2018 (11) TMI 1026 - HC - VAT and Sales Tax

Court remits case for interest and penalty determination, emphasizing payment sequence and reassessment of minimum penalty.

The Kisan Sahkari Chini Mills, Tilhar, Shahjahanpur Versus Commissioner, Trade Tax, U.P. Lucknow

The Kisan Sahkari Chini Mills, Tilhar, Shahjahanpur Versus Commissioner, Trade Tax, U.P. Lucknow - TMI Issues:Penalty imposition under Section 8-D(6) of the U.P. Trade Tax Act, 1948 for A.Y. 1990-91.Analysis:The assessee contended that despite deducting the tax amount due from payments to contractors, there was a delay in depositing the same with the revenue. The total TDS amount due was &8377; 1,44,068, out of which the assessee deposited &8377; 1,82,651, claiming an excess deposit with interest liability. The assessee argued that since the default was rectified before any penalty notice was issued, no loss was incurred by the revenue, and thus, no penalty should be imposed. The assessee relied on previous court decisions where penalties were deleted when TDS amounts were deposited with interest before penalty notices were issued.The opposing party argued that the penalty was initiated in compliance with a specific direction, and the penalty order was passed before the interest default was rectified by the assessee. The Tribunal upheld the mandatory nature of deduction under Section 8-D(6) of the Act, citing a previous court decision.The court noted that while the TDS amount due was admitted by the assessee, the interest amount was not clearly mentioned in the orders. The presence or absence of interest payment before the penalty notice would impact the penalty imposition. The court set aside the Tribunal's order and remitted the matter back to determine the interest due date and penalty initiation date for a fresh decision.Regarding the raised question of law on minimum penalty prescription under the Act, the assessee was given the opportunity to present new arguments before the Tribunal for consideration. The court left this issue open for further deliberation.In conclusion, the court disposed of the revision by remitting the matter for a fresh decision based on the observations made regarding interest payment and penalty initiation date.