Remanded

The Kisan Sahkari Chini Mills Tilhar Shahjahanpur v. Commissioner Trade Tax U.P. Lucknow

Allahabad HC20 Nov 2018STRE/1584/2006

Case brief

AI extract

What is this about?

The High Court revisited a penalty order under the U.P. Trade Tax Act for failure to deposit TDS. Finding that the Tribunal did not record specific findings on the dates of penalty initiation, interest accrual, and final payment, the Court set aside the order and remitted the matter for a fresh decision.

What did the court decide?

The order of the Tribunal setting the penalty was set aside and the matter remitted to the Tribunal to pass a fresh order after recording findings on dates of notice, interest, and payment.

The Kisan Sahkari Chini Mills Tilhar… — Civil Procedure and Limitation | Allahabad HC (2018)

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Court No. - 7

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Case :- SALES/TRADE TAX REVISION No. - 1584 of 2006

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Applicant :- The Kisan Sahkari Chini Mills, Tilhar, Shahjahanpur

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Opposite Party :- Commissioner, Trade Tax, U.P. Lucknow Counsel for Applicant :- Kunwar Saksena,Nitin Kesarwani Counsel for Opposite Party :- S.C.

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Hon'ble Saumitra Dayal Singh,J.

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Heard Sri M.M.Rai, learned counsel for the assessee and Sri B.K.Pandey, learned Standing Counsel for the State.

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The present revision has been filed by the assessee for the A.Y. 1990-91 under the U.P. Trade Tax Act, 1948 (hereinafter referred to as 'the Act') arising from the proceedings under Section 8-D (6) of the Act whereunder the penalty of Rs. 1,15,000/- was imposed on the assessee.

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The assessee contends that for the A.Y. 1990-91 it was liable to deduct tax Rs. 1,44,068/- and deposit the same with the revenue against payments made to various contractors. While such deductions are admitted to have been made against payment to the contractors, admittedly, the assessee defaulted in making prompt deposit of the same with the revenue. It is thus submitted that up to 15.03.1991 the assessee deposited Rs. 29,733/- out of that TDS amount whereas for the balance it deposited Rs. 97,592.85 on 28.06.1991; Rs. 63,199/- on 28.08.1991 and Rs. 12,139/- on 05.06.2006.

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Thus, the assessee claimed to have deposited total amount of Rs. 1,82,651/- against TDS amount of Rs. 1,44,068/- due from it. Thus the assessee further claimed that it had made excess deposit of TDS together with interest liability.

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In such fact, it has been submitted that the assessee having cleared the default of TDS together with interest prior to issuance of any notice before penalty, the revenue had not suffered any loss and therefore, the assessee could not have been penalized.

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As to the provisions of Section 8-D (6) of the Act, it has been submitted that the penalty imposable under that provision is discretionary and not mandatory. Reliance has been placed on certain decisions of this Court where similar penalty had been deleted after taking note of the fact that the assessee (in those cases) had deposited the entire amount of TDS together with

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interest prior to issuance of penalty notice. Thus reliance has been placed on the decision of this Court in the cases of Sales/Trade Tax Revision No. 358 of 2010 Sheels India Limited Vs. Commissioner Commercial Tax, U.P. Lucknow decided on 12.02.2015; The Commissioner of Commercial Tax, Gomti Nagar, Lucknow Vs. M/s Hindustan Petroleum Corp. Ltd., Lucknow (VSTI 2013 (16)B-170); B.S.N.L. through Executive Engineer Vs. Commissioner of Trade Tax U.P. (VSTI 2014 (19) B-154); The Commissioner Commercial Tax, Lucknow Vs. S/S. Garrison Engineers Project (2017 UPTC-400) and Sales/Trade Tax Revision No. 335 of 2015 The Commissioner, Commercial Tax, Lko. Vs. S/S Shri Rajendra Kumar Gupta Memorial Trust decided on 24.07.2015.

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Opposing the present revision, learned Standing Counsel submits that the principle being invoked by learned counsel for the assessee is not applicable in the facts of the present case, inasmuch as undisputedly the penalty was initiated in compliance of the direction dated 01.08.1998 and the penalty order was passed on 25.03.2000, whereas according to the assessee's own case it cleared the default of interest by depositing the amount of Rs. 12,139/- on 05.06.2006 i.e. after the penalty order had come into existence. He therefore, submits that the order of the Tribunal does not suffer from any infirmity.

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Perusal of the order reveals that it has relied on an earlier decision of this Court in the case of Garrison Engineer (Air Force), Agra Vs. Commissioner of Trade Tax (2002 UPTC442) wherein the view taken by the Tribunal that the deduction is required to be made under Section 8-D(6) of the Act was mandatory, has been upheld.

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Having considered the arguments so advanced by learned counsel for the parties, at present though it is admitted to the assessee that the net amount of TDS required to be deposited by the assessee was Rs. 1,44,068/- for the A.Y. 1990-91, however, the amount of interest that became due on that amount (since the assessee failed to make timely deposit of the same) is not borne out from any of the order accompanying the present revision application. The amount of interest would have bearing on the outcome of this revision inasmuch as if it is found that the assessee had deposited the entire amount of TDS together with due interest before issuance of penalty notice under Section 8-D(6) of the Act the penalty may not be imposable at all inasmuch as in such case, the assessee necessarily would have to be held to have cleared the default on its own without the same coming to the notice of the relevant authority.

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However, if any part of the default or the due interest is found to have remained outstanding till issuance of penalty notice, such that it may be included in the amount of Rs. 12,139/deposited by the assessee on 05.06.2006, then, even if some excess payment may have arisen on that date the assessee would continue to be liable to suffer penal consequences though quantum of penalty would still have to be worked out.

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Since the Tribunal has not recorded any finding as to the date when the penalty proceedings were instituted or the amount of interest that became due against the assessee and the date when the entire due amount had been paid the present order of the Tribunal is set aside and the matter remitted to the Tribunal to pass a fresh order in view of the observation made above.

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As to the question of law that has been raised in the present revision, it is left open to the assessee to advance fresh submissions before the Tribunal to contend that there was no minimum penalty prescribed under the Act. In the event of such submission being advanced, the Tribunal may pass appropriate order in that regard.

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In view of the above, the matter is remitted unanswered at this stage.

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Accordingly, the present revision is disposed of .

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Order Date :- 20.11.2018 Lbm/-

The Kisan Sahkari Chini Mills Tilhar Shahjahanpur v. Commissioner Trade Tax U.P. Lucknow

Case brief

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The Kisan Sahkari Chini Mills Tilhar Shahjahanpur v. Commissioner Trade Tax U.P. Lucknow

Case brief

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What did the court decide?

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