STATE OF GUJARAT AND ANR. versus M/S. SAW PIPES LTD. on 17 April 2023

[2023] 6 S.C.R. 479

STATE OF GUJARAT AND ANR.

v.

M/s. SAW PIPES LTD.

(Civil Appeal No. 3481 of 2022)

APRIL 17, 2023

[M. R. SHAH AND B. V. NAGARATHNA, JJ.]

Gujarat Sales Tax Act, 1969 – s. 55A, 45, and 47 –Respondent-assessee was engaged in business of executingindivisible works of undertaking contract of coal tar and enamelcoating on pipes – Respondent deposited tax at rate of 2%, however,the Assessing Officer (AO) held that the composition amount wasnot payable at the rate of 2% as deposited but it fell under residuaryentry-8 to the notification dated 18.10.1993 – Demand of differencein tax as well as the levy of interest u/s.47(4A) and penalty u/s.45(6) of the Act, 1969 was made – By the impugned judgment andorder, the High Court has set aside the penalty and interest leviedu/s.45(6) and s.47(4A) of the Act, 1969 on the ground that therespondent-assessee was under the bonafide opinion and paid taxat 2% and that thereafter, when the enhanced tax as imposed waspaid by the assessee, the penalty and interest was not required to bepaid by the assessee – Issue before the Supreme Court: Whetherwhile levying penalty and interest leviable u/s 45(6) and s. 47(4A)mens rea on the part of the assessee is required to be considered –Held: The language used in s.45 is precise, plain and unambiguousthat the moment any eventuality as mentioned in s. 45(5) occurs,the penalty shall be leviable as mentioned in s. 45(6) – There is noquestion of considering any mens rea on the part of the assessee –The language employed in a statute is the determinative factor oflegislative intent – The Court cannot read anything into a statutoryprovision which is plain and unambiguous – On strict interpretationof s. 45 and s. 47, the only conclusion would be that the penaltyand interest leviable u/ss. 45 and 47(4A) are statutory and mandatoryand there is no discretion vested in the Assessing Officer to levy ornot to levy the penalty and interest other than as mentioned in s.45(6) and s. 47 – Judgment of High Court set aside.

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AAllowing the appeal, the Court

HELD:1. From the language of Section 45(6) of the Act, itcan be seen that the penalty leviable under the said provision isa statutory penalty. The phrase used is “shall be levied.” Themoment it is found that a dealer is deemed to have failed to payBthe tax to the extent mentioned in sub-section (5) of Section 45,there shall be levied on such dealer a penalty not exceeding oneand one-half times the difference referred to in sub-section (5).As per sub-section (5), where in the case of a dealer the amountof tax assessed or re-assessed exceeds the amount of tax alreadypaid by the dealer in respect of such period by more than 25% ofCthe amount of tax so paid, the dealer shall be deemed to havefailed to pay the tax to the extent of the difference between theamount so assessed or re-assessed and the amount paid.Therefore, the moment it is found that a dealer is to be deemedto have failed to pay the tax to the extent mentioned in sub-sectionD(5), the penalty is automatic. Further, there is no discretion withthe assessing officer either to levy or not to levy and/or to levyany penalty lesser than what is prescribed/mentioned in Section45(6) of the Act, 1969. In that view of the matter, there is noquestion of considering any mens rea on the part of the assessee/dealer. [Para 6.4][495-G-H; 496-A-C]

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2. The word used in Section 45(6) is “shall be levied”. Thedealer shall be liable to pay the penalty not exceeding one andone-half times of the difference of the tax as mentioned in sub-section (5) of Section 45 of the Act, 1969. The language used inSection 45 is precise, plain and unambiguous. The intention ofFthe legislature is very clear and unambiguous that the momentany eventuality as mentioned in Section 45(5) occurs, the penaltyshall be leviable as mentioned in sub-section (6) of Section 45.No other word like mens rea and/or satisfaction of the assessingofficer and/or other language is used like in Section 11AC of theGCentral Excise Act. It is a well settled principle in law that theCourt cannot read anything into a statutory provision which isplain and unambiguous. A statute is an edict of the legislature.The language employed in a statute is the determinative factorof legislative intent. As per the settled position of law, the intentionof the legislature is primarily to be gathered from the languageH

used, which means that attention should be paid to what has beensaid as also to what has not been said. The courts cannot aid thelegislatures’ defective phrasing of an Act; they cannot add or mend,and by construction make up deficiencies which are left there.[Para 6.11][501-E-H; 502-A]

3. On strict interpretation of Section 45 and Section 47 ofthe Act, 1969, the only conclusion would be that the penalty andinterest leviable under Section 45 and 47(4A) of the Act, 1969are statutory and mandatory and there is no discretion vested inthe Commissioner/Assessing Officer to levy or not to levy thepenalty and interest other than as mentioned in Section 45(6)and Section 47 of the Act, 1969. It is needless to observe thatsuch an interpretation has been made having regard to the tenorof Sections 45 and 47 of the Act, 1969 and the language usedtherein. [Para 6.12][502-B-C]

Chairman, SEBI v. Shriram Mutual Fund and Anr.(2006) 5 SCC 361; Competition Commission of India v.Thomas Cook (India) Limited and Anr. (2018) 6 SCC549 – relied on.

Union of India and Ors. v. Dharamendra TextileProcessors and Ors. (2008) 13 SCC 369 : [2008] 14SCR 13; Commissioner of Central Excise, Chandigarhv. Pepsi Foods Ltd. (2011) 1 SCC 601 : [2010] 14 SCR836; Brooke Bond India Limited v. State of Gujarat;1998 JX (Guj) 128 – held inapplicable.

Hindustan Steel Ltd. v. State of Orissa; (1969) 2 SCC627 : [1970] 1 SCR 753; State of Gujarat v. ArcelorMittal Nippon Steel India Limited; (2022) 6 SCC 459;Guljag Industries v. Commercial Taxes Officer (2007)7 SCC 269; J. K. Cotton Spg. and Wvg. Mills Co. Ltd.v. CCE; (1998) 3 SCC 540 : [1998] 2 SCR 102; BHELv. Mahendra Prasad Jakhmola; (2019) 13 SCC 82 :[2019] 4 SCR 504; Elecon Engineering Vs. State ofGujarat (1994) 93 STC 397; Director of ElementaryEducation v. Pramod Kumar Sahoo (2019) 10 SCC 674;Nandlal Wasudeo Badwaik v. Lata Nandlal Badwaik;(2014) 2 SCC 576 : [2014] 1 SCR 120; Bhuwalka Steel A

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[2023] 6 S.C.R.

