Uttarakhand High Court

Commissioner vs M/S Lakshit Fashion Pvt. Ltd on 15 April, 2024

            IN THE HIGH COURT OF UTTARAKHAND
                               AT NAINITAL
                   HON'BLE THE CHIEF JUSTICE MS. RITU BAHRI
                                       AND
                     HON'BLE SRI JUSTICE RAKESH THAPLIYAL

             COMMERCIAL TAX REVISION NO. 92 OF 2017
                              15TH APRIL, 2024
Commissioner, Commercial Tax                                     .....Revisionist.
                                     Versus

M/s Lakshit Fashion Pvt. Ltd.                                ....Respondent.

                                         With
             COMMERCIAL TAX REVISION NO. 91 OF 2017
Commissioner, Commercial Tax                                     .....Revisionist.
                                     Versus

M/s Lakshit Fashion Pvt. Ltd.                                ....Respondent.

                                         With
             COMMERCIAL TAX REVISION NO. 93 OF 2017
Commissioner, Commercial Tax                                     .....Revisionist.
                                     Versus

M/s Lakshit Fashion Pvt. Ltd.                                ....Respondent.

Counsel for the Revisionist              :     Ms. Puja Banga, learned Brief
                                               Holder.

Counsel for the Respondent               :     Mr. P.R. Mullick, learned counsel.

The Court made the following:

COMMON JUDGMENT:

(per Hon'ble The Chief Justice Ms. Ritu Bahri)

The revisionist- Commercial Tax, Uttarakhand has

come up in revision against the order dated 26.03.2016

(Annexure-5), passed by the Commercial Tax Tribunal,

Uttarakhand, Dehradun.

2. Brief facts in all the three cases are that the

respondent- M/s Lakshit Fashion Pvt. Ltd. had to file his

quarterly returns for the assessment year 2014-15. These

returns had to be filed by 31.07.2014, 31.10.2014 and

30.01.2015. However, the same were fled after the delay of

28 days, 27 days and 25 days.

3. Vide order dated 25.04.2015, the Assessing

Authority passed penalty orders taking a view that the

assessee has knowingly violated the provisions of Section

58(1)(iv) by filing the returns of the relevant three quarters

late. The Assessing Authority imposed the maximum penalty

(50% of the amounts of admitted tax payable) for the

relevant first, second and third quarters to the tune of

Rs.1,29,686/-, Rs.1,20,984/- and Rs.1,18,816/- respectively.

4. The Assessee filed first appeals on 25.04.2015, and

vide order dated 29.12.2015, the appeals were allowed by

the Joint Commissioner (Appeal)-I, Commercial Tax,

Uttarakhand Head Quarter, Dehradun, and he reduced the

penalty from 50% to 25%, i.e. to the tune of Rs.64,584/-,

Rs.60,492/- and Rs.59,408/- for the relevant three quarters.

5. Against the order dated 29.12.2015, both, the

assessee and the Commercial Tax Department have preferred

the second appeals before the Commercial Tax Tribunal,

Uttarakhand.

6. The Tribunal proceeded to decide these appeals by

examining the penalty proceedings under Section 58(1)(iv).

Relevant portion of Section 58 is as under:-

"Section 58: Offence and Penalties:-

(1) If the assessing authority is satisfied that any dealer or other person has committed the offence in any clause of column (1) of the following chart it may, after such enquiry as deemed necessary, such dealer or person shall pay, by way of penalty, in addition to the tax, if any, payable by mentioned in the related column (2), namely-

                     Column-1                      Column-2
                     Offences                       Penalty
           *           *           *     *            *             *
           (iv)       has,     without (iv) a sum not less than
           reasonable cause failed ten           percent,     but    not
           to furnish the return of exceeding            twenty     five

his turnover or to furnish percent of the tax due if the it within the time allowed tax due is up to ten and in the manner thousand rupees and fifty prescribed; percent if the tax due is above ten thousand rupees:

* * * * * *

7. The Tribunal examined the facts that for the first

quarter, i.e. for the months of April, May and June, 2014, the

tax was deposited late by 08 days, 04 days and 30 days

respectively.

