Entry tax paid in wrong challan form was not non-payment; fresh demand, credit denial and bank attachment were quashed.

Payment of entry tax within time could not be treated as non-payment merely because it was made under the wrong challan form where the amount was expressly identified as entry tax and had already been received and retained by the Revenue. The Court treated the defect as a bona fide procedural error and held that fresh demand of tax, interest and penalty was unsustainable. On that basis, denial of input-tax credit on a purely technical ground and attachment of the bank account for recovery were also unjustified. The impugned assessments and demands were quashed, and the amount was to be refunded for re-deposit in the proper form, without interest burden on the assessee.

---

---

Issues: (i) Whether payment of entry tax under an incorrect challan form, while clearly specifying that the amount was towards entry tax and the revenue having received the amount, could be treated as non-payment so as to justify fresh demand of tax, interest and penalty. (ii) Whether, in such circumstances, denial of input-tax credit and attachment of the bank account for recovery of the demand were justified.

Issue (i): Whether payment of entry tax under an incorrect challan form, while clearly specifying that the amount was towards entry tax and the revenue having received the amount, could be treated as non-payment so as to justify fresh demand of tax, interest and penalty.

Analysis: The payment was made within time, the challans expressly identified the amount as entry tax, and the Department had received and retained the money. The defect was only that the wrong form was used. Such a bona fide mistake, in the absence of any financial loss to the Revenue, could not be equated with non-payment. A hyper-technical approach was not justified where the tax amount had already reached the State exchequer.

Conclusion: The Court held that the payment could not be treated as non-payment, and the fresh demand of tax, interest and penalty was unsustainable in favour of the assessee.

Issue (ii): Whether, in such circumstances, denial of input-tax credit and attachment of the bank account for recovery of the demand were justified.

Analysis: Since the tax amount had already been paid and retained by the Department, the objection related only to the incorrect form. The Court held that the defect could be cured by directing refund and re-deposit in the prescribed form, without burdening the assessee with interest. The coercive attachment of the bank account during pendency of the petition was also found unwarranted because the disputed amount was already with the Department.

Conclusion: Denial of credit on a purely technical ground and attachment of the bank account were held unjustified, in favour of the assessee.

Final Conclusion: The petition succeeded, the impugned assessments and demands were quashed, and the respondents were directed to refund the amount for re-deposit in the proper form and to lift the bank attachment.

Ratio Decidendi: Payment of tax within time cannot be treated as non-payment merely because it was tendered in the wrong prescribed form when the amount was expressly identified as tax due and was already received by the Revenue; in such a case, a bona fide procedural defect does not justify fresh tax demand, interest, penalty, or coercive recovery.

---