AIndustries Ltd. v. Union of India; (2017) 5 SCC 598 :[2017] 2 SCR 993; State of M.P. v. Bharat HeavyElectricals (1997) 7 SCC 1 : [1997] 3 Suppl. SCR 435;Cement Marketing Co. of India Ltd. v. AssistantCommissioner of Sales Tax, Indore and Ors. 1980 (6)ELT 295 (S.C.) – referred to.BRiddhi Siddhi Gluco Biols Ltd. v. State of Gujarat (2017)100 VST 305 (Guj); State of Gujarat v. Oil and NaturalGas Corporation Limited (2017) 97 VST 506 (Guj); JyotiOverseas P. Ltd. v. State of Gujarat; 2017 SCC OnlineGuj 2511 – referred to.C

Case Law Reference

FCIVIL APPELLATE JURISDICTION: Civil Appeal No. 3481of 2022.

From the Judgment and Order dated 04.08.2016 of the High Courtof Gujarat at Ahmedabad in TA No. 1283 of 2006.

Ms. Aastha Mehta, Ms. Deepanwita Priyanka, Ms. PreranaGMohapatra, Advs. for the Appellants.

V. Lakshmikumaran, Aditya Bhattacharya, Ms. Apeksha Mehta,Sahil Parghi, Ms. Avisha Khatri, Ms. Mounica Kasturi, Ms. CharanyaLakshmikumaran, Advs. for the Respondent.

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The Judgment of the Court was delivered by

M. R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 04.08.2016 passed by the High Court of Gujarat atAhmedabad in Tax Appeal No. 1283/2006, by which, the Division Benchof the High Court has set aside the penalty and interest levied undersub-section (6) of Section 45 of the Gujarat Sales Tax Act, 1969(hereinafter referred to as the Act, 1969), the State of Gujarat haspreferred the present appeal.

2. The respondent company - assessee is engaged in the businessof executing indivisible works of undertaking contract of coal tar andenamel coating on pipes. The respondent - assessee had opted forpayment of lump-sum tax as provided under Section 55A of the GujaratSales Tax Act, 1969. The respondent - assessee deposited tax at therate of 2% on sales involved in the execution of works contract of coatingof pipes by treating the same as civil works contract as prescribed inEntry-1 of the notification dated 18.10.1993 issued by the Governmentof Gujarat. The Assessing Officer (AO) vide order dated 30.03.2005for assessment year (AY) 2002-03 held that the contract of coating ofpipes is not a civil works contract and therefore, the composition amountis payable not at the rate of 2% as deposited by the respondent but itfalls under Residuary Entry-8 to the notification dated 18.10.1993. TheAO raised the total demand as under: - 2.1 The assessee preferred a first appeal before the First AppellateAuthority i.e., Joint Sales Tax Commissioner. By order dated 30.07.2005,the First Appellate Authority dismissed the said appeal. The assesseeapproached the Gujarat Value Added Tax Tribunal by filing Second AppealNo. 820/2005. The learned Tribunal vide order dated 29.09.2006 dismissedthe appeal and confirmed the orders passed by the AO as well as theFirst Appellate Authority and thereby confirmed the aforesaid demandof difference in tax as well as the levy of interest under Section 47 (4A)and penalty under Section 45(6) of the Act, 1969. Theassessee preferred A

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Aa further appeal before the High Court being Tax Appeal No. 1283/2006. Before the High Court, the learned Senior Advocate appearing onbehalf of the assessee fairly conceded that looking to the fact that theauthority has passed the assessment order on the basis of materialavailable with it, they were required to pay the tax on the basis of 12%and that has been paid by the assessee since the opinion of the expertBwas turned out, however, the respondent – assessee restricted the appealto the extent of challenging the levy of penalty and interest only bysubmitting that the assessee was under a bonafide belief that the workscontract of the assessee would fall under Entry-1 requiring payment oftax at the rate of 2% only. Reliance was placed on the decision of theCHigh Court in the case of Brooke Bond India Limited Vs. State ofGujarat; 1998 JX (Guj) 128and it was prayed that the imposition ofpenalty and interest not be upheld. By the impugned judgment and order,the High Court has set aside the penalty and interest on the ground thatthe assessee was under the bonafide opinion and following the advice,paid the tax at 2% and that thereafter, when the enhanced tax as imposedDhas already been paid by the assessee, the penalty and interest is notrequired to be paid by the assessee. The High Court allowed the appealto the aforesaid extent, deleting the penalty and interest levied underSection 45(6) and Section 47 (4A) of the Act, 1969.

2.2 Feeling aggrieved and dissatisfied with the impugned judgmentEand order passed by the High Court whereby the penalty and interesthas been set aside, the State has preferred the present appeal.

3. Ms. Aastha Mehta, learned counsel has appeared withMs. Deepanwita Priyanka, on behalf of the State.F3.1 Ms. Mehta learned counsel appearing on behalf of the Statehas vehemently submitted that in the facts and circumstances of thecase, the High Court has committed a serious error in deleting the penaltyand interest levied under Section 45(6) and Section 47(4A) of the Act,1969.G3.2 It is further submitted that while deleting the penalty, the HighCourt has not at all considered sub-section (6) of Section 45 of the Act,1969 in its true spirit.

3.3 It is next submitted that the High Court has not properlyconsidered the fact that the penalty leviable under Section 45(6) of theAct, 1969, is a statutory penalty and hence, is compulsorily leviable.H

3.4 It is contended by Ms. Mehta, learned counsel appearing onbehalf of the State that the penalty leviable under Section 45(6) of theAct, being a statutory penalty, there is no discretion vested with theCommissioner to levy or not to levy, as long as the assessee falls underSection 45(5) of the Act, 1969.

3.5 It is further contended that even the Commissioner has nodiscretion and/or authority to levy the penalty other than the penaltyprovided under Section 45(6) of the Act, 1969.

3.6 It is submitted by the learned counsel appearing on behalf ofthe State that the moment it is found that the amount of tax assessed orreassessed exceeds the amount of tax already paid by the dealer underSection 47 in respect of such period by more than 25% of the amount oftax so paid, the dealer can be deemed to have failed to pay the tax to theextent of the difference between the amount so assessed or reassessedand the amount paid and in that eventuality the dealer is liable to pay apenalty not exceeding one and one-half times the difference and/or, onsuch dealer, who is deemed to have failed to pay the tax to the extentmentioned in sub-section (5) of Section 45, a penalty shall be leviednotexceeding one and one-half times the difference. It is further submittedthat even the Commissioner has no jurisdiction and/or authority to levythe penalty lesser than one and one-half times the difference.

