FEDERATION OF TAX PRACTITIONERS AND OTHERS vs L NOJA

Judgment

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1. I • (1 ?! • ..:I ‘! • II I V 1).. t • i 1 In CONCEPT OF SERVICE TAX FEDERATION OF TAX PRACTITIONERS AND OTHERS vs UNION OF INDIA AND OTHERS [(2007) 9 VST I 26(SC)J L NOJA 200 (7 STR o2i (SC xi ,C’ - 1: j C I I” )1I1( 111 1C(t f ‘ (1’ I i Clot S i’ ‘ (()ii’ 11r (155 Ci’o. 5 ‘flI UI Cot! I ‘of csr’i H 1- 1! 1’! ‘1 ( II I’ ‘1 H! t, JJ( C ‘Hd 31’)! 1’ I au 15 ii 1 ((C CCC I’) 1(1 1 C 1 ‘Ct 1 Ho t N 5’ t V 1 1 I C j,’j N H 11 -I I’ll ( ‘ 7) ‘ C 1 I IC o 7’ 51 1 ,,C o’-1 ._ II III t1i /i If C ha c Ilk Ct’ ‘W Il’c, S 1 tJ(LLL’f C!’ IL ‘ (APiIII;lI 1’ 1 ‘ (11011 t Es’ .wZs (‘WI ‘‘i’’niqnhvsr cf ;‘fl•lt’ fl,. I)’)!?! ‘;‘iIisI:i ‘in tLs 1! Ic lIiis cc ‘ lIP ‘I INC o ‘Ik.e’! ‘1 I)(L%.’(i (‘Ii tilt’ icytd priva •!‘ •1 e’juiL’ctk.rlcr ‘cinch I!’” crnrzcls the (n ton ‘ ick tttuuon hit, j )T I ‘iwl, I 20( 1 C z It’d : n ‘i IL i q Il( CLIL .‘iuc 1’ S ‘) SI ‘ )17),7q’! ‘t’gI ‘_ ‘i 11 S LIL.. t’IVh3i pI’Iz’.Iinr .,1 LRLP1’ fl1. •1srulisIni. iii “mt us Tr; c””CI. IA! : :J ;,1LS’riIi.,lLiJ’l l’LV ‘1% 1 N i!j .Ijri;,. n I jI•7 I, It , r ii it • Ill ‘7 ,‘ V • lg — •. :,‘ • S. “it j. !.1s..’,s £ I. •,, • Iii. I • 1 •i f ‘I tt• .L C •,‘ ‘ •iC’l , . tI• % . •, •4 .: I ‘r . •‘• SI,4. • It ‘ I,’ — 19 rendered to a subscriber by telegraph authority: and services rendered by an Insurer to a poltcy holder. Under the Act it was clarified that words and expressions nor defined In Chapter V but used therein shall bear the same meaning as given In the Central Excise Act, 1944. Section 66 stated that service tax shall be levied at the rate qf five per cent of the value of taxable services provided to any person by the service provider who was responsible jbr collecting the service tat It was similar to section 3 of the Central Excise Act 1944. Section 67 dealt with valuation of taxable services. SectIon 68 dealt with collection and recovery qf service tax. SectIon 71 dealt with assessment. Section 72 dealt with best Judgment assessment. Section 73 dealt with value of taxable services escaping assessment. Section 83, biter alia. staled that Sections 9C. 9D. 1 lB. etc. of the Central Excise Act shall appl!J also to collection and recovery of service tax. The adrrdnistration of service tax is given IC) the authorities under tiw Central Excise Act L 20

5. For the first time when service tax was Introduced in India In the year 1994 initIally only three services were liable to service tax. Later on and gradually, more and more services were brought tinder the service tax net iith the result that at present there are 118 taxable services. Each year the annual Finance Acts have increased the list of taxable sen’lces. The service tax law In our country is evolving so as to encompass every sector and thus new category of services are being introduced. Many a time, service providers are not clear as to whether the services provided by them are taxable or not. The Central Board of Excise and Customs (CBEC) also issues clrcu.lars clarli3iing the law. The stress is on developing a culture of voluntary compliance. The Qovernment is against draconian provisions in practice. In fact. In the Finance Act 1994 Initially there were various provisions in Sections 87 to 92 which made non-compliance of the provisions of the Act a punishable offence, providing for prosecution of offenders. However, when the Finance Act, 1998 was enacted, provisions have been omitted. S • 21

