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2000 (11) TMI 135 - SC - VAT and Sales TaxWhether such late payment surcharge/interest was penal in nature and, therefore, could not be recovered, having regard to the stay of recovery thereof granted by an appropriate authority? Held that:- This court did not accept the argument that it was penal but, having regard to the fact that the rate of late payment surcharge seemed penal on the facts and circumstances of the case, it reduced the assessee's obligation in respect thereof. We cannot accept the submission of learned counsel for the taxing authorities that the penalty contemplated by section 42 is analogous to a late payment surcharge/ interest. A late payment surcharge/interest is necessarily compensatory in character. A penalty is a punishment. In the premises, we hold that the assessee was not in default for the period June 24, 1989, onwards and that it cannot be subjected to penalty under section 42 in regard to that period. The demand in that behalf is set aside.
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