3.7 It is contended by Ms. Mehta learned counsel appearing onbehalf of the State that the phrase used in sub-section (6) of Section 45of the Act is “shall be levied”. Reliance was placed on the decision of athree-judge bench of this Court in the case of Union of India and Ors.Vs. Dharamendra Textile Processors and Ors.; (2008) 13 SCC369 wherein it has been held that when the term is used “shall be leviable”the adjudicating authority will have no discretion.

3.8 It is further submitted that the penalty leviable under sub-section (6) of Section 45 of the Act, is a statutory penalty and legislaturehas consciously used the word “shall” and even for interest the samelanguage is employed in Section 47(4A) of the Act. That the assessee isstatutorily liable to pay the penalty and interest. That therefore, the HighCourt has committed a serious error in deleting the penalty and interest,mainly, on the ground that the amount of tax has already been paid bythe assessee and that the assessee was under the bonafide belief that itwas liable to pay the tax at rate of 2%.

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A3.9 It is further contended by Ms. Mehta, learned counselappearing on behalf of the State that the non-payment of penalty is metwith consequences under Section 45 of the Act, 1969, and is recoverableas an arrear of land revenue. That it is well-settled that when non-compliance or violation of a provision is met with a consequence, then,the language of the provision is deemed to be mandatory in nature. It isBtherefore submitted that the statutory penalty cannot be done away with.

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3.10 It is submitted that in case the penalty is a statutory penalty,there is no requirement to prove mens rea or to consider the aspectregardingbonafide belief of the assessee while computing payment ofpenalty and interest. In support of the above submissions, learned counselCappearing on behalf the State has heavily relied upon the decisions ofthis Court in the cases of State of Gujarat Vs. Arcelor Mittal NipponSteel India Limited; (2022) 6 SCC 459andChairman, SEBI Vs.Shriram Mutual Fund and Anr.; (2006) 5 SCC 361; GuljagIndustries Vs. Commercial Taxes Officer (2007) 7 SCC 269;DCompetition Commission of India Vs. Thomas Cook (India)Limited and Anr. (2018) 6 SCC 549,as well asthe decisions of theGujarat High Court in the cases ofRiddhi Siddhi GlucoBiols Ltd. Vs.State of Gujarat; (2017) 100 VST 305 (Guj) and State of GujaratVs. Oil and Natural Gas Corporation Limited; (2017) 97 VST 506(Guj).E

3.11 It is submitted that mens rea can only be expressly includedin the law by the legislature. The Court cannot fill in the gaps and purportthe requirement of an intention or guilty mind of the assessee beforelevying penalty and interest where the same is not prescribed by thelegislature.F

3.12 In so far as the decision of this Court in the case of HindustanSteel Ltd. Vs. State of Orissa; 1969 (2) SCC 627 relied upon onbehalf of the assessee is concerned, it is vehemently submitted by thelearned counsel appearing on behalf of the State that the said decisionshall not be applicable while considering penalty and interest levied underGSection 45(6) and 47(4A) of the Act, 1969. It is contended that evenotherwise in the present case, the learned Tribunal had specificallyrecorded findings that the said decision shall not be applicable sincethere is nothing on record to prove that there was in fact a bonafidebelief of the respondent - assessee.

3.13 In so far as the reliance placed on behalf of the assesseeupon the decision of this Court in the case of Dharamendra TextileProcessors(supra)is concerned, it is submitted by Ms. Mehta, learnedcounsel appearing on behalf of the State that the said decision also shallnot be applicable to the facts of the case at hand, more particularly,considering the statutory provisions, namely, Section 45(6) and Section47(4A) of the Act. It is submitted that in the said case, this Court wasconsidering Section 11AC of the Central Excise Act. That the Parliamentin its wisdom has specifically incorporated the element of mens rea inSection 11AC by employing the words, “fraud, collusion or any wilfulmisrepresentation or any wilful misstatement or suppression of facts”and “intent to evade payment of duty”. It is submitted that only when anintention is built into the provision and when the assessee’s intention ismade relevant by the Parliament, can the courts interpret and go into theissue as to whether or not the evasion was bonafide or malafide. Nosuch language is employed in Section 45(6) and Section 47(4A) of theAct, 1969. That a similar decision of this Court relied upon on behalf ofthe assessee in the case of Commissioner of Central Excise,Chandigarh Vs. Pepsi Foods Ltd; (2011) 1 SCC 601 is misconceivedand shall not be applicable to the facts of the case at hand since itinterprets Section 11AC of Central Excise Act and the language of theprovision at hand and that in Section 11AC is starkly opposite.

3.14 Ms. Mehta, learned counsel appearing on behalf of the Statehas further contended that even the reliance placed by the assesseeupon the decision of the Gujarat High Court in the case of JyotiOverseas P. Ltd. Vs. State of Gujarat; 2017 SCC Online Guj2511:(2017) 6 GSTL 388, is also misconceived and shall not beapplicable to the facts of the case at hand. It is submitted that in the saidcase, the High Court was dealing with Section 34(7) of Gujarat VATAct, in which the language used is “If the Commissioner is satisfied thatthe dealer, in order to evade or avoid payment of tax…” That under theVAT Act, not only is the Commissioner vested with discretion but thesaid penalty provision is applicable specifically when the assessee hasan intention to “evade or avoid payment of tax.” That in the presentcase, the legislature in its wisdom imposed a liability of penalty and interestwithout reference to any requirement of mens rea on the part of theassessee.

3.15 Making the above submissions and relying upon the abovedecisions, it is prayed that the present appeal be allowed and the impugned A

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Ajudgment and order deleting the penalty and interest levied under Section45(6) and Section 47(4A) of the Act, 1969 be quashed and set aside.

4. The present appeal is vehemently opposed by Shri V.Lakshmikumaran, learned counsel appearing on behalf of the respondent– assessee – dealer. It is submitted at the outset that the penalty andBinterest is not payable by the assessee in the facts of the present case. Itis further submitted that with reference to imposition of penalty, as perstatutory provision, penalty is leviable only if differential tax liability(difference between tax assessed and tax paid) is more than 25%. Thataccording to the assessee, the differential tax liability on merits is lessthan 25%, however, for the sake of argument, it is assumed that theCcondition of 25% is fulfilled.

4.1 Learned counsel appearing on behalf of the respondent –assessee has made the following submissions in support of the case onbehalf of the assessee that the assessee is not liable to pay the penaltyand interest: -D

(1) That for the purpose of argument that penalty is not payable,the respondent is within his legal rights to argue that quantumof tax demand is not correct, even if the same was notpressed before the High Court.