6. It is in this background keeping in mind the object and lnlcnclnwni of the Parliament in enacting this law, the provisions dealing with the penalty have to be considered. Sections 76. 77. 78 and 80 of the Finance Act reads as tinder: - ‘SECTION 76. Penalty for failure to collect or pay service tat - Any person liable to pay service lax in accordance with the provisions of section 68 or the rules made thereunder. who falls to pay such tax shall pay in addition to paying such taz an Interest on that tax In accordance with the provisions of section 75, a penalty which shall not be less than one hundred rupees but which may extend to two hundred rupees for every day during which such Jàilure continues. so. liowever chat the penalty under this clause shall not exceed the amount qf service tax that heJälled to pay. SECTION 77. PenaLty forfailure ioJürnish prescribed return f a person Jails to jhmlsh In ) 22 due fine the return which he is required 10 .IürrUsli under section 70 or the rules made thereunder. he shall be liable to a penalty which may extend to an amount not exceeding one thousand rupees. SECTION 78. Penalty jór suppressing service value of taxable service.- evade payment of the Assistant Commissioner of Central Excise or. as the case may be. Deputy Commissioner qf Cciiiral Excise In the course of any proceedings under this Chapter is sattfled that any person has. with intent suppressed or concealed the value of taxable service or has furnished ii taccurate valise of such taxable service, lie may direct that such person shall pay by way ofpenalty, In a4dltlon to service tax and interest, jf aug. payable by him. a sum which shall not be less than, but which shall not exceed twice, the amount qf Income tax sought to reason qf concealment of the value qi taxable service or the furnishing of Inaccurate value of such taxable evaded by suppression SCfl’ICL’. #4 23 certain SECflON 80. Penalty not to be imposed in - Not withstanding anything contained Ui the provisions of section 76, section 77. section 78 or section 79. no penalty shall be Imposable on the assessee Jbr any Jäilure rqferred to in the said provisions jf the assessee proves that there was reasonable cause jör the said failure.”

7. Section 77 deals with penalty for failure to furnish prescribed return. SectIon 79 deals with penalty for failure to comply with notice.

8. From the aforesaid provisions. it is clear that a person who Is liable to pay tax under the Finance Act, 1994, Is tinder a legal obligation to get himself registered under the Act. Non-registration attracts penalty. After registration, he Is expected to file returns, ii’ he is liable to pay lax. If the returns are not filed, again it attracts penalty. For non-registration and ‘I 24 for not filing returns, a fixed amount is prescribed as penalty. Though under these two provisions. the maxinnim penalty Is prescribed, discretion is conferred on the authority to levy a lesser amount. Section 79 deals with penalty for failure to comply with the notice i.e. a person who thUs to comply with the provision of Section 71.

9. A person who is liable to pay tax under Section 68 of the Act, if his understanding is that he is not liable to pay tax. he may not even register himself. may not file return and consequently may not pay tax. Even If a person who has registered himself and has been paying service tax tbr certain activities. may fail to Include In his returns the activity, which according to him does not attract service tax and therefore may not pay tax. it also amounts to a case of failure to collect or pay service tax on that particular activity, though he has registered himself tinder the Act and has filed returns in respect of activity on which service tax is attracted. In such cases. there is a battajide dispute whether tax is payable or not k0 4 25 and whether a particular activity Is construed as a taxable service under the Act.

