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Judgment
Ramesh Ranganathan, J.—The proceedings under challenge in this Writ Petition is the order passed by the 1st respondent dated 21.03.2014 levying penalty of Rs. 77,935/-. The petitioner, a registered dealer on the rolls of the 1st respondent, is carrying on business in chillies. He purchases chillies from farmers in the market yard and sells the same to others. The Andhra Pradesh Value Added Tax Act (For short, the "Act") requires dealers to file their monthly returns, and pay the taxes due as per the said returns by the 20th of the succeeding month. While the petitioner filed his returns, within the time stipulated, for the four month period i.e., March, June, July and September, 2013, he failed to remit the tax due within the stipulated time. In the affidavit filed in support of the Writ Petition, the petitioner contended that there was a delay on his part, in paying the tax due, because of severe financial difficulties. The 1st respondent, by notice dated 07.12.2013, called upon the petitioner to show-cause why penalty, under Section 51(1) of the Act should not be imposed on him. In his reply thereto, the petitioner stated that he had paid tax belatedly as chillies is a seasonal crop sold in Summer from February to July; during peak season they were facing difficulty in settling the accounts of farmers; as such they did not pay the tax within the stipulated period; and regular buyers in the market seek time to pay the sale proceeds, as they can adjust the amounts to pay the farmers who sold the chillies. The petitioner assured that he would pay tax in time, along with monthly returns, in future. In the impugned order, the first respondent held that, since he had failed to pay the tax due on the basis of the returns submitted for the said 4 months by the last date of the month in which it was due, the petitioner was liable to pay penalty at 10% of the tax due for the said 4 months period; and the reasons shown by him in his reply letter dated 21.12.2013, for belated payment of tax, did not exonerate him from payment of penalty. Consequently, the petitioner was imposed penalty of Rs. 77,935/-.
Sri G. Narendra Chetty, learned counsel for the petitioner, would rely on the judgments of Supreme Court in 1) Hindustan Steel Ltd. Vs. State of Orissa, ; and 2) State of Madhya Pradesh and others Vs. Bharat Heavy Electricals, ; and the Judgment of Bombay High Court in Additional Commissioner of Sales Tax, VAT-III, Mumbai Vs. Ankit International (2011) 46 VST 1 (Bom.), to contend that it is not mandatory for the assessing authority to impose penalty at 10% merely because tax had not been paid by the assessee within time; the power to impose penalty is discretionary; as the authorities are entitled to levy interest-for belated payment under Section 22(1) of the Act, no penalty ought to have been imposed; and, instead, interest should have been levied under Section 22(1) and (2) of the Act.
Section 51 of the A.P. VAT Act prescribes the penalty for failure to pay tax when due. Under sub-section (1) thereof, where a dealer fails to pay the tax due on the basis of the return submitted by him by the last day of the month in which it is due, he shall be liable to pay tax and a penalty of ten percent of the amount of tax due. Under the proviso thereto, before levying such penalty, the prescribed authority is required to give the dealer a reasonable opportunity of being heard.
In Hindustan Steel Ltd. Vs. State of Orissa, , the Supreme Court observed:
".....An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. 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 consideration of all relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty where there is a technical or venial breach of the provisions of the Act....."
In the light of the law laid down by the Supreme Court in Hindustan Steel Ltd. Vs. State of Orissa, , even if a minimum penalty is prescribed under the Act, the authority, competent to impose penalty, is entitled to refuse to impose penalty if he is satisfied that the breach of the provisions of the Act is merely technical or venial in nature. It is not in dispute that the petitioner had failed to the pay tax due, on the basis of the returns submitted by him, by the last day of the month in which it fell due. The reasons given by him, in justification thereof, is that he was facing severe financial difficulties in settling accounts of the farmers from whom he had procured chillies. The assessing authority rejected the petitioner''s contention and held that the reasons given by him, in his reply letter dated 21.12.2013, did not exonerate him from payment of penalty. Financial problems faced by an assessee or delay in receiving payments from those to whom he had made supplies, are all mere incidence of business, and do not constitute justifiable grounds for the authority to refrain from imposing a penalty.
In State of Madhya Pradesh and others Vs. Bharat Heavy Electricals, , the scope of Section 7(5) of the Madhya Pradesh Entry Tax Act arose for consideration. Section 7(5) stipulated that, where a registered dealer referred to in Section 7(1) or (2) had, in the course of his business, sold local goods to other registered dealers, and had failed to make the statement referred to in sub-section (1), it should be presumed that he had facilitated evasion of entry tax on the local goods so sold; and he shall be liable to pay penalty equal to ten times the amount of entry tax payable on such goods as if they were not goods of local origin. Before the Supreme Court it was conceded by the Learned Senior Counsel for the appellant that the presumption raised in Section 7(5) was rebuttable , and it did not provide for a fixed rate of penalty. The Supreme Court observed that there can be several good reasons why a registered dealer may have failed to make the statement required to be furnished by him under Section 7(1) and (2); and it was not the intention of the legislature that an accidental omission or non-furnishing of the statement, for a good and valid reason, must necessarily lead to the ''presumption that the registered dealer had the intention of facilitating evasion of entry tax.