E(2)That section 45(5) of Gujarat Sales Tax Act, 1969 createsa presumption which is rebuttable in nature.

(3) That for the purpose of imposition of penalty under Section45(6) Gujarat Sales Tax Act, 1969, mens rea, blameworthyconduct, deliberate violation, evil doing, fraud, suppression(either one or more of them) must be proved.

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(4) That section 45(6) of the Act, 1969 provides for impositionof penalty not exceeding one and one-half times thedifferential tax. The provision provides for an upper limitfor imposition of penalty; however, no minimumpenalty isprescribed. This indicates that in appropriate cases whereGthere is no mens rea, the authority has the discretion toimpose no penalty.

(5) That in case the claim of the dealer for payment ofcomposition amount of 2% is rejected, the dealer could paythe tax on actual value of goods involved in the executionH

of a works contract. Even in such a scenario, the additionaltax payable would be less than 25% and hence, the provisionfor penalty will not be attracted.

(6) No interest is payable under Section 47(4-A) of GujaratSales Tax Act, 1969.

4.2 Elaborating the above submissions, it is submitted that thelevy of penalty under Section 45(6) of the Act would depend upon theliability of the dealer to pay tax. That accordingly, in case where there isa dispute regarding imposition of penalty under Section 45(6), it becomesnecessary to determine if the dealer is liable to pay additional tax. It issubmitted that this position would remain unaltered even when thecorrectness of imposition of tax has not been argued before the HighCourt.

4.3 It is next submitted that the respondent can, in an appeal filedby the opposite party, re-canvass for reversal of a finding reached againsthim in the judgment. Reliance is placed upon the decisions of this Courtin the case of J.K. Cotton Spg. and Wvg. Mills Co. Ltd. Vs. CCE;(1998) 3 SCC 540and BHEL Vs. Mahendra Prasad Jakhmola;(2019) 13 SCC 82. Learned counsel appearing on behalf of the assesseehas also relied upon the decision of the Gujarat High Court in the case ofElecon Engineering Vs. State of Gujarat; (1994) 93 STC 397.

4.4 Relying upon the decision of this Court in the case of Directorof Elementary Education Vs. Pramod Kumar Sahoo; (2019) 10SCC 674, it is submitted that as held by this Court any concession inlaw made by either counsel would not bind the parties, as it is legallysettled that advocates cannot throw away legal rights or enter intoarrangements contrary to law.

4.5 It is contended that in the present case, since the penalty andinterest were proposed to be waived by following the decision in case ofBrooke Bond India Limited(supra), the advocate of the dealer didnot press the issue of demand on merits. That in case the judgment ofHigh Court is proposed to be reversed and penalty is proposed to beimposed, it will become necessary to adjudicate the dispute on merits asthe same is detrimental to the imposition of penalty.

4.6 It is further contended that Section 45(5) of the Act, 1969,provides that in case difference between assessed tax and tax paid bythe dealer is more than 25%, the dealer shall be deemed to have failed to A

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Apay the tax to the extent of the difference. That therefore, Section 45(5)creates presumption against the dealer.

4.7 It is submitted that as held by this Court in the case of NandlalWasudeoBadwaik Vs. Lata Nandlal Badwaik; (2014) 2 SCC 576,there is a clear distinction in law between a legal fiction and presumption.BLegal fiction assumes existence of a fact which may not really exist.However, a presumption of a fact depends on satisfaction of certaincircumstances. In support of above submissions, reliance is also placedon another decision of this Court in case of Bhuwalka Steel IndustriesLtd. Vs. Union of India; (2017) 5 SCC 598.

C4.8 It is next submitted that even otherwise Section 45(5) of theAct creates a presumption against the dealer and such presumption isrebuttable in nature. That the term “burden of proof” connotes theobligation to prove a fact or facts, by adducing the necessary evidence.It is submitted that any statutory provision by way of which penalty isimposed by tax authorities, the burden of proof to prove mens rea liesDwith revenue, however, a statute can shift the burden on the dealer incertain circumstances. That therefore, such presumption would berebuttable in nature.

4.9 It is submitted that Section 45(5) provides a presumption thatin case differential tax is more than 25%, the dealer shall be deemed toEhave failed to pay the tax. That the presumption contained in sub-section(5) is not irrebuttable but rebuttable in nature. That this is specifically sobecause, sub-section (6) of Section 45 grants discretionary power to theassessing officer to impose penalty. It is submitted that in case thepresumption is rebutted by the dealer, the assessing officer will not imposeFpenalty in exercise of its discretionary power. Reliance is placed uponthe decision of this Court in the case of State of M.P. Vs. BharatHeavy Electricals; (1997) 7 SCC 1. That therefore, Section 45(5) ofthe Act, 1969, merely shifts the burden of proof, however, the presumptioncontained in the Section is not irrebuttable.

G4.10 As regards the other preposition that for the purpose ofimposition of penalty under Section 45(6), mens rea, etc., must be proved,it is vehemently submitted that it is a general principle of law, based onthe maxim of “actus non facitreummens sit rea” that an act does notmake a man guilty, unless it can also be shown that he was aware thathe was doing wrong. It is submitted that legislative attitude towards theHconcept of mens rea in tax laws and the judicial practice in emphasising its importance therefore, deserves careful consideration.Learned counselappearing on behalf of the respondent - assessee has also relied uponthe decision of this Court in the cases of Hindustan Steel Ltd.(supra);Cement Marketing Co. of India Ltd. Vs. Assistant Commissionerof Sales Tax, Indore and Ors.; 1980 (6) ELT 295 (S.C.) andCommissioner of Central Excise, Chandigarh (supra) in supportof his abovesubmissions to the effect thatbefore levy of penalty andinterest mens rea has to be proved by the department.

4.11 It is further submitted by the learned counsel appearing onbehalf of the respondent – assessee that Section 45(6) of the Act, 1969,provides for imposition of penalty “not exceeding” one and one-half timesthe differential tax demand. That employment of the term “not exceeding”postulates that the authority has been conferred with a discretionaryjurisdiction to levy penalty. By necessary implication, the authority maynot levy penalty. If it has the discretion not to levy penalty, existence ofmens rea becomes relevant factor. Relance is placed upon the decisionof the Gujarat High Court in the case of Jyoti Overseas P. Ltd.(supra).

4.12 Learned counsel appearing on behalf of the assessee hassubmitted that on the aforesaid grounds the interest levied under Section47(4A) of the Act, 1969, is also bad in law and therefore, the High Courthas rightly set aside the same.