10. It Is In this background that, we have to take note of the fact that when the service tax was Introduced in 1994 for the first time, it had only three taxable services. In every annual Finance Act, different categories of services are brought within the tax net. Even though the expressions “sen’lces0 and ‘laxable services” are defined, there may be a doubt whether a particular activity falls within those definitions and Is liable to service tax. It is after a period of time that disputes arose. matters reached Judicial [brums, doubts cleared and law laid down. It cannot therefore be said that there Is any Intention to avoid payment of tax by such taxpayers who banqilde believe that their activity Is not liable to service tax. Probably keeping this In mind, the legislature has not only provided for imposing penally. but also conferred a power coupled with discretion on the authority not to impose penalty, if there was a areasonable cause” for the assessee not to pay tax. As the wordings of L-. 4 26 Sections 76 and 78 stand, unless, the Ingredients mentioned in both the sections exist, those sections are not attracted. After those ingredients are held to be in existence and the sections are attracted, even then the Imposition of penalty Is not automatic.

11. Section 80 Is emphatic In terms of text that no penally shall be imposable on the assessee for any Ihilure referred to in SectIons 76, 77. 78 and 79. if the assessee proves that there was a reasonable caus& for the said failure. Therefore. mere failure to comply with the requirements of the Section. does not vest any power in the adjudicating or assessing authority to Impose penalty. Once, the failure of the requirements of the said provisions Is established, In view of the non-obstante clause in SectIon 80. the authority has to find out whether there was any0reasonable cause” for the assessee for such Ihilure to comply with the requirement of law. assessee makes out a reasonable cause. Section 80 mandates that no penalty shall be impossable on the assessee. 4 s-SI Therefore, the sine qua non for the authority to Impose penalty Is as follows :- a) b) c existence of ingredients mentioned in Sections 76. 77 and 78: failure on the part of the assessee to comply with the requirements of the said provisions; absence of “reasonable cause” for the failure to comply with the requirement of law.

12. It is only thereafter that the authority has been vested with the power to impose penalty. In this regard, ills useful to refer to the Judgment of the Delhi High Court In the case of WOODWARD GOVERNOR OP INDIA P. LTD. VS. CIT & OTHERS reported In 2002 (253) ITR 745 jDel.) which was rendered In the context of the Income Tax Act, 1961 which Contains a provision conferring discretion on income tax authorities, not to impose penalties when there Is reasonable cause” shown by an assessee. It reads as under: 4 28 Sectlon 273B starts Lvirh a non obstante clause and provides that notwithstanding anything contained in several provisions enu.inerated therein including section 271C. no penalty shall be Imposable on the person or the assessee, as the case may be, Jbr any failure referred to in the said provisions. f he proves that there was reasonable cause for the said failure. A clause beginning with notwlthstancling anythingTM is sometimes appended to a section in the beginning with a view to give the enacting part qf the section in case of conflict art overriding effect over the provision of Act mentioned in (he non-obstarde clause (see Orient Paper and Industries Ltd. v. State of Orlssa AIR 1991 SC 672). A non-obstante clause may be used as a legislative device, to modify the ambit qf the provision of’ law mentioned In the non-obstante clause, or to override it In specified circumstances. (see T.R. Thandur v. Union of India. Air 1996 SC 1643). The true çffect qf the non-obstante clause is that In spite qf the provision or Act mentioned in the non obstante clause, the enactment following it will have its full operation or that the provisions embraced In the non obscante clause will not be an Impediment for the operation Smi. enactment (see 4 29 Pornycutkancliyal Eravath Kanapravan Kalliani Amma v. K. Devi, AIR 1996 SC 19631. Therefore, in order to bring in application qf section 271C in the backdrop qf section 27313. absence qf reasonable cause. existence of which has to be established by tile assessee. is the sine qua non. section 271C is not Levy of penalty under automatic. Bqlóre levying penalty. the concerned officer is required tojind out that even (1 there was anyfailure referred to in the concerned provision the same was without a reasonable cause. The initial burden is on the assessee to show that existed reasonable cause which was the reason for the failure referred to in the concerned provision. Thereqfter the officer dealing with the matter has to consider whether the explanation qffered by the assessee or the person. as tile case may be. as regards the reason jbr failure, was on account of reasonable cause. “Reasonable cause” as applied to human action is that which would constrain a person of average and ordinary It cart be described a probable cause. It intelligence prudence. means an ho; test belief fin mdccl grounds. existence t ipon reaso; table of a state 4 30 ivlzicli assiuning thenz to be true. circuTnstances. would reasonably lead any ordinarily prudent and cautions man. placed in the position q1 the person concerned. to come to the conclusion that the same was the right thing to do. The cause shown has to be considered and only if it jôund io be frivolous. without substance or jbundoftori, the prescribed consequencesfollow.

