Ashwani Kumar Mishra, J. - (1.) This revision is by the revenue challenging an order passed by the Tribunal dated 29th March, 2016, setting aside the order of the First Appellate Authority dated 8th March, 2013, and thereby quashing the penalty imposed upon the assessee for late deposit of tax under Section 34 (8) of the U.P. Value Added Tax Act.
(2.) In order to appreciate the controversy involved, it would be relevant to notice provisions of the U.P. VAT Act, which operates in the field. Section 34 provides for tax deduction at source, Sub-section (1) thereof deals with deduction of tax at source, while Sub-section (6) provides the time within which such amount is to be deposited, and for any failure to deposit such amount, liability of interest arises under sub-section (9), whereas, for any failure to deposit tax deducted at source, penalty is leviable under sub-section (8). The provisions in that regard are reproduced:- "(1) Without prejudice to any other mode of recovery, payment or collection of tax under this Act, the State Government may, by notification in the Gazette, direct that, in a specified case and in the specified circumstances but subject to such conditions as may be specified, every specified person responsible for making payment to the selling dealer, for discharge of liability on account of valuable consideration payable on sale of goods in such cases as may be specified, shall, at the time of making such payment to the seller, either by credit or in cash or in any other manner, towards satisfaction of tax payable by the dealer on account of sale of any taxable goods, deduct an amount determined in the manner specified:PROVIDED that where in case of a works contract, the contractor has awarded a sub-contract and the notification provides for deduction of amount by the contractee from the payments made to contractor, the contractor responsible for making any payment or discharge of any liability to any sub-contractor, in pursuance of a contract with the sub-contractor, shall, whilemaking payment to the sub-contractor, deduct amount of tax referred to above:PROVIDED FURTHER that where in case of a works contract, the contractor has already made deduction from the payments made to his sub-contractor, the amount of such payments shall be deducted from the amount on which deduction is to be made by the contractee to the contractor.(6) The amount deducted under sub-section (1) shall be deposited into the Government Treasury by the person making such deduction before the expiry of the 20th day of the month following that in which deduction is made:PROVIDED that where the purchaser of goods referred to in sub-section (1) is a registered dealer, he shall deposit the amount of deduction in the manner and within the time in which amount of tax for the tax period in which purchase has been made, is payable and such dealer shall be entitled to claim input tax credit in accordance with provisions of section 13 in respect of such purchase.(8) If any person referred to in sub-section (1) fails to make the deduction or after making deduction fails to deposit the amount so deducted as required by subsection (6), the assessing authority may, after giving to such person an opportunity of being heard, by order in writing, direct that such person shall pay, by way of penalty, a sum not exceeding twice the amount deductible under this section but not so deducted and, if deducted, not so deposited into the Government Treasury.(9) Without prejudice to the provisions of sub-section (8), if any such person, after deducting, fails to deposit the amount so deducted, he shall be liable to pay simple interest at the rate of fifteen percent per annum on the amount not so deposited from the date on which such amount was deducted to the date on which such amount is actually deposited."
(3.) In the facts of the present case, the assessee for the year 2011-2012 made payment to its sub contractor, and also deducted tax at source amounting to Rs. 58,10,052/-. The amount was deducted in December, 2011, and by virtue of sub-section 6, was liable to have been deposited by 20th January, 2012. Instead, such deposit was made on 1.6.2012. It has come on record that upon the delayed deposit of tax, interest payable under Sub-section (9) has been duly deposited by the assessee. The authorities under the act also imposed penalty to the extent of twice the amount of delayed deposit of tax. Such imposition of penalty, however, has been set aside by the Tribunal, noticing the fact that revenue was not adversely affected since interest upon such delayed amount has been deposited. Para 8 and 9 of the Tribunal's order which notices reasons for quashing penalty, reads as under:- "8(1). Section 54 (1)(1)(a) of the U.P. Value Added Tax Act, 2008 and Section 34(8) of the U.P. Value Added Tax Act, 2008 are two provisions which prescribe imposition of penalty in case any dealer fails to deposit the tax within the time prescribed by the act. Neither Section 54 (1)(1)(a) nor Section 34 (8) of the U.P. Value Added Tax act, 2008 provides any time limit for the assessee to deposit the admitted tax or tax deducted at source along-with interest thereon for the period by which the deposition of tax was delayed and after which the assessing officer will have no option left but to inflict a penalty upon the assessee notwithstanding that the assessee has deposited the admitted tax along-with interest thereon. Penalty under Section 54 (1)(1)(a) and also under Section 34 (8) of the U.P. Value Added Tax Act, 2008 can be imposed only when the assessee fails to show some reasonable cause for his failure to deposit the admitted tax on or before the prescribed date.(9). In this case in hand though the appellant had deducted the tax at source on payment, it had made to the sub-contractor in the month of December, 2011 but had failed to deposit the amount by the prescribed time and admittedly had deposited the amount only on 1.6.2012. In other words it had deposited the amount of tax deducted at source after a delay of 4 months. Though the appellant has failed to give any good explanation as to why it had failed to deposit the amount of tax deduced at source within the time prescribed but nevertheless since the appellant had deposited the amount of tax deducted at source along-with interest thereon for the period the deposition was delayed and that too well before the deputy commissioner had issued a notice to it and these facts weigh very heavily in favour of the appellant while determining the amount of penalty to be imposed upon it under Section 34(8) of the U.P. Value Added Tax Act, 2008. In view of the fact that the appellant had deposited hefty amount of Rs. 2,94,164.00 towards interest for the period the deposition of tax deducted at source was delayed and the revenue has not lost any amount rather it had gained much in getting a considerable amount in the form of interest, which in-itself amount a penalty, we are of the considered view that imposition of any penalty under section 34(8) of the U.P. Value Added Tax Act, 2008 was wholly unjust and unwarranted. In the case of 'Commissioner of Commercial Tax versus Hindustan Petroleum Corporation Ltd. VST I 2013 (16)B-170', the Allahabad High Court held that if tax deducted at source along-with interest thereon for the period of delay in its deposition has been paid/deposited there is no good reason or justification for imposition of penalty under Section 34(8) of the U.P. Value Added Tax Act, 2008 as the revenue is not going to loose any amount.";