4.13 Making the above submissions, it is prayed that the presentappeal be dismissed.

5. We have heard learned counsel appearing on behalf of therespective parties at length.

6. At the outset, it is required to be noted that the assessing officerlevied the penalty and interest against the respondent – assessee underthe provisions of Section 45(6) and Section 47(4A) of the Act, 1969,which levy came to be confirmed by the learned Tribunal. However, bythe impugned judgment and order, the High Court has set aside the levyof penalty and interest, mainly on the grounds that the tax imposed hadalready been paid and that the assessee was under a bonafide opinion asto its tax liability and was following expert advice and therefore, paid thetax at the rate of 2%. Therefore, according to the High Court, thoughnot specifically mentioned/opined, there was no mens rea on the part ofthe respondent – assessee in not paying the tax at the rate of 2% and inmaking the payment of the tax at 2%. Therefore, the short question A

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Awhich is posed for consideration of this Court is whether while imposing/levying penalty and interest leviable under Section 45(6) and Section47(4A) of the Act, 1969, mens rea on the part of the assessee is requiredto be considered.

6.1 While appreciating the submissions made on behalf of theBrespective parties on the levy of the penalty and interest under Section45(6) and Section 47(4A) of the Act, the relevant sections i.e., Section45 and Section 47(4A) of the Act, 1969 are required to be referred to,which are as under: - “45. Imposition of penalty in certain cases and bar to prosecution.C(1)Where any dealer or Commission agent becomes liable topay purchase tax under the provisions of sub-section (1) or(2) of section 16, then, the Commissioner may impose onhim, in addition to any tax payable –

(a) if he has included the purchase price of the goods in hisDturnover of purchase as required by sub-section (1) ofsection 16, a sum by way of penalty not exceeding half theamount of tax, and (b)if he has not so included the purchase price as aforesaid, asum by way of penalty not exceeding twice the amount ofEtax.

(2) If it appears to the Commissioner that such dealer - (a)has failed to apply for registration as required by section29, or F(b)has without reasonable cause, failed to comply with thenotice under section [41, 44 or 67] or

(c) has concealed the particulars of any transaction ordeliberately furnished inaccurate particulars of anytransaction liable to tax, the Commissioner may impose uponGthe dealer by way of penalty, in addition to any tax assessedunder section 41 or reassessed under section 44 or revisedunder section 67 a sum not exceeding one and one-halftimes the amount of the tax.

(3) If a dealer fails to present his licence, recognition or as theHcase may be, permit for cancellation as required by section STATE OF GUJARAT AND ANR. v. M/s. SAW PIPES LTD.[M. R. SHAH, J.]

35 or 36, the Commissioner may impose upon the dealer byway of penalty, a sum not exceeding two thousand rupees.

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(3A) If a dealer fails to furnish any declaration or any return bythe prescribed date as required under sub-section (1) ofsection 40, the commissioner shall impose upon such dealerby way of penalty for each declaration or return, a sum ofBtwo hundred rupees for every month or part of a monthcomprised in the period commencing from the dayimmediately after the expiry of prescribed date and endingon the date on which a declaration or return is furnished.

(4) If a dealer fails without sufficient cause to furnish anydeclaration or any return [as required by proviso to sub-section (1) or sub-section (2) of section 40], theCommissioner may impose upon the dealer by way ofpenalty, a sum not exceeding two thousand rupees.

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(5) Where in the case of a dealer the amount of tax -(a) assessed for any period under section 41 or 50; or D

(b) reassessed for any period under section 44; exceeds the amount of tax already paid under sub-section(1), (2) or (3) of section 47 by the dealer in respect of suchperiod by more than twenty five per cent of the amount oftax so paid, the dealer shall be deemed to have failed to paythe tax to the extent of the difference between the amountso assessed or reassessed as aforesaid and the amount paid.

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(6) [Where under sub-section (5) a dealer is deemed to havefailed to pay the tax to the extent mentioned in the said sub-section, there shall be levied on such dealer a penalty notexceeding oneand one-half times the difference referredto in sub-section (5).]”

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“47. Payment of Tax and Deferred Payment of Tax, etc.

(4A) (a) Where a dealer does not pay the amount of tax withinthe time prescribed for its payment under sub-section(1), (2) or (3), then there shall be paid by such dealerfor the period commencing on the date of expiry of the H

aforesaid prescribed time and ending on the date ofpayment of the amount of tax, simple interest, at therate of [eighteen per cent], per annum on the amount oftax not so paid or on any less amount thereof remainingunpaid during such period.

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B(b) Where the amount of tax assessed or reassessed forany period, under section 41 or section 44, subject torevision if any under section 67, exceeds the amount oftax already paid by a dealer for that period, there shallbe paid by such dealer, for the period commencing fromthe date of expiry of the time prescribed for payment ofCtax under sub-section (1), (2) or (3) and ending on dateof order of assessment, reassessment or, as the casemay be, revision, simple interest at the rate of [eighteenper cent] per annum on the amount of tax not so paid oron any less amount thereof remaining unpaid during suchDperiod.”

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6.2 On a fair reading of Section 45 of the Act, it can be seen thatas per sub-section (2) of Section 45 of the Act, 1969, penalty is leviableif it appears to the Commissioner that a dealer has concealed theparticulars of any transaction or deliberately furnished inaccurateEparticulars of any transaction liable to tax. In the present case, it cannotbe said that the dealer has concealed the particulars of any transactionor deliberately furnished inaccurate particulars of any transaction liableto tax. However, in so far as penalty leviable under sub-section (6) ofSection 45 of the Act, 1969 is concerned, the penalty leviable under thesaid provision is as such, a statutory penalty and there is no discretionFvested with the Commissioner as to whether to levy the penalty leviableunder sub-section (6) of Section 45 of the Act, 1969 or not. Sub-section(5) of Section 45 provides that in the case of a dealer where the amountof tax assessed for any period under sections 41 or 50 or re-assessedfor any period under Section 45 exceeds the amount of tax already paidGby the dealer in respect of such period by more than 25% of the amountof tax so paid, the dealer shall be deemed to have failed to pay the tax tothe extent of difference between amount so assessed or re-assessed asaforesaid and the amount paid. Considering sub-section (5) of Section45 of the Act, 1969, if a dealer is deemed to have failed to pay the tax tothe extent mentioned in sub-section (5), there shall be levied on such H

dealer a penalty not exceeding one and one-half times the differencereferred to in sub-section (5). Under the circumstances, to the aforesaidextent and on the difference of tax, as per sub-section (5) of Section 45,the respondent – assessee – dealer shall be liable to pay the penalty asmentioned under sub-section (6) of Section 45.

