Discretionary penalty for delayed TDS deposit: interest is separate, but mitigating facts can justify reduction.

Section 34(8) of the Uttar Pradesh Value Added Tax Act treats interest for delayed deposit and penalty for failure to deposit as distinct liabilities, so payment of interest does not by itself bar penalty. Because the provision uses discretionary language, the authority must decide fairly after hearing the person concerned and consider bona fide reasons, mitigating circumstances, and the nature of the default. Absence of mens rea is not decisive in a civil penalty regime, though it remains relevant to the exercise of discretion. On the stated facts of delayed TDS deposit by a government department, the penalty was maintainable but reduced further to 5% of the TDS amount.

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Issues: Whether penalty under Section 34(8) of the Uttar Pradesh Value Added Tax Act, 2008 was leviable for delayed deposit of TDS in the absence of deliberate defiance or dishonest intention, and whether the extent of penalty required further reduction in the facts of the case.

Analysis: The provisions of Section 34 show that interest for delayed deposit and penalty for failure to deposit are distinct liabilities, and payment of interest does not by itself exclude penalty. The use of the word "may" in Section 34(8) makes imposition of penalty discretionary, and the authority is required to exercise that discretion fairly after hearing the person concerned. The absence of mens rea is not by itself decisive in a civil penalty provision, but bona fide reasons, mitigating circumstances, and the nature of the default are relevant while deciding whether to impose penalty and to what extent. On the facts, the default was only in delayed deposit of TDS, the case related to a government department, and the Tribunal had already reduced the levy to 10% of the TDS amount.

Conclusion: The penalty was held to be maintainable, but its quantum was further reduced to 5% of the TDS amount, and the Tribunal's order was modified accordingly.

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