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2018 (12) TMI 100 - HC - VAT and Sales TaxPenalty u/s 34(8) of the U.P. Vat Act, 2008 - assessee had, of its own and prior to issuance of any notice, cleared the default in payment of T.D.S. amount together with interest - Held that:- Though the language of section 34(8) of the Act does not admit any element of concealment as an ingredient for the penalty imposable under that provision of law, at the same time it clearly does not appear to suggest that in every case of default, in either making a deduction or in timely depositing the T.D.S. amount, the defaulting assessee must, as a matter of principle, be penalised - The word 'shall' used to provide for the effect or consequence of the penalty order cannot be read out of context to imply that the assessing officer must necessarily, in all cases of default, irrespective of all other attending facts and circumstances obliged to impose penalty. To accept such an interpretation, besides doing violence to 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. 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. In the present case, undisputedly the assessee rectified the default committed by it (during A.Y. 2010-11) together with interest before the end of the calendar year 2011 i.e. during A.Y. 2011-12. The revenue on the other hand did not realize the existence of that default or its rectification made by the assessee, till as late as 09.09.2014. This undisputed fact mitigates against the levy of penalty as the assessee was not caught having committed the default and it had made good the loss to the revenue before issuance of any notice of demand with respect to the defaulted amount etc. - There survived no further legal justification to penalize such an assessee. Revision allowed - decided in favor of the assessee and against the revenue.
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