Penalty for disputed tax non-deposit requires provisional assessment before levy under U.P. Trade Tax law.

Penalty under section 15A(1)(a) of the U.P. Trade Tax Act is attracted only where a dealer, without reasonable cause, fails to deposit tax shown as due before or with the return. Where monthly returns are filed in time and the dealer does not admit liability on the disputed turnover, the assessing authority must first resort to provisional assessment if it treats the return as incorrect. In the absence of such provisional assessment, non-deposit of the disputed tax by itself does not justify penalty, and the earlier view on this point is reaffirmed.

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Issues: Whether penalty under section 15A(1)(a) of the U.P. Trade Tax Act, 1948 was leviable when the dealer filed monthly returns within time, did not admit tax liability on gutkha turnover, and no provisional assessment order was passed.

Analysis: Penalty under section 15A(1)(a) is attracted only where, without reasonable cause, a dealer fails to deposit tax due before furnishing the return or along with it. Under section 7(1A), the dealer is required to deposit only the tax shown as due in the return. If the assessing authority considers the return incorrect or takes the view that tax was payable, it may proceed to make a provisional assessment under rule 41(6). Where no provisional assessment is made, the mere non-admission of liability in the return, coupled with non-deposit of the disputed tax, does not by itself justify penalty. The issue was already covered by the earlier decision holding that such penalty was not warranted in the absence of provisional assessment.

Conclusion: The penalty was not sustainable and was liable to be set aside.

Ratio Decidendi: Penalty for non-deposit of tax cannot be sustained where the dealer has filed the return, disputed the tax liability, and the assessing authority has not first invoked provisional assessment to determine the alleged dues.

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