6.3 Section 45 confers power to levy/impose penalty in certaincases. In certain cases, enumerated in Section 45 of the Act, the penaltyimposable is distinct with the assessment such as Section 45(1)(a)(b).However, in so far as penalty imposable under Section 45(5) and 45(6)of the Act is concerned, it has a direct bearing or connection with theorder of assessment and the determination of the tax liability. Sub-section(5) of Section 45 provides that where in the case of a dealer the amountof tax assessed for any period under Section 41 or 50; or re-assessedfor any period under Section 44; exceeds the amount of tax already paidby the dealer under sub-section (1), (2) or (3) of Section 47 of the Act, inrespect of such period by more than 25% of the amount of tax so paid,the dealer shall be deemed to have failed to pay the tax to the extent ofthe difference between the amount so assessed or re-assessed asaforesaid and the amount paid. Sub-section (6) of Section 45 providesthat where under sub-section (5), a dealer is deemed to have failed topay the tax to the extent mentioned in the said sub-section, there shallbe levied on such dealer a penalty not exceeding one and one-half timesthe difference referred to in sub-section (5). Thus, on a bare reading ofsub-sections (5) and (6) of Section 45, it is evident that it is integral partof the assessment that the penalty be levied on the difference of amountof tax paid and amount of tax payable as per the order of assessment orre-assessment as the case may and the same shall be automatic.Therefore, when the penalty on the difference of amount of tax paid andtax payable is more than 25% of the amount of tax so paid, there shall beautomatic levy of penalty under Section 45(6) of the Act.

6.4 From the language of Section 45(6) of the Act, it can be seenthat the penalty leviable under the said provision is a statutory penalty.The phrase used is “shall be levied.” The moment it is found that adealer is deemed to have failed to pay the tax to the extent mentioned insub-section (5) of Section 45, there shall be levied on such dealer apenalty not exceeding one and one-half times the difference referred toin sub-section (5). As per sub-section (5), where in the case of a dealerthe amount of tax assessed or re-assessed exceeds the amount of tax A

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Aalready paid by the dealer in respect of such period by more than 25%of the amount of tax so paid, the dealer shall be deemed to have failed topay the tax to the extent of the difference between the amount so assessedor re-assessed and the amount paid. Therefore, the moment it is foundthat a dealer is to be deemed to have failed to pay the tax to the extentmentioned in sub-section (5), the penalty is automatic. Further, there isBno discretion with the assessing officer either to levy or not to levy and/or to levy any penalty lesser than what is prescribed/mentioned in Section45(6) of the Act, 1969. In that view of the matter, there is no question ofconsidering any mens rea on the part of the assessee/dealer.

6.5 At this stage, a few decisions of this Court as well as decisionsCof the Gujarat High Court (on levy of penalty and interest under theGujarat Sales Tax Act) are required to be referred to. In the caseofDharamendra Textile Processors(supra) after referring andconsidering another decision of this Court in the case of Shriram MutualFund(supra), it is observed and held that when the term used “shall beDleviable,” the adjudicating authority will have no discretion.

6.6 In the case of Shriram Mutual Fund(supra) while dealingand/or considering similar provision under the SEBI Act, it is observedand held that mens rea is not an essential ingredient for contravention ofthe provisions of a civil Act. While interpreting the similar provision ofESEBI Act, it is observed that the penalty is attracted as soon ascontravention of the statutory obligations as contemplated by the Act isestablished and, therefore, the intention of the parties committing suchviolation becomes immaterial. In the case before this Court, the Tribunalrelied on the judgment in the case of Hindustan Steel Ltd.(supra).However, this Court did not agree with the view taken by the TribunalFrelying upon the decision in the case of Hindustan Steel Ltd. (supra)byobserving that it pertained to criminal/quasi criminal proceedings.ThisCourt observed that the decision in the case of Hindustan Steel Ltd.(supra)shall not have any application as the same relates to impositionof civil liabilities under the SEBI Act and the Regulations and theGproceedings under the said Act are not criminal/quasi-criminalproceedings.In paragraphs 34 and 35, it is observed and held as under: - “34. The Tribunal has erroneously relied on the judgmentin Hindustan Steel Ltd. v. State of Orissa [(1969) 2 SCC 627 :AIR 1970 SC 253] which pertained to criminal/quasi-criminalHproceedings. That Section 25 of the Orissa Sales Tax Act which was in question in the said case imposed a punishment ofimprisonment up to six months and fine for the offences under theAct. The said case has no application in the present case whichrelates to imposition of civil liabilities under the SEBI Act and theRegulations and is not a criminal/quasi-criminal proceeding.

35. In our considered opinion, penalty is attracted as soon as thecontravention of the statutory obligation as contemplated by theAct and the Regulations is established and hence the intention ofthe parties committing such violation becomes wholly irrelevant.A breach of civil obligation which attracts penalty in the nature offine under the provisions of the Act and the Regulations wouldimmediately attract the levy of penalty irrespective of the factwhether contravention must be made by the defaulter with guiltyintention or not. We also further held that unless the language ofthe statute indicates the need to establish the presence of mensrea, it is wholly unnecessary to ascertain whether such a violationwas intentional or not. On a careful perusal of Section 15-D(b)and Section 15-E of the Act, there is nothing which requiresthat mens rea must be proved before penalty can be imposed underthese provisions. Hence once the contravention is established thenthe penalty is to follow.”

6.7 In the case of Guljag Industries (supra)while consideringSections 78(2) and 78(5) of the Rajasthan Sales Tax Act, 1994 whichprovided for penalty equal to thirty percent of the value of goods forpossession or movement of goods, whether seized or not, in violation ofthe provisions of Clause (a) of sub-section (2) or for submission of falseor forged documents or declaration, this Court in paragraph 9 observedas under: -

“9. Existence of mens rea is an essential ingredient of an offence.However, it is a rule of construction. If there is a conflict betweenthe common law and the statute law, one has to construe a statutein conformity with the common law. However, if it is plain fromthe statute that it intends to alter the course of the common law,then that plain meaning should be accepted. Existence of mensrea is an essential ingredient in every offence; but that presumptionis liable to be displaced either by the words of the statute creatingthe offence or by the subject-matter with which it deals. A penaltyimposed for a tax delinquency is a civil obligation, remedial andcoercive in its nature, and is different from the penalty for a crime.’’

