TMI Blog2017 (4) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... l was not justified in deleting the penalty levied under Section 34 (8) - matter is remitted back for a fresh consideration on the quantum of penalty to be imposed - appeal allowed by way of remand. - Sales/Trade Tax Revision No. 221 of 2016 - - - Dated:- 13-4-2017 - Hon'ble Ashwani Kumar Mishra, J. For the Applicant : S. C. For the Opposite Party : Praveen Kumar, Trapti Gupta ORDER 1. This revision is by the revenue challenging an order passed by the Tribunal dated 29th March, 2016, setting aside the order of the First Appellate Authority dated 8th March, 2013, and thereby quashing the penalty imposed upon the assessee for late deposit of tax under Section 34 (8) of the U.P. Value Added Tax Act. 2. In order to appreciate the controversy involved, it would be relevant to notice provisions of the U.P. VAT Act, which operates in the field. Section 34 provides for tax deduction at source, Sub-section (1) thereof deals with deduction of tax at source, while Sub-section (6) provides the time within which such amount is to be deposited, and for any failure to deposit such amount, liability of interest arises under sub-section (9), whereas, for any failure to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing authority may, after giving to such person an opportunity of being heard, by order in writing, direct that such person shall pay, by way of penalty, a sum not exceeding twice the amount deductible under this section but not so deducted and, if deducted, not so deposited into the Government Treasury. (9) Without prejudice to the provisions of sub-section (8), if any such person, after deducting, fails to deposit the amount so deducted, he shall be liable to pay simple interest at the rate of fifteen percent per annum on the amount not so deposited from the date on which such amount was deducted to the date on which such amount is actually deposited. 3. In the facts of the present case, the assessee for the year 2011-2012 made payment to its sub contractor, and also deducted tax at source amounting to ₹ 58,10,052/-. The amount was deducted in December, 2011, and by virtue of sub-section 6, was liable to have been deposited by 20th January, 2012. Instead, such deposit was made on 1.6.2012. It has come on record that upon the delayed deposit of tax, interest payable under Sub-section (9) has been duly deposited by the assessee. The authorities under the act also im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s interest for the period the deposition of tax deducted at source was delayed and the revenue has not lost any amount rather it had gained much in getting a considerable amount in the form of interest, which in-itself amount a penalty, we are of the considered view that imposition of any penalty under section 34(8) of the U.P. Value Added Tax Act, 2008 was wholly unjust and unwarranted. In the case of 'Commissioner of Commercial Tax versus Hindustan Petroleum Corporation Ltd. VSTI 2013 (16)B-170', the Allahabad High Court held that if tax deducted at source along-with interest thereon for the period of delay in its deposition has been paid/deposited there is no good reason or justification for imposition of penalty under Section 34(8) of the U.P. Value Added Tax Act, 2008 as the revenue is not going to loose any amount. 4. The Tribunal for coming to such conclusion has relied upon an order dated 3rd December, 2012, passed by Lucknow Bench of this Court in Trade Tax Revision Defective No. 25 of 2010 (The Commissioner Commercial Tax Gomti Nagar Lko. Vs. M/s Hindustan Petroleum Corp, Ltd. Lko.), which is quoted hereinafter:- Present revision has been filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon a person making payment to a contractor engaged in a works contract to deduct tax. The tax which is liable to be deducted is with reference to the liability discharged on account of valuable consideration paid for the transfer of property in goods in pursuance of a works contract. The civil work element undertaken by the contractor would necessarily entail a transfer of property in goods involved in the execution of a works contract. Sub-section (6) then provides for the imposition of penalty if a person fails to make deductions before making payment to the contractor. Sub-section (6) does not defer the imposition of penalty nor does it make the payment of penalty dependent upon the intent of the person responsible. The payment of penalty is also not contingent upon it being found that there was a design to evade payment of tax or any unlawful intent not to deduct tax. Sub-section (6) therefore, stands attracted immediately upon a failure on the part of the person responsible to deduct tax from payments made to a contractor. In the present case, there has admittedly been a failure on the part of the revisionist to deduct tax. Consequently, the provisions of sub-section (6) stoo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, accept the contention of Mr. Shome and dismiss the appeal answering the questions in the negative. During the course of hearing this appeal against the judgment and order of the Calcutta High Court, we had required the assessee to explain to us how and why the mistake was committed. The assessee has filed an affidavit dated 14th September, 2012 in which it is stated that the assessee is engaged in Multidisciplinary Management Consulting Services and in the relevant year it employed around 1000 employees. It has a separate accounts department which maintains day to day accounts, pay rolls etc. It is stated in the affidavit that perhaps there was some confusion because the person preparing the return was unaware of the fact that the services of some employees had been taken over upon acquisition of a business, but they were not members of an approved gratuity fund unlike other employees of the assessee. Under these circumstances, the tax return was finalized and filled in by a named person who was not a Chartered Accountant and was a common resource. It is further stated in the affidavit that the return was signed by a director of the assessee who proceeded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industan Petroleum Corp (Supra), also relies upon the observations of the Supreme Court in Price Waterhouse (Supra) for coming to the conclusion that where interest over delayed deposit of tax deducted at source is paid, the levy of penalty may not be imposed. 9. Section 271 (c) of the Income Tax Act is reproduced:- 271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under the Act, is satisfied that any person-.. (c) has concealed the particulars of his income or furnished inaccurate particulars of such income.. Explanation 1.- Were in respect of any facts material to the computation of the total income of any person under this Act,- (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B) Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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