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1989 Supreme(All) 262
IN THE HIGH COURT OF ALLAHABAD
Anshuman Singh, J.
WESTERN INDIA MATCH CO.LTD. - Appellant
Versus
COMMISSIONER OF SALES TAX - Respondents
Sales Tax Revision 621 Of 1988
Decided On : 05/08/1989
BHARATJI AGARWAL, V.M.Sahai
The imposition of a penalty under Section 15-A(1)(a) of the U.P. Sales Tax Act requires a finding that the assessee has failed to show reasonable cause for the late filing of returns and non-deposit of tax. The mere non-filing of an application for extension of time cannot be equated with the absence of reasonable cause. The assessee's deposit of interest under Section 8(1) of the Act compensates the Revenue for the late filing or non-deposit of tax.
Headnote:
SALES TAX - PENALTY - IMPOSITION - CONDITIONS - REASONABLE CAUSE - ABSENCE OF FINDING - APPLICATION FOR EXTENSION OF TIME - NON-FILING - EQUATION WITH ABSENCE OF REASONABLE CAUSE - INTEREST DEPOSITED UNDER SECTION 8(1) OF THE ACT - COMPENSATION FOR LATE FILING OR NON-DEPOSIT OF TAX - BONA FIDES OF ASSESSEE - RELEVANT CIRCUMSTANCES - DELAY IN FILING RETURNS - NOMINAL - PENALTY - KNOCKED OFF.
Fact of the Case:
The assessee, a public limited company, had a factory in Uttar Pradesh and a branch in Allahabad. The Allahabad branch was separately registered as a dealer under the U.P. Sales Tax Act. The assessee filed monthly returns and deposited tax at the Allahabad office. However, for the months of June 1976 to March 1978, the returns were filed late and the tax was deposited after the prescribed period. The assessing authority imposed a penalty on the assessee under Section 15-A(1)(a) of the Act.
Finding of the Court:
The court held that the Tribunal erred in imposing a penalty on the assessee without recording a finding that the assessee had failed to show reasonable cause for the late filing of returns and non-deposit of tax. The court also held that the mere non-filing of an application for extension of time could not be equated with the absence of reasonable cause. Further, the court held that the assessee's deposit of interest under Section 8(1) of the Act compensated the Revenue for the late filing or non-deposit of tax, and therefore, the imposition of penalty was unwarranted.
Issues: 1. Whether the Tribunal erred in imposing a penalty on the assessee without recording a finding that the assessee had failed to show reasonable cause for the late filing of returns and non-deposit of tax? 2. Whether the mere non-filing of an application for extension of time could be equated with the absence of reasonable cause? 3. Whether the assessee's deposit of interest under Section 8(1) of the Act compensated the Revenue for the late filing or non-deposit of tax?
Ratio Decidendi: 1. The court held that the Tribunal erred in imposing a penalty on the assessee without recording a finding that the assessee had failed to show reasonable cause for the late filing of returns and non-deposit of tax. The court relied on the decision of Spencer and Company Ltd. v. Commissioner of Sales Tax, 1980 UPTC 121, which held that in the absence of any finding that there was no reasonable cause for late filing of return and non-deposit of tax, the order of imposition of penalty could not be maintained. 2. The court held that the mere non-filing of an application for extension of time could not be equated with the absence of reasonable cause. The court relied on the decision of Spencer and Company Ltd. v. Commissioner of Sales Tax, 1980 UPTC 121, which held that mere non-filing of application for extension of time could not be equated with the absence of reasonable cause. 3. The court held that the assessee's deposit of interest under Section 8(1) of the Act compensated the Revenue for the late filing or non-deposit of tax. The court relied on the decision of Commissioner of Sales Tax v. Wire-Cond Delhi (P.) Ltd., 1986 UPTC 175, which held that if the tax due is deposited along with interest, the penalty under Section 15-A(1)(a) of the Act could not be imposed.
Final Decision: The court allowed the revisions and set aside the orders passed by the Tribunal. The penalty imposed on the assessee was knocked off.
( 1 ) THE facts giving rise to these revisions are that the assessee is a public limited company incorporated under the Companies Act and has its registered office at Ramji Bhai Marg, Ballard estate, Bombay. It has a factory in the State of Uttar Pradesh at Clutterbukganj, in the district of bareilly where it carries on the business of manufacture of match boxes. The Bareilly unit of the assessee is registered under the U. P. Sales Tax Act (hereinafter referred to as "the Act") and the central Sales Tax Act (hereinafter referred to as the "central Act" ). During the assessment years 1976-77 and 1977-78 the assessee opened a branch at Allahabad, which was being supervised by the assessees Calcutta office. Under some legal advice the Calcutta office got the Allahabad branch registered separately as a dealer under the Act. The Allahabad branch had some depots in the eastern Uttar Pradesh. It has been alleged by the assessee that the Bareilly factory which was separately registered at Bareilly was not aware about the registration of the Allahabad branch as a separate dealer. The sales figures were sent by the Allahabad branch and the depots attached thereto to the Calcutta office where the returns under the provisions of the Act were prepared and sent to Allahabad along with the amount of tax by bank drafts to be deposited at Allahabad itself. At the time of assessment it transpired that the Allahabad branch could not be separately assessed as two assessments cannot be made against one company even though it may have been separately registered at two places and consequently the file pertaining to the Allahabad branch was transferred by the sales tax department from Allahabad to Bareilly. After receipt of the files at Bareilly it was discovered that for the months of June, 1976 to March 1978 the monthly returns were filed late, i. e. , beyond the prescribed time under the Act and the tax due was also deposited after the expiry of the prescribed period. Consequently the Assistant Commissioner (Assessment), Sales Tax, Bareilly Range, Bareilly, who was the assessing authority of the assessees Bareilly factory, issued notices under Section 15-A (1) (a) of the Act to the assessee to show cause as to why penalty for the late filing of the return and not depositing the tax within the prescribed time should not be imposed. The said notices were contested by the assessee and it was pleaded by the assessee that there was sufficient cause for not submitting the returns in time as well as not depositing the due tax. The contention raised on behalf of the assessee was, however, repelled by the assessing authority and the penalty as contemplated under Section 15-A (1) (a) of the Act was imposed by various orders. The assessee feeling aggrieved against the orders of imposition of penalty in all the cases, filed separate appeals under Section 9 of the Act before the Deputy Commissioner (Appeals), Sales Tax, Bareilly, who upheld the orders of the assessing authority but reduced the penalty except for the months of November and December 1976 and the penalty for the said two months was knocked off. The assessee feeling further aggrieved against the orders passed by the Deputy Commissioner (Appeals), dismissing the eighteen appeals of the assessee in part preferred second appeals under Section 10 of the Act before the Tribunal. The Tribunal dismissed the appeals for the months of June, July, August and october 1976, and February 1977, allowed the appeals for the months of September 1976 and march, June and October 1977, and partly allowed those for the months of January, May, July, august, September and December 1977 and January, February and March 1978, The assessee feeling aggrieved against the aforesaid order of the Tribunal has come to this Court in the instant fourteen revisions under Section 11 of the Act. Since the questions involved in all the aforesaid revisions are common, they are being disposed of by a common judgment wi