13. Therelbre. given the language of SectIon 80 of the Act. which confers discretion on the service tax authorities not to Impose penalty If there Is reasonable cause in a given case. the Imposition of penalty tinder SectIons 76.77 and 78 is not automatic. The existence of grounds/Ingredients postulated In the said provisions Is a condition precedent for attracting penalty. Therefore. first, we have to find out. whether in the facts of a given case whether (hose Ingredients exist. Once It is held that those ingredients exist and the provisions are attracted, then if the language used In the said provisions do not leave any discretion In the authority In the matter of imposition of penally, penafly is to be imposed in wrms of the 31 said provision. However, if any discretion Is left, then the said quasi- judicial discretion is to be exercised reasonably. E3eibre levying penalty, the authority is required to find out whether there was any thilure referred to in the concerned provision and the same was without a reasonable cause. The initial burden is on the assessee to show that there existed reasonable cause, which was the reason ibr the failure referred to in the concerned provision. Thereafter the authority has to consider the explanation offered by the assessee for failure and whether it constitutes a reasonable cause. “Reasonable cause” an honest belief founded upon reasonable grounds. of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinarily prudent and cautions man, to come to the conclusion that the same was the right thing to do. Only if it found to be frivolous, without substance or foundation, the question of Imposing penalty would arise. .1 1 i 1% i ill n ,n (‘“lid in t ‘crn% .1 hi .PlllI’)Iftlr% 1 .t!: i 111’ eI’.:’ %‘iCi S I I .4 In an ilit’ ‘v,’nliii. •1 %.‘cqp)fl S. r er I he 1’ igt ‘- ilietit—. ol Sn ii I sb it ( lbi% ci 1 ‘al ‘cii’ “ ‘i Ott intL , .il t’4 li’.h , )iI )rt’ ‘s sI “1 11. my i’ttlI suc’It ii’ rson %Ilwill “(Ui In: 1lYiI’ ‘4 J)ti”tIILI . I1itn.’Itiitt.. r I 1 C a’nh’ .llv 1. nn ‘ ‘ not t’ .flpi.%. ;n”uJi. 1ri IN’— crnirxt. : ii. ‘It’i )CX a ISMJL4RBANSK4RI CR’ ,uoitc n(997)224 ITR 418 jSC). hi!r 1t•’rr:):rnt12 ,.t. i?l’)>)1. ‘9’i atl’j!1’ ..‘‘L’ I C 1 1 (:I1lJI P’. ‘: ‘t.r “j.: C i .‘ ‘. .‘ a’ ‘t’• C. C I I . I . , Iq.:i_ ,‘ :t It’ , 5, ,Ie —. t.I. .5. . 1.1,1.: .. I s’. .. t•. : ‘I• %V’) •t ,j:. v ( I t 33 under tlw Act is sea i4Iied then any person has. without reasonable cause, failed to furnish the returns which lie is required to furnish or has ivithoul reasonable cause jailed to _Ihrnish L4’ithiin the time allowed or without reasonable causejailed to comply with a notice under section 16(2) or (4). or has concealed the particulars of any assets or furnished inaccurate particulars of any assets or debts such officer may direct that such person shall pay. by way qf penalty. the amount specIed respectively in three clauses set out therein. Section 18-B confers power on the Commissioner to reduce or waive such penalty fri certain contingencies. ff he is satisfied that such person has madefull and true disclosure qf his net wealth and has cooperated assessment of his net wealth and has either paid or made satiiIäctory arrangement or the payment qi any tax or interest payable In consequence cfl an order passed under the Act. relating enquiry if the conditions stipulated in the section are satisJied the Commissioner has a discretion in the matter. Ccnnn,issioner can either reduce (he amount qi the penalty or he may even waive the entire penalty. It exercise of discretion, In / 34 is ór the Commissioner to decide on the j&’ts qf a particular case whether a waiver in entirety or a reduction alone Is warranted. The words “the Commissioner may In his discretion qi’ penalty” in Section 18-B qf the Act are clear enough reduce or waive amount the power to show that conferred on the Commissioner is to be exercised by him In such manner as he deems just and proper. When a discretion Is conferred on an authority the same must be exercised jäirly and not arbitrarily. justly and notfancljitLly vide S.G. Jalslnghanl vs. U.O.L & others: AIR 1967 SC 1427. Even if’ the legislature has not used the words “in his discretion” In Section 1818ff)) Commissioner could have exercised only a discretionary power in view of the employment of the word “may”L Plow when the Parliament used both expressions “may” and “in his discretion” together, the position is pLaced beyond the pale of any doubt legislature wanted an qfileer qJ’ the rank of the Commissioner to be reposed with the discretionary power to choose between entire waiver or reduction in any proportion.” 1’ 35 1 5. Therefore, it. is clear that oiler the word may is employed by the legislature, a discretion is vested in the authority to Impose or not to Impose penalty. When once the authority decides to Impose penalty, then the discretion that is conferred on the authority has to be exercised in consonance with the express words used In both these sections. Firstly, when both these sections specifIcally speak of penalty at a particular rate. authority should find out fIrst whether the failure to pay tax falls tinder Section 76 or 78. Tf It Is a case falling under SectIon 76, then while Imposing the penalty, the penally imposed shall not be less than one hundred nipees. but may extend to two hundred nipees for every day during which such lällure continues. However, the penalty under this clause shall not exceed the amount of sen’ice tax that he failed to pay. When the statute stipulates (he minimum penalty to be Imposed and the maximum penally to be Imposed, an authority cannot exercise its discretion to Impose penalty either less than the minimum or in excess of (he maximum that is prescribed by the Statute. In this regard no discretion Is, left to the 1 1 1 1 ‘ ( 11 \ 11 ( i; t’lICN I ‘ \\ I ii \ B I Is Ott B I p B I’ It I11” t—N I B 1111 II I It II lB 111)11 N hJ\l1u( 0 t(tO I I (it c ( t I so tt iLu I I P ilN I mi_lu; Cu II 10 N 115 I 1) l It C V II thH 00 NI no Pundit P 11111015 PH s i1 1 ;id 101111 FIlm mis u u1m1 maCcr of j 1( t i I c Ii iIa.aI it tIlr u SMITHI. SHETTY VS CCE 111101 ullu 2003 (156) ELT 84 (Ti m i’urc 1Th (Ii kit I I ;t re; Ii u -uI nrC, C Drj irrI1;- H 11(1 11 Ii N 11 t r (U I It) P “ I3 ; (IN I 11CC j ; II I I C i;Ttr’ J;Ht(’- 0; C 0; u-i (I Ii I t N ; ; — ; S ( 1 vIm B; 1• 37 the case qj’ Sec. 77. the phrase ‘per day’ used after the words ‘rupees two hundred’ shall apply to the words rupees one hundred also. Section 76 and 77 as it stood at the relevant point of time ore as follows: “76 Penalty forfailure to called or pay service tax - Any person. liable to pay service tax in accordance with the provisions qf Sec. 68 or the rules made there under. who frills to pay such tax shall pay in addition to paying such tax. and Interest on that tax In accordance with the provisions of Sec. 75 . a penalty which shall not be less than one hundred rupees bitt which may extend to two hundred rupees for everyday during which such failure continues. so. however. that the penalty under this clause shall not exceed the amount of service tax that hejäiled to pay.

