Frontier Springs Limited vs Commissioner of Trade Tax, U.P., Lucknow

Arun Tandon, J.—Heard Sri Shubham Agrawal, learned counsel for the assessee and learned standing counsel for the Department in these six revisions. These six trade tax revisions filed by the assessee raise common question of law. Therefore, all these revisions have been clubbed together and are being decided by this common judgment.

Facts in short leading to these six revisions are as follows:

The assessee in assessment years 2000-01 and 2001-02 in different quarters had committed default in deposit of admitted amount of tax within the time permissible. Therefore, proceedings for penalty u/s 15A(1)(a) of the Trade Tax Act were initiated against the assessee. The assessing authority found that the explanation furnished by the assessee for non-deposit of the admitted amount of tax within the time permitted under the statute was not satisfactory and therefore, penalty at the rate of 20 per cent of the amount of tax was levied.

Not being satisfied, the assessee filed first appeal which was allowed by the first appellate authority vide order dated April 6, 2002 and it was held that the explanation furnished by the assessee qua delay in deposit of the tax was bona fide and satisfactory and therefore, levy of penalty was set aside.

Feeling aggrieved by the order so passed by the first appellate authority the Department filed six second appeals, which were clubbed together and have been decided under a common judgment dated April 10, 2007 by the Tribunal. Hence these six revisions.

The Tribunal in the facts of the case has found that the explanation furnished by the assessee qua sale price along with the incident of tax being not recovered from the purchaser, which was none other than a Government company, namely, railways, was not reasonable explanation for non-deposit of the tax within the time. Similarly, deposit of admitted amount of tax interest for delayed period by the assessee, will not dilute the levy of penalty. The Tribunal has gone on to hold that the liability to pay the tax on the transactions is admitted to the assessee and it is wholly immaterial as to whether he had recovered the sale price along with the incident of tax from the purchaser or not.

This court finds no illegality in the reasoning so assigned in the order of the Tribunal. It has to be kept in mind that payment of interest on the delayed amount of tax flows from statutory provision, i.e., section 8(1) of the Trade Tax Act while penalty proceedings are taken for delayed payment of tax u/s 15A(1)(a) of the Trade Tax Act. Both interest and penalty are two different concepts. Interest flows from the retention of the money, which was legally payable, while penalty is inflicted for violation of statutory provisions and the time schedule prescribed.

In the facts of the case, it is no concern of the Department as to whether the purchaser had made payment of price of the goods purchased to the revisionist-assessee dealer or not and it is also immaterial as to whether the purchaser is a Government Company or a private buyer.

In the totality of the circumstances as on record, this court finds absolutely no illegality in the order passed by the Tribunal.

The learned counsel for the petitioner has placed reliance upon the judgment of this court in the case of East India Transformers & Switch Gear (P.) Ltd., Ghaziabad v. Commissioner of Sales Tax reported in [1993] UPTC 212.

The judgment relied upon by the assessee does not lay down any proposition of law as would be clear from paragraph of the said judgment which specifically mentions that in the facts of the case, the court was satisfied that no penalty was called for.

The learned counsel for the assessee has also referred to the judgment of 12 this court in the case of Govind Sugar Mills Limited, Lakhimpur Khiri v. Commissioner of Trade Tax reported in [2010] 33 VST 399 (All.) : [2008] UPTC 991, only for the purpose that the rate of penalty may be reduced from 20 per cent, to the minimum permissible, i.e., 10 per cent.

In the facts of the case the amount of penalty is reduced to 15 per cent subject to the conditions that the assessee deposits the reduced penalty in terms of the order of this court within one month from today. Any amount already deposited shall be taken into consideration for the purpose. In case of default in compliance with any of the conditions mentioned above, the assessee shall not be entitled to the benefits of this order.

The order of the Tribunal stands modified to that extent only. With the aforesaid directions/observations, all the revisions stand disposed of.