(i) For the second quarter, i.e. for the months of July, August, 2014, the tax was deposited with a delay 01 day and 06 days, and the tax for the month of September, 2014 was deposited within time.

(ii) With respect to the third quarter, i.e. for the months of October, November and December, 2014, the assessee had deposited the admitted tax for the months of October and December within time, and the admitted tax for the month of November, 2014 was deposited with a delay of 02 days.

8. The Tribunal held that that on account of the delay,

the Assessing Authority was correct in initiating the penalty

proceedings under Section 58(1)(iv).

9. With respect to the quantum, the Tribunal while

examining the imposition of penalty, held that out of the nine

relevant months of the relevant quarters, the due admitted

tax of the three months has already been deposited by the

assessee within time prescribed, and with respect to the

remaining months, the returns were filed in the same

financial year and the amount of interest has already been

deposited by the assessee. The penalty was reduced to 15%

of the admitted tax payable by the assessee, and the appeals

of the assessee were partly allowed. The penalty for the first

quarter for the assessment year 2014-15 was determined at

Rs.38,751/-; for the second quarter Rs.36,295/-, and; for the

third quarter Rs.35,645/-.

10. At this stage, counsel for the respondent has

referred to the judgment of the Hon'ble Supreme Court in

Commissioner of Income Tax (Addl.), Gujarat vs. M/s

I.M. Patel & Co., 1993 Supp (1) SCC 621, which was

dealing with the question of imposition of penalty on belated

filing of returns.

11. The abovesaid judgment will not be applicable to

the facts of the present case, as in that case, the Supreme

Court was examining the issue that in case returns are not

filed within time, whether these Revenue Authorities are

required to establish mens rea with the assessee that he

deposited the returns late.

12. In the case before the Supreme Court, for the year

1964-65, the assessee returned an income of Rs.48,000/-,

while he was assessed on an income of Rs.58,557/-, and

penalty of Rs.9,690/- was imposed. Similarly, for the year

1965-66, the assessee returned an income of Rs.45,000/-

and he was assessed on an income of Rs.52,337/-, and

penalty of Rs.6,115/- was imposed upon the assessee. For

the year 1966-67, the assessee returned an income of

Rs.51,000/-, and he was assessed on an income of

Rs.62,560/- and a penalty of Rs.3,915/- was imposed. In this

backdrop, the imposition of penalty was held to be correct.

The imposition of penalty was upheld by the Appellate

Assistant Commissioner. However, the Tribunal decided the

appeal in favour of the assessee. In this backdrop, the

Hon'ble Supreme Court allowed the appeal of the Revenue,

and set-aside the judgment of the Tribunal and held that the

Assessing Authority and the Appellate Authority were correct

in imposing the penalty.

13. In that case before the Supreme Court, the returns

were filed by the assessee. However, the Assessing Authority

found that the income declared by the assessee, as above, is

less than the income assessed by the Assessing Authority,

and in this backdrop, the penalty was imposed. He had filed

incorrect returns for the three assessment years, and the

income was much more.

14. In the present case, the Revenue Department is not

disputing the fact that the tax was deposited along with

interest. The only question for consideration in these revisions

is that whether the income declared by the assessee was on

the lower side in filing the returns, and whether penalty of

10% is sufficient as per the above said Act.

15. In the present case, it is not the case of the

Revenue that the income declared by the Assessee was on

the lower side. The Revenue has accepted the income tax

returns as it is. However, on the question of delay, whether

the penalty should be 50% or 25% or 15%, is the only

question for consideration in these revisions.