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4.00 .CIFV SUDSR&HAN FALKIES i $‘‘ ; 1993, 2000 ITh 153 (hal) 4.IaT I I j, ‘%i’I ‘11 II’ C ‘ I C ‘1’. l • I I.E. p 54 independent of A similar question had come up for consideration bctôre this court in the case qf Addl. CIT a J.K. D’Cosla (1982) 133 FIR 7. ProceedIngs Jör levy qf penalty were not initiated by the Income- tax (3flcer and the Commissioner had. In that case. passed an order under sectIon 263 of the Act and directed Income-tat Q(ficer Initiate proceedingsfor the levy of penalty. This court caine to the conclusion that the proceedings for the levy qf penalty whether under sectIon 271(11 (a) or section 273(b) are proceedings separate from, the assessment proceedings. It then came to the conclusion thai failure to initiate penalty proceedings would not give jurisdiction to the Commissioner of Income-lax to pass an order under sectIon 263 and direct initiation of penalty proceedings. After this point was decided in javour qf the assessee. the Commissioner of Income-tax filed a special leave petition being SLP (Clvii) Nos. 11391-1 1392 of 1981 see (1984) 147 ITR (Sc) 1) and the scurte was dismissed by the Supreme Court on March 2. 1984. It is clear, therefore, that the Division Bench J.K.D’Cos:a’s case (1982) 133 ITR 7 has been coqtimrd by the Supreme Court and the fliers of decision ‘Wi 55 that case are similar to thefacts of the present case. It must follow. thereJôre. that the Tribunal was r(qht In setting aside the order qf the Commissioner qf Income-tar passed under section 263 qf the Act n so ar as It directed the Income-tar Qificer to Initiate penalty proceedings tinder sectIon 273(b) qf the Act.

