Penalty for delayed tax deposit requires statutory levy and reasoned quantification, not mechanical month-wise enhancement.

Penalty for delayed deposit of tax deducted at source requires a prior determination of whether the statute actually treats belated deposit as a penal default, and whether it can be equated with non-deduction or non-deposit after deduction. The Tribunal had sustained and mechanically enhanced penalty month-wise without addressing that foundational question or giving a rational basis for quantification. The orders were set aside and the issue of leviability and computation of penalty for delayed deposit of deducted tax was remitted for fresh decision with reasons.

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Issues: Whether penalty is leviable when tax is deducted but deposited beyond the prescribed time, whether such a default can be equated with non-deduction or non-deposit after deduction, and what would be the rational basis for quantifying penalty for delayed deposit.

Analysis: The statutory scheme under section 8D of the Uttaranchal Trade Tax Act and section 35 of the Uttarakhand Value Added Tax Act, 2005 provides for deduction at source, deposit within the prescribed time, penalty for default, and interest for delayed payment. The Tribunal had sustained penalty and enhanced it month-wise, but it did not examine the foundational question whether mere delayed deposit of an amount actually deducted attracts penalty at all. It also did not explain why the default should be treated on the same footing as non-deduction or non-deposit after deduction, or why the percentage of penalty should rise mechanically from month to month without a rational basis supported by reasons.

Conclusion: The matter required reconsideration. The Tribunal's orders were set aside and the issue of leviability and quantification of penalty for belated deposit of deducted tax was remitted to the Tribunal for fresh decision with reasons.

Ratio Decidendi: Penalty for delayed deposit of deducted tax cannot be sustained without a determination on statutory leviability and a reasoned, rational basis for quantification distinct from penalties for non-deduction or non-deposit.

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