Decided on February 18,2009

Salzigitter Hydraulics Pvt. Ltd. Appellant


Manoranjan Virk, Member (A) - (1.) THIS appeal has been filed against the order of the Appellate Deputy Commissioner (CT), Hyderabad Rural Division, Hyderabad, related to penalty and interest for the assessment period 1.4.2005 to 1.9.2007. Separate appeals have been filed on the assessment issue relating to this tax period by the appellant contesting the interpretation of two Final Eligibility Certificates issued to the appellant by the Department of Industries.
(2.) IN their grounds of appeal, the appellant has stated that the disallowance of deferment of sales tax for the years 2005 -06, 2006 -07 and 2007 -08 has been disputed and six tax appeals have been filed before the Tribunal. Since levy of interest and penalty is only an adjunct to the disallowance of deferment, the legality of levy of interest and penalty depends upon the out come of the tax appeals and the grounds of appeal filed along with tax appeals questioning withdrawal of deferment may be read as part and parcel of their grounds of appeal in the present appeal. In the additional grounds of appeal filed before us at the time of hearing the appellant has reiterated the arguments advanced by them in the six appeals related to assessment. Further, they have stated that Sec. 53 of the VAT Act, 2005 cannot be invoked for levying penalty on them. According to them, the situations calling for the levy of penalty are exhaustively illustrated by the illustrations (a) & (b) of Rule 25 of the APVAT Rules. Neither the section 53 of VAT Act nor the Rule 25 provide for the levy of penalty with regard to issues involving the manner of availment of deferments. They have stated that the appellant company cannot be accused of under declaration of tax and the penalty is not according to law. They have further stated that the manner of availment of deferment is a genuine interpretational issue where no "contumaciousness" can be attributed to the appellant company. In the absence of "contumaciousness" the levy of penalty is not according to law. The belief entertained by the appellant company was neither malafide nor unreasonable, but was a bona fide belief. Hence, penalty is not imposable. They have relied on the decisions of the Hon'ble Supreme Court in the case of Cement Marketing Co., of India Ltd. Vs. Asst. Commissioner of Commercial Taxes, Indore & Others : (1980) 45 STC 197 (SC) and Hindustan Steels Ltd. vs. State of Orissa, (1970) 15 STC 111 (SC).
(3.) THE learned State Representative has supported the orders of the Appellate Deputy Commissioner.;

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