TMI Blog2015 (9) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, cannot be countenanced. The facts and circumstances are a pointer to the conscious disregard of the petitioner's obligation to pay the tax, hence disentitled to a concession in the levy of penalty under section 12B(4) of the KST Act, by exercise of discretion. The first appellate authority in exercise of its discretion modified the order of the assessing authority by reducing the penalty to 50 per cent. of the tax. The order admittedly is not challenged by the Revenue and is allowed to rest. In the facts and circumstances, the point raised for consideration is answered in the negative and against the petitioner, and these petitions devoid of merit, are accordingly dismissed. - Decided against the assessee. - STRP No. 1004, STRP No. 1005 of 2013 - - - Dated:- 17-9-2014 - RAM MOHAN REDDY AND MANOHAR B. JJ. Sangram S. Kulkarni and Vivek Gramopadhya for the petitioner. C. S. Patil, Government Advocate, for the respondent. ORDER Since common questions of law and that of fact arise for decision making, petitions are clubbed together and with the consent of the learned counsel, though listed for admission, are finally heard and disposed of by this common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay any tax due under section 25B of the KST Act. The assessing authority, accepted the return recording a finding that the appellant was eligible for the tax incentive in terms of the certificate annexure A as if applicable to all the five units. The assessing authority exercising powers of rectification under section 25A of the KST Act, by order dated January 23, 2010, rectified its earlier order recording a finding that from out of the five units, only one unit at Munavalli was entitled to the benefit and accordingly, on the same day, issued a demand notice in form No. 7. The petitioner is said to have paid the total taxes due though in respect of the four units, on February 15, 2010. The non-payment of the purchase tax in respect of the four units, led to a notice dated April 20, 2011 invoking section 12B(4) of the KST Act proposing penalty as under: (i) 2006-07 ₹ 2,76,78,805 (ii) 2007-08 ₹ 1,18,49,937 The said proposition notice was confirmed by order dated June 25, 2011, aggrieved by which, the petitioner preferred W. P. Nos. 64639-640 of 2011, whence, by order dated August 12, 2011, the petitions were permitted to be withdrawn with liberty to file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate for the respondent/Revenue seeks to sustain the orders of the appellate authority and the KAT as being well merited, fully justified and not calling for interference. Learned counsel submits that the appellant when issued with the new unit certificate, annexure-A, specifying its applicability to the unit at Munavalli with installed crushing capacity of 2,500 tonne, there can be no mistake in understanding that the said certificate was inapplicable to other units of the petitioner hence, unit centric and not company specific . Even other wise, as on April 19, 2001, the new unit certificate, annexure A when issued, was in respect of Munavalli unit, since the four other units at Aland, Haveri, Havalga and Burlatti were not commissioned. According to the learned Government Advocate, despite lack of bona fides, the first appellate authority exercised its discretion to reduce the penalty to its minimum to modify the order of the assessing authority, petitioner cannot be heard to have a grievance. Having heard the learned counsel for parties, perused the pleadings and examined the orders impugned, the common point for consideration in these petitions is: Whether the Join ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to concessions by conversion of purchase tax pay able into interest free loan. The certificate states that M/s Renuka Sugars Limited, Munavalli, Savadatti Taluk, registered with Government of India for manufacture of sugar with installed capacity of 2,500 TC commenced commercial production on November 22, 1999, evident from the first sale invoice issued by the unit at Munavalli, with approval of Commissioner for Industrial Development and Director of Industries and Commerce. The only impression that any rational, prudent man could gather from the certificate is that, it was unit centric and not company specific . In other words, concession was available to the petitioner's unit at Munavalli, which commenced production on November 22, 1999. This certificate did not extend benefit to four other units since not commenced commercial production of sugar by the petitioner-company. It is not the case of the petitioner that the new unit certificate, annexure A, was either modified or a fresh certificate issued covering the other four units at Aland, Haveri,Havalga and Burlatti, or that similar such new certificates were issued to those four units on the commencement of commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention on the part of the assessee in not acting in accordance with law in payment of advance tax and that the contravention had occurred because of circumstances beyond its control, opined that penalty for failure to deposit advance tax within the time-limit as provided under section 12B(4) is not automatic without considering facts and circumstances of the case. The said authority, further observed the opinion of the apex court in Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 (SC), as also Naren Constructions, Shimoga v. State of Karnataka [2000] 48 KLJ 34 (Trib.), in the light of which, held that imposition of the maximum penalty equal to the amount of tax is too heavy and it was reasonable to levy minimum penalty stipulated under section 12B(4) of the Act and accordingly by order dated 19th August 2011, reduced the penalty. The KAT too, on a re-appreciation of the entire material placed before it in a second appeal, concurred with the views of the first appellate authority to dismiss the appeals. A co-ordinate Division Bench of this court in Gujarat Co-operative Milk Marketing Federation Limited v. State of Karnataka [1996] 103 STC 369 (Karn), while interpr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 214, an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily 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. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances'. In Shanthi Industries v. Commissioner of Commercial Taxes [1993] 89 STC 190 (Karn), a co-ordinate Division Bench, observed that it was well neigh impossible to lay down all tests for all cases but possible to lay down some tests as applicable to all cases. When discretion with duty is invested in the authority, the requirement is a consideration of all explanations offered in regard to the alleged breach of law inviting the penalty though the authority has the power to impose such penalty. Section 12B(4) of the KST Act reads thus: If at the end of the year i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchase tax into interest-free loan, nevertheless, did discharge its liability immediately after issue of the demand notice dated January 23, 2010. The contention that at the first instance the assessing authority accepted the petitioner's return for the years 2006-07 and 2007-08, claiming concession followed by the assessing authority rectifying the said order and issuing a demand notice pursuant to which the purchase tax was paid, is acceptable explanation, cannot be countenanced. The facts and circumstances are a pointer to the conscious disregard of the petitioner's obligation to pay the tax, hence disentitled to a concession in the levy of penalty under section 12B(4) of the KST Act, by exercise of discretion. The first appellate authority in exercise of its discretion modified the order of the assessing authority by reducing the penalty to 50 per cent. of the tax. The order admittedly is not challenged by the Revenue and is allowed to rest. In the facts and circumstances, the point raised for consideration is answered in the negative and against the petitioner, and these petitions devoid of merit, are accordingly dismissed. - - TaxTMI - TMITax - CST, VAT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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