2018 (12) TMI 1015

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....rch, 2010. 2. It is also admitted fact that penalty notice were issued to all applicant-assessee on 20.01.2015. Much prior to that, the assessee had, of its own, deposited the entire defaulted amount of TDS together with interest. Thus, the default together with interest had been cleared by the applicant-assessee before the same came to the notice of the assessing authority. The facts pertaining to imposition of penalty giving rise to the present set of revisions are as below: Sales/Trade Tax Revision Nos. Month Amount of T.D.S. Last Date of Deposit Actual Date of Deposit 361 of 2018 April, 2009 50,505 20.05.2009 04.03.2010 362 of 2018 May, 2009 3,73,452 38,788 20.06.2009 20.06.2009 07.12.2009 04.03.2010 360 of 2018 June, 2009 2,87,063 2,98,677 20.07.2009 20.07.2009 21.12.2009 29.03.2010 359 of 2018 July, 2009 1,31,479 1,36,846 20.08.2009 20.08.2009 21.12.2009 04.03.2010 367 of 2018 August, 2009 2,88,488 20.09.2009 12.04.2010 366 of 2018 September, 2009 ....

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....t about four years before issuance of the notice in the case of M/S Yadu Sugar Mill Ltd. Vs. The Commissioner Commercial Taxes (supra) a similar position of facts had given rise to the same questions of law as are involved in the present revisions. In that case, the penalties were deleted and it was observed as under: "8. Having considered the arguments so advanced by learned counsel for the parties, in the first place, it may be noted neither decision cited by either side has directly interpreted the statutory language and decided whether the penalty under Section 34(8) of the Act is mandatory or discretionary. Still the decision in the case of C.C.T. Vs. Bareilly Highways Projects Limited (supra) does hold, for the purpose of imposition of penalty, it may not be a material consideration that the assessee had already paid the defaulted amount of tax along with interest. In fact, in that decision itself, the court clarified, the imposition of penalty would remain a distinct provision where penalty may be imposed "to the extent permissible in law". However, it has not been clarified or elaborated as to the pre-conditions when penalty may be imposable as may lead to a logica....

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.... of a default. The true nature of penalty - whether mandatory or discretionary may be determined on an interpretation of the statutory provision providing for penalty and not on a general principle of law or administrative convenience or even the facts of each case. From a plain reading of section 34(8) of the Act it appears, penalty 'may' be imposed by the assessing officer, if after considering the reply of the assessee, the assessing officer considers imposition of the penalty to be warranted. In contrast, the word 'shall' appears in the later part of the sub-section to indicate once such order imposing a penalty is passed, the assessee would be obligated to pay that amount of penalty as may be specified in the penalty order. Again, the assessing officer 'may' impose the quantum of penalty as per his discretion. Thus, he 'may' impose any penalty not exceeding twice the amount of the tax deductible at source. 13. The words 'may' and 'shall' having been used in two parts of the same sub-section providing for levy of penalty, it appears natural and logical to assign the normal grammatical meaning to those two words so as to p....

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....shall" in the earlier and the word "may" in the latter part of that sub-section. In that case it may have been urged with success that the word "may" though indicates existence of a discretion, it has to be read as obligatory, otherwise it would lead to absurd results by leaving it optional to the defaulter to comply with the penalty order passed against him. 16. Another reason to hold the penalty under section 34(8) of the Act discretionary and not mandatory arises from the indisputable position that there exists discretion with the assessing officer to impose such quantum of penalty as may not exceed twice the amount of defaulted amount. However, there is no prescription of a minimum penalty. Once such discretion exists, it has to be conceded that the assessing officer has to apply his mind to relevant facts such as the nature (admitted or disputed) of default; extent of default; the conduct of the defaulting assessee etc. to determine the quantum of penalty that may be justified. 17. In absence of any amount or rate or quantum being specified by the legislature by way of minimum penalty imposable, necessarily a minimum penalty of say one Rupee or such amount wo....