28. The Madras High Court In the case of Cl? VS. CRK SWAMI’ reported in (2002)254 ITR 158 (MAD.) while dealing with revisionary powers under the Income Tax Act, 1961 held as under: bMoreoLvJr. as held by a Bench of the Delhi Fligli Court in the case of Add). Cli.’ v. Sudershan Talkles (19931200 ITR 153,fallure on the pan of the assessing authoflty to initiate penalty proceedings would not give jurisdiction to the Commissioner qf Incorne-twc to pass an order wider section 263 qf the Income-tax Act, 1961 and to direct. initiation qf such proceedings. We are in respecttId agreement with that view. The question rferred to assessment t,ear 1984-85. as to whether. on the Jhcts and In the circumstances qf the case. ‘a----. 56 Appellate Tribunal was right In law In setting aside the order passed under section 263 qf the Income- tax Act and holding that non-initiation of penalty proceedings under sectIon 271 (1)(C) do not render the assessment made dated January 16. 1989. erroneous or prejudicial to the Interests of the Revenue and consequently the Commissioner qf Income-tax is norjustifled in assuming under section 263. Is therefore answered Infavour of the assessee and against the Revenue.

29. The learned counsel ibr the revenue submitted that all the judgments referred to by the counsel for the respondent- assesses are rendered tinder the Income tax law. Whether the provision which falls for Interpretation under the Act Is similar to the provision In the Income Tax is to be seen. It Is true that as we have pointed out, wordings of Section 263 In the Income Tax is not In parlmaterla with Section 84 of the Finance Act.

1994. In Section 263, the two grounds on which a revislonal authorit.y could exercise jurisdiction are briefly explained. i.e.. the order Is erroneous and when the order Is prejudicial to the 57 Interest, of the revenue. Both these words are missing in Section 84. As pointed out earlier, If there is no indication of the scope of power of revisional authority under the Act, it is liable to be struck down as violative of Article 14 as it amounts to confennent of unbridled power or arbitrary power on the revisional authority. Therefore, to save the said provision from unconstitutionality, we a Interpretation on the said provision. It is in this context. the very phrase “revlsional power or the word “revision” gives an indication, in so far as the scope of power to be exercised by the authority under this Act. reasonable

30. While Interpreting a fiscal legislation what has to be kept in mind by the revislonal authorities is the scheme of each and every legislation to levy arid collect tax in accordance with the provision of the Act. This task is entrusted lo the revenue. The revenue is levying tax lawfully payable by a person. Ccrtainiy revisional authorities owe a dub’ to review such orders uu1 facilitate my and collection of tax which are S. 58 legitimately due to the Department. Penalty is one such category. which cannot be considered as loss of revenue to the exchequer. Non-payment of tax and Interest would be a part of the tax itself and if not collected would be prejudicial to the interest of the revenue.

