ORDER
Prakash Krishna, J.
1. These two revisions under Section 11 of the U.P. Trade Tax Act, 1948, (hereinafter referred to as “the Act”) arise out of a common order of the Tribunal dated October 22, 2003 confirming the levy of penalty under Section 15A(1)(qq) of the Act. The assessing authority levied penalty under the aforesaid section for the month of October, 1999, both under the U.P. and the Central Sales Tax Act, 1956 on the ground that the dealer-applicant having not admitted any tax realised the tax from customers for the month of October, 1999 in U.P. and in Central.
2. The applicant is a private limited company and carries on the manufacture and sale of wheels generally used in tractors. It claimed itself a new unit within the meaning of Section 4A of the U.P. Trade Tax Act, 1948 and applied for grant of eligibility certificate under backward integration scheme. An application under Section 4A was filed on July 16, 1997. It remained pending and ultimately it was granted on September 14, 2000. From the eligibility certificate it is clear that the application for grant of eligibility certificate was filed on July 16,1997 and the eligibility certificate was issued later on September 14, 2000 and thereafter amended and the amended certificate is dated July 4, 2003 vide para 5 of the revision. During the pendency of application for grant of eligibility certificate the dealer-applicant realised trade tax on the turnover of wheels. The department initiated penalty proceeding under Section 15A(1)(qq) of the Act only for the month of October, 1999 both in U.P. as well as in Central. In reply to the penalty notice the stand taken by the dealer was that it realised the amount to cover the contingency of refusal to grant exemption under Section 4A of the Act. The said explanation was not accepted as sufficient by the assessing authority. The penalty order having been confirmed up to the stage of Tribunal, present two revisions have been filed.
3. Heard learned Counsel for the parties and perused the record.
Learned Counsel for the applicant made two submissions in support of the revisions. First that on the facts the provision of Section 15A(1)(qq) of the Act are not attracted. Secondly, the amount thus realised from the purchaser has been deposited by the dealer. Therefore, no penalty under the aforesaid section could be levied. In contra learned Standing Counsel submitted that the applicant being the eligibility certificate holder, the turnover being exempted, there was no occasion for the dealer to realise the tax from the purchaser and, as such, levy of penalty is fully justified.
4. Section 15A(1)(qq) of the Act provides levy of penalty if the assessing authority is satisfied that any dealer or other person realised any amount as sales tax or purchase tax and any amount in lieu of sales or purchase tax by giving it a different name or colour in contravention of the provision of Sub-section (2) of Section 8A of the Act. Section 8A(2)(b) of the Act is relevant for the present purpose. Section 8A(2)(a) is applicable where a person who realised tax is not registered dealer under the Act. Section 8A(2)(b) of the Act is applicable in the case of unauthorised realisation of sales or purchase tax, by giving different name or colour by a registered dealer including the commission agent. Learned Counsel for the applicant submitted that the dealer has not contravened either Section 8A(2)(b) or Section 15A(1)(qq) of the Act. Elaborating the argument it was submitted by him that the department has imposed penalty as the dealer had realised certain amount as sales tax in the month of October, 1999. The dealer is a new unit and the application for grant of eligibility certificate was pending on October, 1999. Indisputably, the said application was granted by order dated September 14, 2000 with effect from July 16,1997. Learned Standing Counsel on query put by me informed that there is no provision either under Section 4A or the notification issued therein prohibiting the applicant who has applied for eligibility certificate to charge or realise the trade tax or purchase tax dues pending grant of eligibility certificate.
5. Learned Counsel for the applicant has placed reliance upon a Division Bench judgment of this Court in the case of M.A. & Co. v. Assistant Commissioner (Judicial) Sales Tax, Farrukhabad [1964] 15 STC 487, for the proposition that tax become payable when the liability to pay tax arises and liability to pay tax arises by the happening of taxable events. The taxable events under the U.P. Sales Tax Act are sale of goods or their supply or distribution by way of sale. It is not necessary to wait until assessment is completed in order to say that the tax has become payable. There is distinction between the expressions “tax payable” and “tax due”. The tax is due when it becomes a debt owed to the taxing State, it becomes debt when it has been determined by assessment and quantified and a notice of demand has been issued intimating the amount of tax and demanding payment. The realisation of tax has been sought to be justified by the dealer on the plea that under Section 8A(2)(b) of the Act the dealer was authorised to recover the amount equivalent to the amount of sales tax payable, from the person to whom goods are sold by him. There is no contravention of Section 8A(2) of the Act as when taxable events took place, no eligibility certificate was in existence. The dealer was hoping for grant of eligibility certificate but that hope become true only on September 14, 2000. To levy penalty the action of the dealer should be judged the fact, as they existed at the time of taxable events.