Section 7(5) of M.P. Entry Tax Act, is not in pari-materia with Section 51(1) of A.P. VAT Act, and the construction placed on the said provision, cannot be automatically applied in construing Section 51(1) of the A.P. VAT Act. While an accidental omission, or failure to comply with the statutory requirement for good and valid reasons, would not, as held by the Supreme Court in State of Madhya Pradesh and others Vs. Bharat Heavy Electricals, , justify imposition of penalty, in the present case failure of the petitioner to pay the tax due within the stipulated period is neither an accidental omission nor a failure to comply with a statutory requirement for good and valid reasons. Reliance placed by Sri G. Narendra Chetty, on Bharat Heavy Electricals 1997 106 (STC) 604, is therefore misplaced.
It is wholly unnecessary for this Court to examine whether or not the assessing authority has the discretion to refrain from imposing the minimum penalty stipulated under Section 51(1), for failure to pay tax within time, as, even if we proceed on the premise that the assessing authority has the discretion not to impose penalty for just and valid reasons, the discretion exercised by the assessing authority, in the present case, does not necessitate interference. As noted hereinabove, the 1st respondent did not impose penalty on the petitioner merely on the ground that Section 51(1) A.P. VAT Act did not confer on him any discretion to waive imposition of penalty. On the other hand, the 1st respondent has held that the reasons shown by the petitioner, for belated payment of tax, could not result in his being exonerated from payment of penalty. The 1st respondent has exercised his discretion to impose penalty, under Section 51(1) of the A.P. VAT Act, for just and valid reasons. This Court, while exercising jurisdiction under Article 226 of the Constitution of India, would not sit in Appeal over the discretion exercised by the authority to impose penalty, more so when it is not in dispute that the petitioner had failed, without justifiable reasons, to pay the tax within the stipulated period.
In Ankit International (2011) 46 VST 1 (Bom.), the scope of Section 61(2) of the Maharashtra Value Added Tax Act, 2002 was under consideration.
Section 61(2) reads as under:
"(2) If any dealer liable to get his accounts audited under sub-section (1) fails to furnish a copy of such report within the time as aforesaid, the Commissioner may, after giving the dealer a reasonable opportunity of being heard, impose on him, in addition to any tax payable, a sum by way of penalty equal to one tenth per cent of the total sales:
Provided that, if the dealer fails to furnish a copy of such report within the period prescribed under sub-section (1), but files it within one month of the end of the said period, and the dealer proves to the satisfaction of the Commissioner that the delay was on account of factors beyond his control, then no penalty under this sub-section shall be imposed on him."
Unlike Section 51(1) of A.P. VAT Act, which used the word "shall", Section 61(2) of the Maharashtra Vat Act, 2002 uses the word "may". Section 61(2) enables the Commissioner to impose penalty equal to one tenth percent of the total sales. As Section 61(2) of the A.P. VAT Act is not in pari-materia with Section 51(1) of A.P. VAT Act, reliance placed by the petitioner on Ankit International (2011) 46 VST 1 (Bom.) is of no avail.
Section 22 of the A.P. VAT Act relates to the due date for payment of Tax. Under Section 22(1) thereof, the tax payable in respect of a tax period along with a return, and the tax assessed under the Act, shall be payable in such manner and within such time as may be prescribed. Under Section 22(2) if any dealer fails to pay the tax due on the basis of the return submitted by him or fails to pay any tax assessed or penalty levied or any other amount due under the Act, within the time prescribed or specified therefore, he shall pay, in addition to the amount of such tax or penalty or any other amount, interest calculated at one and half quarter (1.25%) per month for the period of delay from such prescribed or specified date for its payment. Interest, which can be levied under Section 22(2) of the A.P. VAT Act, is in addition to the amount of tax or penalty. In the present case, no interest under Section 22(2) of the A.P. VAT Act has been levied on the petitioner. Reliance placed by Sri G. Narendra Chetty on Section 22(2) of the A.P. VAT Act is therefore misplaced. The Writ Petition as filed is devoid of merits and is, accordingly, dismissed. In consequence, miscellaneous petitions, if any, pending in this writ petition shall stand dismissed. There shall be no order as to costs.