16. The Tribunal, thereafter, proceeded to examine the

judgments of the Hon'ble Supreme Court in M/s Hindustan

Steel vs. State of Orissa; Deputy Commissioner, Central

School Organization & another vs. J. Hussain, (2013)

10 SCC 106, as well as the judgments of the Allahabad High

Court in M/s Dhampur East Company vs. Commissioner

of Commercial Tax, U.P., 2004 NTN (Vol.24) 434; M/s

Jain Sons vs. Commissioner of Commercial Tax, 2000

NTN (Vol. 16), Page 139.

17. Relevant portion of Section 58 of the Act is as

under:-

"Section 58. Offences and Penalties.

(1) If the assessing authority is satisfied that any dealer or other person has committed the offence in any clause of column (1) of the following chart, it may, after such enquiry as deemed necessary, direct that such dealer or person shall pay, by way of penalty, in addition to the tax, if any, payable by mentioned in the related column (2), namely-

                Column-1                              Column-2
                Offences                              Penalties
      *       *   *    *                   *     *      *    *
      (vii)    has,       without   any *        *      *         *
      reasonable cause failed-
      (a) * *         *      *
      (b)     to   pay     within   the (b) a sum not less than
      time allowed the tax due ten               percent,             but   not
      under the provisions of exceeding                     twenty          five
      the Act;                             percent of the amount due if
      *       *       *      *             the amount due is up to ten
                                           thousand     rupees        and   fifty
                                           percent if the amount due
                                           is   above       ten       thousand
                                           rupees.
                                           *     *      *         *

18. In the abovesaid judgments, the Hon'ble Supreme

Court and the Allahabad High Court have examined the

provisions of imposition of penalty for late deposit of tax with

interest, and have held that if penalty is to be imposed it is a

matter of discretion of the authority to be exercised judicially

and on a consideration of all the relevant circumstances. The

power should be exercised in reasonable manner and penalty

should not be imposed in each and every case when there is

a default. Imposition of penalty, mechanically, is highly

improper and cannot be approved. When punishment is found

to be outrageously disproportionate to the nature of charge,

then principle of proportionality comes into play. The question

of the choice and quantum of punishment is within the

jurisdiction and discretion of the court martial, and finally, if

dealer deposits the tax payable with interest prior to initiation

of penalty proceedings, then lenient view should be adopted

which assessing the quantum of penalty.

19. In the present case, the Assessing Authority has

imposed 50% penalty on the amount of admitted tax, which

the Appellate Authority has reduced to 25%, and the Tribunal

reduced it to 15% from 25%. The order of the Tribunal has

been passed after applying the ratio of the abovesaid

judgments of the Hon'ble Supreme Court and the Allahabad

High Court, and keeping in view that the tax had been

deposited with interest.

20. Since the Tribunal in CTR Nos.92/17, 91/17 and

93/17 has rightly followed the opinion of the Hon'ble Supreme

Court as well as other High Courts that power to levy penalty

is a discretionary power, and penalty should not be imposed

in each and every cases where there is a default, and

imposition of penalty, mechanically, is highly improper and

cannot be approved.

21. Recently, the Allahabad High Court in

Commissioner, Commercial Tax vs. Bhushan Power and

Steel Ltd., (2016) 60 NTN DX 21, dismissed the revision

filed by the Revenue against the order of the Tribunal dated

26.08.2015, whereby the Tribunal had set-aside the penalty

imposed on the assessee by observing that the assessee had

deposited the admitted tax late along with the interest.

Reference was also made to another judgment of the

Allahabad High Court in M/s Govind Sugar Mills Ltd. vs.

CTT, 2008 UPTC Page 991, wherein it has been held that

where the admitted tax is paid along with interest, it would

not be justified to impose any penalty.

22. In the facts of the present case, the penalty has

been reduced from 25% to 15%, and all the admitted returns

had been accepted as it is.

23. In view of the above, no question of law arises in

the present revisions.

24. We find no merit in these revisions and the same

are, accordingly, dismissed.