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AThat thereafter, after following the decision in the case of ShriramMutual Fund (supra), this Court observed and held that mens rea isnot an essential ingredient for contravention of the provisions of a civilact. It is further observed that the breach of a civil obligation whichattracts penalty under the Act would immediately attract the levy ofpenalty irrespective of the fact whether the contravention was made byBthe defaulter with any guilty intention. In paragraph 30, it is observedand held as under: - A

“30. In Chairman, SEBI v. Shriram Mutual Fund [(2006) 5 SCC361] this Court found on facts that a mutual fund had violated theSEBI (Mutual Funds) Regulations, 1996. Under the saidCRegulations there was a restriction placed on the mutual fund onpurchasing or selling shares through any broker associated withthe sponsor of the mutual fund beyond a specified limit. It is in thiscontext that the Division Bench of this Court held that mens reawas not an essential ingredient for contravention of the provisionsDof a civil act. The breach of a civil obligation which attracts penaltyunder the Act would immediately attract the levy of penaltyirrespective of the fact whether the contravention was made bythe defaulter with any guilty intention. It was further held thatunless the language of the provision intends the need to establishmens rea, it is generally sufficient to prove the default/Econtravention in complying with the statute. In the present casealso the statute provides for a hearing. However, that hearing isonly to find out whether the assessee has contravened Section78(2) and not to find out evasion of tax which function is assignednot to the officer at the check-post but to the AO in assessmentFproceedings. In the circumstances, we are of the view that mensrea is not an essential element in the matter of imposition of penaltyunder Section 78(5).”

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6.8 In the case of Competition Commission of India (supra)while considering Section 43A of the Competition Act, 2002 whichGprovides for a penalty, it is observed in paragraphs 34 to 37 as under: - “34. If the ultimate objective test is applied, it is apparent thatmarket purchases were within view of the scheme that wasframed. As such the subsequent change of law also did not cometo the rescue of the respondents considering the substance of theHtransaction. The market purchases were part of the sametransaction of the combination.

35. Lastly, the submission raised that there were no mala fides onthe part of the respondent as such penalty could not have beenimposed. We are unable to accept the submission. The mens reaassumes importance in case of criminal and quasi-criminal liability.For the imposition of penalty under Section 43-A, the action maynot be mala fide in case there is a breach of the statutory provisionsof the civil law, penalty is attracted simpliciter on its violation. Theimposition of penalty was permissible and it was rightly imposed.There was no requirement of mens rea under Section 43-A orintentional breach as an essential element for levy of penalty.Section 43-A of the Act does not use the expression “the failurehas to be wilful or mala fide” for the purpose of imposition ofpenalty. The breach of the provision is punishable and consideringthe nature of the breach, it is open to impose the penalty.

36. In SEBI v. Shriram Mutual Fund [SEBI v. Shriram MutualFund, (2006) 5 SCC 361] , with respect to imposition of penaltyon failure to comply with the civil obligation this Court has laiddown thus: (SCC pp. 371 & 376, paras 29 & 35)

“29. … In our opinion, mens rea is not an essential ingredientfor contravention of the provisions of a civil Act. In our view, thepenalty is attracted as soon as the contravention of the statutoryobligations as contemplated by the Act is established and, therefore,the intention of the parties committing such violation becomesimmaterial. In other words, the breach of a civil obligation whichattracts penalty under the provisions of an Act would immediatelyattract the levy of penalty irrespective of the fact whether thecontravention was made by the defaulter with any guilty intentionor not. This apart [that] unless the language of the statute indicatesthe need to establish the element of mens rea, it is generallysufficient to prove that a default in complying with the statute hasoccurred. … the penalty has to follow and only the quantum ofpenalty is discretionary.

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35. In our considered opinion, a penalty is attracted as soonas the contravention of the statutory obligation as contemplatedby the Act and the Regulations is established and hence intentionof the parties committing such violation becomes wholly irrelevant.

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A… We also further hold that unless the language of the statuteindicates the need to establish the presence of mens rea, it iswholly unnecessary to ascertain whether such a violation wasintentional or not. On a careful perusal of Section 15-D(b) andSection 15-E of the Act, there is nothing which requires that mensrea must be proved before a penalty can be imposed under theseBprovisions. Hence once the contravention is established then thepenalty is to follow.”

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37. The imposition of penalty under Section 43-A is onaccount of breach of a civil obligation, and the proceedings areneither criminal nor quasi-criminal; the penalty has to follow. OnlyCdiscretion in the provision under Section 43-A is with respect toquantum of penalty.”

6.9 The Gujarat High Court while considering the very provisionand penalty and interest imposed under Section 45(6) and Section 47(4A)of the Act, 1969, has taken a consistent view in the cases of RiddhiDSiddhi GlucoBiols Ltd. (supra) and Oil and Natural GasCorporation Limited(supra)that the penalty leviable under Section45(6) of the Act is a statutory and mandatory penalty and there is noquestion of any mens rea on the part of the assessee to be considered.In the aforesaid decisions, it is observed and held that levy of penalty isEautomatic on the eventualities occurring under sub-section (5) of Section45 of the Act, 1969.

6.10 In the recent decision in the case of Arcelor Mittal NipponSteel India Limited(supra), while dealing with the very provision ofSection 45 of the Act, 1969, it is observed and held in para 23 and 23.1as under: -F

“23. Now, so far as the levy of penalty is concerned, it is to benoted that the penalty is leviable under Section 45 and such apenalty is leviable under sub-sections (5) and (6) of Section 45 ofthe Act, 1969 and the penalty is leviable on purchase tax assessed.GIt provides that if the difference of tax paid and tax leviable/assessed is more than twenty-five percent, in that case, the dealershall be deemed to have failed to pay the tax to the extent of thedifference between the amount so assessed/re-assessed and theamount paid and, in that case, there shall be levied on such dealera penalty not extending one and one-half times the difference as H

per sub-section (5). Therefore, there being difference of morethan twenty five percent, penalty to the aforesaid extent shall beleviable. This is a clear case of false and wrong claim of exemption,as the exempted goods were transferred to a third person andused in an ‘ineligible’ industry. This is a case of deliberate violationand evil doing.

23.1 In the present case, as the difference between total tax paidand the purchase tax is more than twenty-five percent, therespondent is deemed to have failed to pay the tax as per sub-section (5) of Section 45 and, therefore, liable to pay the penaltynot exceeding one and one-half times. The words used in sub-section (6) of Section 45 is “there shall be levied on such dealer apenalty not exceeding one and one-half times the difference”. Asnoted above, in the present case, the modus operandi which wasadopted by the respondent - Essar Steel warrants a penalty.Though, the raw material was required to be used by itself for themanufacture of their goods, after availing the exemption as eligibleunit and instead of using the same for itself/himself, the ESL soldthe raw materials to an ‘ineligible’ entity - EPL, who used it formanufacture of its own goods - generating the electricity, whichagain came to be sold to ESL under the power purchaseagreement.”

