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The Commissioner Commercial Tax Versus Bareilly Highways Projects Limited

2017 (4) TMI 878 - ALLAHABAD HIGH COURT

Penalty u/s 34 (8) of the UPVAT Act - late deposit of TDS - Revenue contends that liability to pay penalty consequent upon delayed deposit of tax deducted at source is a necessary corollary of delayed deposit of tax deducted at source, and considerations like intent or malafide etc. are not material - Held that: - reliance was placed in the case of Price Waterhouse Coopers Pvt. Ltd. Vs. commissioner of Income Tax and another [2012 (9) TMI 775 - SUPREME COURT], for coming to the conclusion that w .....

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ision imposing liability of penalty to the extent permitted in law. - Tribunal 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 revenu .....

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eof 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 deposit tax deducted at source, penalty is leviable under sub-section (8). The provisions in that regard are reproduced:- "(1) Without prejudice to any other mode of recovery, payment or collection of tax under this Act, the State Government m .....

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e by the dealer on account of sale of any taxable goods, deduct an amount determined in the manner specified: PROVIDED that where in case of a works contract, the contractor has awarded a sub-contract and the notification provides for deduction of amount by the contractee from the payments made to contractor, the contractor responsible for making any payment or discharge of any liability to any sub-contractor, in pursuance of a contract with the sub-contractor, shall, whilemaking payment to the .....

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the month following that in which deduction is made: PROVIDED that where the purchaser of goods referred to in sub-section (1) is a registered dealer, he shall deposit the amount of deduction in the manner and within the time in which amount of tax for the tax period in which purchase has been made, is payable and such dealer shall be entitled to claim input tax credit in accordance with provisions of section 13 in respect of such purchase. (8) If any person referred to in sub-section (1) fails .....

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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 De .....

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ue was not adversely affected since interest upon such delayed amount has been deposited. Para 8 and 9 of the Tribunal's order which notices reasons for quashing penalty, reads as under:- "8(1). Section 54 (1)(1)(a) of the U.P. Value Added Tax Act, 2008 and Section 34(8) of the U.P. Value Added Tax Act, 2008 are two provisions which prescribe imposition of penalty in case any dealer fails to deposit the tax within the time prescribed by the act. Neither Section 54 (1)(1)(a) nor Section .....

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P. Value Added Tax Act, 2008 can be imposed only when the assessee fails to show some reasonable cause for his failure to deposit the admitted tax on or before the prescribed date. (9). In this case in hand though the appellant had deducted the tax at source on payment, it had made to the sub-contractor in the month of December, 2011 but had failed to deposit the amount by the prescribed time and admittedly had deposited the amount only on 1.6.2012. In other words it had deposited the amount of .....

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ant while determining the amount of penalty to be imposed upon it under Section 34(8) of the U.P. Value Added Tax Act, 2008. In view of the fact that the appellant had deposited hefty amount of ₹ 2,94,164.00 towards 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 impositi .....

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x 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 department under section 11 of the U.P. Trade Tax Act, 1948, against the judgmen .....

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ction 8-D(6) of the Trade Tax Act, vide order dated 19.07.2004. The same was upheld by the first appellate authority. However, the Tribunal vide its impugned order has cancelled the penalty. From the record, it appears that the petitioner had deposited the TDS alongwith interest for the delay. Thus, there was no loss to the revenue. When the TDS was deposited alongwith interest and there was no loss to the revenue, then there was no justification for levy of the penalty. There was no malafide in .....

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support of the revision, contends that liability to pay penalty consequent upon delayed deposit of tax deducted at source is a necessary corollary of delayed deposit of tax deducted at source, and considerations like intent or malafide etc. are not material. Learned Standing Counsel places reliance upon a decision of Sales/Trade Tax Revision No. 883 of 2006 (Bharat Sanchar Nigam Ltd. Thru Asst. G.M Admin. Vs. the Commissioner of Trade Tax U.P. Lucknow), while dealing with the pari materia provis .....

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tion 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 o .....

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tracted and the levy of penalty, therefore, followed and was in fact a necessary corollary." 6. It is, therefore, contended that the Tribunal has erred in interfering with the imposition of penalty for the reasons disclosed therein. 7. Sri Praveen Kumar appearing for assessee, has placed reliance upon the order of the Lucknow Bench of this Court in Commissioner Commercial Tax (Supra). Reliance is also placed upon judgement of Apex Court in Price Waterhouse Coopers Pvt. Ltd. Vs. commissioner .....

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. The only reason given by the High Court for dismissing the appeal reads as under: "After analysing the facts of this case, considering the submissions made by the learned Advocates for the parties and the materials placed before us, we cannot brush aside the fact that the assessee company is a well known and reputed Chartered Accountant firm and a tax consultant. We also do not find any substance in the submissions made by Dr. Pal; on the contrary, in our considered opinion, we find that .....

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f the opinion that the penalty under that provision is a civil liability and wilful concealment is not an essential ingredient for attracting civil liability as in the matter of prosecution under section 276C, as has been held by the Hon'ble Supreme Court. We also find that the mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. We, therefore, accept the contention of Mr. Shome and dismiss the appeal answering the questions in the negativ .....

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olls 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 t .....

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ssessee could make a silly mistake and indeed this has been acknowledged both by the Tribunal as well as by the High Court. The fact that the Tax Audit Report was filed along with the return and that it unequivocally stated that the provision for payment was not allowable under Section 40A(7) of the Act indicates that the assessee made a computation error in its return of income. Apart from the fact that the assessee did not notice the error, it was not even noticed even by the Assessing Officer .....

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turn, failed to add the provision for gratuity to its total income. This can only be described as a human error which we are all prone to make. The calibre and expertise of the assessee has little or nothing to do with the inadvertent error. That the assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. We are of the .....

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so 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 .....

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facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." 10. Under the provision of the Income Tax Act, penalty is leviable if the assessing authority is satisfied that any person has concealed t .....

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