SARVASRI SWASTI POWER ENGINEERING LTD Vs. COMMISSIONER

JUDGEMENT

(1.) There is no dispute that under section 35 of the Uttarakhand VAT Act, 2005 (hereinafter referred to as "the Act"), revisionist was required to deduct tax at source while making payment to its contractors and was also required to deposit the tax so deducted within the following month. In the instant case, the revisionist deducted tax at source on February 14, 2006, February 22, 2006 and March 24, 2006 and deposited the deducted amount on April 28, 2006. The tender, in the instant case, was made by an outstation bankers' draft which was cleared on May 15, 2006. In the above factual background, the assessing authority, after initiating penalty proceedings, imposed penalty of a sum twice the amount of the tax, which was deducted. On appeal, the assessee did not get any relief. The Tribunal has reduced the penalty by half. The assessee is, accordingly, before us. The assessing authority accepted, which was not disputed by him before the appellate authority and also before the Tribunal that on May 14, 2006, February 22, 2006 and March 24, 2006, the assessee prepared bankers' drafts equivalent to the amount of tax deducted at source in the name of the assessing officer and went to deposit the amount in the bank accounts of the assessing officer, but the banker of the assessing officer refused to accept the same as they were outstation bankers' drafts, despite the assessee offering to pay collection charges to the banker of the assessing officer separately in respect of those bankers' drafts. It was also not in dispute that the assessing officer ultimately denoted to the assessee a particular banker to whom again an outstation draft was deposited on April 28, 2006. The question is, in the background of the aforementioned facts, can it be said that the action on the part of the assessee is such that the same demonstrated animus or ill will or deliberate refusal to discharge its statutory obligation. The provision permitting imposition of penalty is provided in subsection (8) of section 35 of the Act. The same is extracted below:

(2.) A look at the aforementioned provision of law would make it amply clear that before a penalty is imposed the person to be penalized must be heard. In course of hearing, the person concerned gets an opportunity to explain his conduct. In the instant case, the conduct has been explained. Having regard to such conduct, a discretion has been granted to impose penalty. That can be as much as twice the amount deducted, but not so deposited in Government Treasury. In the instant case, amount deducted has been deposited into Government Treasury. The deposit has been made in respect of deduction made on March 24, 2006 within time as prescribed, but in respect of deductions made on February 14, 2006 and February 22, 2006 one month after. Before that simultaneously with the deductions an attempt was made to deposit the deducted amount, but for the reasons indicated above the same could not be deposited as the banker of the assessing officer did not agree to accept an outstation bankers draft despite the assessee offering to pay the collection charges. In the matter of using discretion, it was obligatory on the part of the taxing authorities to look into this conduct on the part of the assessee. The fact remains that for delayed payment, the assessee has already paid statutory interest.

(3.) In the circumstances, we are of the view that the authorities below did not exercise their discretion of imposing penalty in the background of the factual matrix of the case and, as such, we interfere, set aside the order of the assessing authority imposing penalty, the appellate order as well as the order of the Tribunal. We can remit the matter, but since the matter is pending since 2006, we apply the thumb rule and assess the penalty at Rs. 25,000. The revision is disposed of accordingly.