6.11 Even otherwise, the word used in Section 45(6) is “shall belevied”. The dealer shall be liable to pay the penalty not exceeding oneand one-half times of the difference of the tax as mentioned in sub-section (5) of Section 45 of the Act, 1969. The language used in Section45 is precise, plain and unambiguous. The intention of the legislature isvery clear and unambiguous that the moment any eventuality as mentionedin Section 45(5) occurs, the penalty shall be leviable as mentioned insub-section (6) of Section 45. No other word like mens rea and/orsatisfaction of the assessing officer and/or other language is used like inSection 11AC of the Central Excise Act. It is a well settled principle inlaw that the Court cannot read anything into a statutory provision whichis plain and unambiguous. A statute is an edict of the legislature. Thelanguage employed in a statute is the determinative factor of legislativeintent. As per the settled position of law, the intention of the legislature isprimarily to be gathered from the language used, which means thatattention should be paid to what has been said as also to what has not A

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Abeen said. The courts cannot aid the legislatures’ defective phrasing ofan Act;they cannot add or mend, and by construction make up deficiencieswhich are left there.

6.12 Under the circumstances, on strict interpretation of Section45 and Section 47 of the Act, 1969, the only conclusion would be that theBpenalty and interest leviable under Section 45 and 47(4A) of the Act,1969 are statutory and mandatory and there is no discretion vested inthe Commissioner/Assessing Officer to levy or not to levy the penaltyand interest other than as mentioned in Section 45(6) and Section 47 ofthe Act, 1969. It is needless to observe that such an interpretation hasbeen made having regard to the tenor of Sections 45 and 47 of the Act,C1969 and the language used therein.

6.13 Inso far as the decisions relied upon by the learned counselappearing on behalf of the respondent – assessee – dealer, referred tohereinabove, are concerned, none of the decisions shall be applicable tothe facts of the case at hand, while dealing with Section 45 and SectionD47 of the Act, 1969. The words/language of the relevant provisions thatfell for consideration in the decisions relied upon on behalf of therespondent is altogether different from the language used in Section 45and Section 47 of the Act, 1969. In the case of Dharamendra TextileProcessors(supra), this Court was considering Section 11AC of theECentral Excise Act. In Section 11AC, the words used are “fraud, collusionor any wilful misrepresentation or any wilful misstatement or suppressionof facts” and “intent to evade payment of duty.” In that view of thematter, the mens rea will play an important role. Therefore, the saiddecision shall not be applicable while considering Section 45 and Section47 of the Act, 1969. Asimilar decision in the case of Pepsi Foods LtdF(supra) also shall not be applicable and/or of any assistance to therespondent – assessee – dealer.

6.14 In so far as the submissions on behalf of the respondent –dealer – assessee that as such the dealer shall not be liable to pay thetax at the rate of 12% and that it was incompetence on the part of theGauthority to prove the difference of more than 25% and that the concessionwas wrongly given by the learned Senior Advocate appearing on behalfof the respondent – assessee – dealer before the High Court areconcerned, at the outset, it is required to be noted that a conscious decisionwas taken by the learned Senior Advocate appearing on behalf of theHdealer, who appeared before the High Court and therefore, he did not press the issue/question on the liability to pay the tax at the rate of 12%was wrongly given. It is to be noted that the respondent – dealer wasrepresented through a very senior advocate before the High Court.Therefore, it cannot be said that the concession was wrongly given.While referring the submissions made by the learned Senior Advocate,appearing on behalf of the respondent – assessee – dealer, the HighCourt has recorded as under: - “4. Learned Senior Counsel Mr. S N Shel at, appearing with Mr.HA Dave, learned Advocate for the appellant has fairly concededthat looking to the fact that the respondent has passed theassessment order on the basis of material available with it, theywere required to pay the tax on the basis of 12% and that hasbeen paid by the appellant since the opinion of the expert wasturned out.”

It is not true that the learned Senior Advocate, appearing on behalfof the respondent – assessee – dealer, was considering the decision ofthe in the case of Brooke Bond India Limited(supra). It was aconscious decision taken not to press into service the issue No. 1 and 2,that is with respect to the liability to pay the tax at the rate of 12%.Therefore, the decision relied upon by the learned counsel appearing onbehalf of the respondent – assessee on the concession given by thelearned Senior Advocate, appearing on behalf of the respondent –assessee before the High Court, would not be applicable to the facts ofthe case on hand.

6.15 In so far as the reliance placed by the learned counsel onbehalf of the respondent – dealer on the decision of this Court in thecase of Hindustan Steel Ltd.(supra) is concerned, at the outset, it isrequired to be noted that the learned Tribunal specifically found thatthere was nothing on record to prove that there was in fact a bonafidebelief of the respondent herein, that itwould be required to pay tax at 2%only.As observed hereinabove and on plain reading of Section 45 andSection 47 of the Act, 1969 and as observed hereinabove, on theeventualities occurring under sub-section (5) of Section 45, there shallbe levied penalty mentioned in sub-section (6) of Section 45 and theliability to pay the interest is incurred as mentioned in Section 47(4A).The impugned judgment and order passed by the High Court on thegrounds that the amount of tax has already been paid by the assessee –dealer; that the assessee – dealer was under the bonafide belief that it AB

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Awas liable to pay the tax at the rate of 2%, is unsustainable. None of theaforesaid grounds would justify deletion of the penalty and interest leviable/payable under Section 45(6) and Section 47(4A) of the Act, 1969. Asobserved hereinabove, in the case of Shriram Mutual Fund (supra),this Court distinguished the decision in the case of Hindustan Steel Ltd. (supra) and even set aside the order passed by the Tribunal whichBwas relying upon the decision in case of Hindustan Steel Ltd. (supra).

7. In view of the above and for the reasons stated above, thepresent appeal succeeds. The impugned judgment and order passed bythe High court is hereby quashed and set aside. The order(s) passed bythe Assessing Officer confirmed up to the Tribunal to levy penalty andCinterest under Section 45(6) and Section 47(4A) of the Act, 1969, arehereby restored. Present appeal is accordingly allowed. In the facts ofthe case, there shall be no order as to costs.

Ankit GyanD(Assisted by : Abhishek Pratap Singh and Aarsh Choudhary, LCRAs)

Appeal allowed.

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