6. Learned Standing Counsel submitted that in all fairness the dealer should have waited for the ultimate outcome of the result of application for grant of eligibility certificate. The eligibility certificate having been granted including the period October, 1999 no sales tax was payable by the dealer and, as such the dealer could not recover the amount equivalent to the amount of sales tax payable from the purchaser. The interpretation suggested by the learned Standing Counsel ignores the ground realities. The application for eligibility certificate was filed as way back as on July 16, 1997 and the grant of eligibility certificate is not automatic. The Divisional Level Committee or the concerned authority, as the case may be, may or may not grant the eligibility certificate. Unless and until eligibility certificate is granted it cannot be said that realisation of amount equivalent to the amount of sales tax payable from the purchasing dealer by the selling dealer contravenes Section 8A(2)(b) of the Act. To judge the contravention of Section 8A(2)(b) of the Act the relevant point of time is taxable events. In the present case the taxable events are during the month of October, 1999 and, as such, taking the practical view of the matter, it cannot be said that the dealer has contravened Section 8A(2)(b) of the Act.
7. The Tribunal was of the view that in such a circumstance the dealer should have deposited the amount under protest along with monthly return. It has further recorded a finding that non-deposit of the amount, thus realised by the dealer, is violative of Section 29A(1) of the Act. The present proceeding arises out of the order passed under Section 15A(1)(qq) of the Act. The only question to be examined, therefore, is as to whether penalty can be levied under the aforesaid section or not. The imposition of penalty is a quasi-criminal proceeding. The burden lay upon the department to prove the ingredients of the alleged breach. In the present case except making comments that the dealer should have deposited the amount under Section 29A of the Act the authorities below could not establish that ingredient of Section 15A(1)(qq) of the Act are proved. It is not the case of the department that the dealer has realised sales or purchase tax on any amount in lieu of sales or purchase tax by giving it different name or colour.
8. Learned Counsel for the applicant has placed reliance on the following three cases:
(1) Commissioner of Sales Tax v. Romills Garrage
(2) Durga Chemical industries v. Commissioner of Sales Tax [1985] UPTC 1049, and
(3) Commissioner of Sales Tax v. Shyam Metal Refiners [1986] UPTC 1038.
9. These cases were decided with reference to unamended section as it stood then and are not very relevant as presently Section 15A(1)(qq) of the Act is materially altered. In these cases it was held that if the dealer on expectation that his turnover will go beyond certain limit and he will be liable to pay additional tax went on realising additional tax then he cannot be penalised only because the turnover fell short, below the limit, prescribed for payment of additional tax.
10. Argument was also raised that the dealer has deposited the amount of tax thus realised for the month of October, 1999 both in respect of U.P. Sales Tax as well as Central sales tax. Reliance has been placed by the learned Counsel upon Kalu Ram Raghunath Das v. Commissioner of Sales Tax [1995] UPTC 403 and Commissioner of Sales Tax v. State Trading Corporation of India [1999] UPTC 1024. In these cases it has been held that where the registered dealer realised purchase tax and deposited the same, no penalty can be levied under Section 15A(1)(qq) of the Act. In the present case there is no clear-cut material on record to conclude that the dealer applicant has deposited the tax, thus realised. A reference was made by learned Counsel of a chart given on page 69 of the paper book. From this chart it is difficult to record any such definite finding. However, it is open to the department to verify this fact from the record. If ultimately this finds to be incorrect it will be open to the department to recover the amount of tax, thus realised by the dealer for the month of October, 1999 under U.P. and Central. The dealer shall have no right to take any objection on this count.
In the result both the revisions are allowed subject to the observation made above and the orders of penalty are set aside.