31. In Ihe matter of collection of tax, if there is any order, which is prejudicial to the Interest of the revenue, the same is liable to be corrected. It is also possible that such orders may be contrary to the statutory provision iii an enactment. When the statutory provisions are inserted in the enactment prescribing a penalty at a particular rate taking away discretion on the part of the assessing authority, if the assessing authority ignoring this provision imposes penalty lesser than what is prescribed, probably a case for exercise of revisional power is made at&t. But if the order of the assessing (adjudicating) authority is within the parameters prescribed tinder the law. if the penalty imposed Is not less than the minimum prescribed, when an elciiw’ni of discretion is vt’stecl ‘ . • 1 1 1 1 1 J•aI•:LJLLUiI1’IIa1i1, Ii .‘Ii .%I’q;!.:.J1II.l.. i”I ‘ai’II’I‘‘!l’“ 11Ijtu.aII))%)t’11Ilput sit’’LL’lItIIIJL(1. ..‘iJi..•I•iVlII•4:; 4 I. • ‘ • 1 ) ‘i ‘ a .7%flll..kl.91).1(_fljTL)iuUtIr.)TicijitIj14Ill. •T,1’TJIAU’I(1)j114% %1T.Il)I1)l)I’.p’p)cIiil’3411’..flP.))MU‘LUn1C11’%I)(I.U’l3Il1)111 ‘P ¶ ‘ ‘ ‘ I L Iflfl.’%tIII.jI•lU1I1.IVIt.PUOn11Ac;u-nji )qIt IfCltII ‘Ii)!!.it•‘jIJI’Ijifl’.n.flc.aI•‘l’-“I)%“‘1l.Ta[usill’T{.TVii 1 1’ 11Ki LIIUIlLII’Ua r’I”•• Ii I 41*111 : I‘lv‘C.pai%L.1I3’V .aJ)_T)jiTI..!ti!!(ij••*_I)j):TIi ;.— )j. I ) ) I TIc’;z I.t1 — i. U .9UI 1

1.1 •(J.. III a a!•_U ‘‘I. ‘‘I * • • V.1‘‘ Ii ‘L, I 4I ‘. $ ‘. ‘. •J I .7. I .!I. I. 1 1 I I ‘ . 1 C C. 1 1 1 S S 61 (1) The imposition of penalty under the Act Is not automatic. The Ingredients mentioned in the Section should exist. In respect qf Sections 76. 77 and 78 qf the Act, not only the Ingredients of those Sections should exist. but also there should be absence of reasonable causejbr the said jãilure. (2) Sections 76 and 78 are mutually exclusive. penalty is payable under Section 78. Section 76 is not attracted. Therqjôre, no penalty can be imposed for the samefailure under both the provisions. (3) Even V the ingredients stipulated In SectIons 76 and 78 of the Act are established. V the assessee shows reasonable causefor suchfailure, then the authority has no power to Impose penalty In view qf Section 80 of the Act. (4) Even after holding that the ingredients stipulated in Sections 76 and 78 exist, and there is no reasonable cause shown for jäilure to comply with the said provisions, the authority has the discretion regarding 62 the quantity qf the penalty to be imposed. However. the pertain, LO be imposed cannot be less than (lie minimum, or more than the maximum prescribed under the statute. (5) The mlnimwn penalty to be imposed Is Rs.100/- and not Rs. 100/- per day. 61 41 (lie penalty imposed is not less than the minimum prescribed under law. the revislonal authority has no power to enhance the amount qf penalty on the gmund that It Is less. (7) When the assessing authority. in Its discretion has held (Fiat no penalty is leviable. by yin tie qf Section 80 qf the Act, the revislonal authority cannot Invoke its jurisdiction and impose penally fir thefirst time.

34. In this batch of cases, it is clear from some of the orders of the assesslng/a4judicating authority that he was satisfied with the “reasonable cause” shown by the assessees but still penalty was Imposed. not on the ground that there was 3 a C 0 a u n c szbiit c hs oci Ic C a e r i ac 1 ‘ath t a r e S I sifiic rop’aza ía ci’ t a e r e a c h ‘i i Si,