|COURT:||Gujarat High Court|
|CORAM:||C. L. Soni J, Jayant Patel J|
|CATCH WORDS:||Interest, Refund of penalty|
|COUNSEL:||J. P. Shah|
|DATE:||October 17, 2014 (Date of pronouncement)|
|DATE:||October 21, 2014 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 275(1A): Assessee's claim for refund of penalty with interest cannot be defeated by inaction of revenue|
(i) What is provided by Section 275(1A) is that the order imposing or enhancing or reducing or cancelling the penalty may be passed on the basis of the assessment as revised by giving effect to the order in appeal. The concerned authority was thus required to make specific order for cancelling the penalty by giving effect to the order in appeal made in favour of the petitioner. However, failure of assessing officer or concerned authority to pass such order would not mean that the assessee has no right of refund on his becoming successful in appeal against the order of assessment. Further, if there is failure to exercise power under Section 275(1A) within outer limit of six months, the assessee would be justified in approaching before this Court under Article 226 of the Constitution. In our view, word ‘MAY’ should be construed to create an obligation upon the authority to pass consequential order upon conclusion of the litigation.
(ii) Though time limit of six month is provided for the order contemplated to be passed of imposing, enhancing, reducing, cancelling penalty or dropping the proceedings for imposition of penalty for giving effect to any order passed in appeal, but when such order is to be passed in favour of the assessee, time limit for passing such order by the concerned officer should not come in the way of the assessee for cancelling the penalty on his getting success before the higher forum in appeal merely because the concerned officials failed to discharge his duty of giving effect to the order made in the appeal in favour of the assessee.
(iii) A “tax refund” is a refund of taxes when the tax liability is less than the tax paid. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorizedly by the Department. When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited.
Good judgement by honorable HC.
Revenue need to to be honorable in its practices too, if so follows sec.275 (1A) within 6 months of forums’ orders , assesses may pay penalties if they succeed in the appeals before higher forums of justice, naturally, no asessee would desist in paying if wrongly imposed , that way natural justice would prevail,
It the Revenue fails to pay within 6 months wrong collection of excess taxes, then when asessees move under Art 226, Hon HC may also fine Revenue pay double the money revenue is due to the assessees, that way Due process under Art 265 Taxation would meaningfully prevail is my view!
i hope in future HCs would likewise move to bring detterance on Revenue!
One more if revenue moves SLP to hon SC, if revenue loses, hon SC need to fine double the amount of fine on Revenue, the fines need to be paid to courts treasury within 6 months, the court can deduct the excess realised fines could be credited to consolidated funds account of government of india that could be used for judiciary to use that money for increasing more judges on benches wherever necessary, that way independence of judiciary could be safe guarded in a most meaningful way, is my view.
i hope HCs and SC would so implement in the interest of maintaining justice parameters in the country!
THE SUPREME COURT AND THE HIGH COURTS HAVE BEEN UNNECESSARILY ENCOURAGING THE INCOME TAX AUTHORITIES TO DISREGARD THEIR ORDERS BY MAKING SOME CASUAL OBSERVATIONS.THE OFFICERS SHOULD BE TRIED FOR THE CONTEMPT OF THE COURT AND SHOULD BE AWARDED CORPOREAL PUNISHMENT. THE INCOME TAX AUTHORITIES CAN EASILY MAKE PAYMENT OF COST OR FINE .MONEY IS NOT A PROBLEM FOR THEM