.03.2006, the assessment order has been passed and immediately thereafter, the payment has been made. In that view of the matter, in our view, both the authorities committed a serious error in not taking into consideration the facts of this case, the conduct of the assessee prior to the Supreme Court judgment, after the Supreme Court judgment and after the assessment orders in levying penalty which cannot be sustained - Decided in favour of assessee.
|