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M/s Swarna Cars Private Limited Through Auth. Signatory Versus The Commissioner Of State Tax U.P. Lucknow

2018 (2) TMI 610 - ALLAHABAD HIGH COURT

Penalty u/s 54(1)(1) of the U.P. VAT Act - delayed deposit of tax - Held that: - It is admitted that the assessee has deposited tax late by two days. It is also not in dispute that on the relevant date when the admitted tax was to be deposited the assessee had no funds available in its bank account. It is, however, not disputed that revisionist had overdraft facilities available and the amount of admitted tax could have been paid from it. The amount of interest payable upon the delayed deposit o .....

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statute itself confers discretion upon the authority concerned and the imposition of penalty is not automatic, the authority concerned is expected to take into consideration relevant facts and circumstances that are placed before it. The exercise of jurisdiction to levy penalty in the facts and circumstances is not proper - revision allowed. - Sales/Trade Tax Revision No. 26 of 2018 - Dated:- 5-2-2018 - Hon'ble Ashwani Kumar Mishra, J. For Applicant :- Shubham Agrawal For Opposite Party :- .....

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is satisfied that any dealer or other person, as the case may, has committed the wrong described in column 2 of the table below, it may, after such inquiry, if any, as it may deem necessary and after giving dealer or person reasonable opportunity of being heard, direct that such dealer or person shall, in addition to the tax, if any, payable by him, pay by way of penalty, a sum as provided in column 3 against the same serial no. of the said table: c Wrong Amount of Penalty (1) (2) (3) 1 The deal .....

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f November, 2009 the admitted amount of VAT payable by it had to be deposited by 20.12.2009. The assessee, however, was not having sufficient funds in its account, and therefore, made a request to the assessing authority to extend the time for depositing the admitted tax. Upon being convinced of justification furnished, the time to deposit VAT was extended by four days i.e. upto 24.12.2009. The assessee could not deposit the tax by 24.12.2009 and it was actually deposited late by two days i.e. o .....

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that in its bank account it had no liquid funds, however, is not disputed. 4. The assessee places reliance upon a decision of this Court in M/s Govind Sugar Mills Limited vs. Commissioner of Trade Tax reported in 2008 UPTC 991, in which the provisions of the U.P. Trade Tax Act, similar in nature, fell for consideration. This Court after examining the law on the point proceeded to hold as under in para 13 and 19:- "13. In Commercial Auto Sales Pvt. Limited, Allahabad v. Commissioner of Trad .....

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le cause and the burden to prove the absence of a reasonable cause lies on the revenue. Apart from rejecting the dealer's explanation, it has brought no material on record to establish the absence of a reasonable cause. The approach of the Assessing Officer that there might be other bank accounts or over draft facilities merely shows that the approach is merely conjectural. As is evident the default was trifling and the State has not suffered any loss. On the other hand it has gained by earn .....

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has held that penalty will not be imposed merely because it is lawful to be so and 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." 19. In view of the consistent pronouncement of various judgments on this issue by the Court, this Court is of the opinion that the imposition of penalty under Section 15-A(1)(a) of the Act was patently e .....

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t in taxing statutes the provisions are to be strictly construed. It is contended that once a finding is returned by the tribunal that reasonable cause was not explained by the assessee for the delay occasioned, the imposition of penalty is not liable to be interfered with. Reliance is placed upon a decision of the Apex Court in State of U.P. and others vs. Sukhpal Singh Bal reported in (2005) 7 SCC 615, para 15 thereof is relied upon and is reproduced hereinafter:- "15. In the light of the .....

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lties for avoidance of civil liabilities which do not constitute offences against the State. This distinction is responsible for any enactment intended to protect public revenue. Thus, all penalties do not flow from an offence as is commonly understood but all offences lead to a penalty. Whereas the former is a penalty which flows from a disregard of statutory provisions, the latter is entailed where there is mens rea and is made the subject-matter of adjudication. In our view, penalty under Sec .....

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is conferred by the statute in question. Deterrence is the main theme or object behind the imposition of penalty under Section 10(3)." 7. Reliance is also placed upon another decision of the Apex Court in Chairman SEBI vs. Shriram Mutual Fund and another reported in (2006) 5 SCC 361. Para 19, 29, 32, 33 and 35 are relied upon. Learned Standing Counsel also places reliance upon a decision of Apex Court in Director of Enforsement vs. MCTM Corporation Pvt. Ltd. and others reported in (1996) 2 .....

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owever, not disputed that revisionist had overdraft facilities available and the amount of admitted tax could have been paid from it. The amount of interest payable upon the delayed deposit of admitted tax has been deposited by the revisionist and the interest of State is adequately protected. 10. So far as the judgments relied upon by the learned Standing Counsel are concerned, it is otherwise well settled that strict interpretation is to be resorted to while interpreting the provisions of a ta .....

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the facts and circumstances of the present case. 11. So far as the judgment in Chairman, SEBI (supra) is concerned, their Lordships of the Apex Court observed that where penalty proceedings are initiated under the Act there is no question of proof of intention or any requirement of mense rea. In the context of the provision of section 15 of the Security and Exchange Board of the India Act, 1992 it was observed that once penalty became leviable, the plea of hardship or mense rea is not relevant. .....

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