Penalty for unpaid admitted tax is discretionary in quantum, and State penalty provisions can apply to Central sales.

Penalty is leviable under Section 58 of the Uttarakhand Value Added Tax Act, 2005 where admitted tax is not deposited before filing the return or with the return without reasonable cause, and the existence of sufficient cause remains central to liability. The provision is discretionary as to quantum, so penalty need not be fixed at the highest permissible rate; on the facts noted, the Tribunal's enhancement to 20% was treated as excessive and reduced to 15%. Penalty for Central sales was also held sustainable because Section 9(2A) of the Central Sales Tax Act, 1956 applies the State law on offences, interest and penalties to Central sales assessments and collections.

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Issues: (i) Whether penalty under Section 58 of the Uttarakhand Value Added Tax Act, 2005 was leviable and whether the Tribunal was justified in enhancing it to 20% for failure to deposit admitted tax along with the return. (ii) Whether penalty in respect of Central sales could be sustained under the Central Sales Tax Act, 1956 and the State VAT law.

Issue (i): Whether penalty under Section 58 of the Uttarakhand Value Added Tax Act, 2005 was leviable and whether the Tribunal was justified in enhancing it to 20% for failure to deposit admitted tax along with the return.

Analysis: Section 58 applies where the dealer, without reasonable cause, fails to deposit tax due before furnishing the return or along with the return. The existence of reasonable cause is therefore central to liability. The Court held that once sufficient cause was not established, penalty was permissible, but the provision did not require adoption of the highest permissible penalty. Penalty remained discretionary, and while the assessee could not avoid liability altogether, the quantum fixed by the Tribunal was considered excessive in the circumstances, including the absence of earlier penalty history.

Conclusion: Penalty was upheld in principle, but the enhancement to 20% was not sustained and was reduced to 15%.

Issue (ii): Whether penalty in respect of Central sales could be sustained under the Central Sales Tax Act, 1956 and the State VAT law.

Analysis: After insertion of Section 9(2A) of the Central Sales Tax Act, 1956, the provisions relating to offences, interest and penalties under the general sales tax law of the State apply, with necessary modifications, to assessment and collection under the Central Act. On that basis, the Court held that the State authorities had power to impose penalty in the circumstances covered by Section 58 of the State Act, and the contention that no such penalty could be levied for Central sales was rejected.

Conclusion: The challenge to the competence to levy penalty for Central sales failed and was decided against the assessee.

Final Conclusion: The revisions succeeded only to the limited extent of reduction of penalty from 20% to 15%, while the remaining legal challenges were rejected.

Ratio Decidendi: Where the statute authorises penalty for failure to deposit admitted tax without reasonable cause and also provides for application of State penalty provisions to Central sales through Section 9(2A) of the Central Sales Tax Act, 1956, the penalty is sustainable in principle, though its quantum remains a matter of judicial discretion on the facts of the case.

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