The fine was imposed by commercial taxes department citing failure to pay tax in advance for drawing 'Bhutan Super' and 'Bhutan Dear' in July 2010.
For the newly-introduced lotteries, the promoter had, on July 1, paid Rs 1.82 crore tax along with Rs 8.4 lakh interest for 26 daily draws from July 19-31, 2010.
According to the government, the promoter should have paid the tax on the first day of the preceding month (June 1). The fact that the promoter voluntarily paid interest is evident that he was fully aware of the launch of new lotteries from July 19, the government argued.
The commercial taxes department argued that collection of interest is only compensatory for the delay in payment of tax, but penalty is for deliberate omission to make payment as required under law. As tax was not paid within the stipulated time, there is willful failure, which attracts penalty. Hence, maximum penalty, at 50% of the tax amount, along with daily penalty of Rs 1,000 for 30 days, was imposed, the department submitted.
Quashing the imposition of penalty, justice C K Abdu Rehim pointed out that section 10(2) of Kerala Tax on Paper Lotteries Act, 2005, permits belated filing of tax with interest. In other words, the provision under section 10(2) facilitates the revenue to compensate the loss caused by late payment, if any, by way of collecting interest, the court observed.
In a case where the promoter voluntarily submitted statement and paid tax along with interest, it cannot be held that there was a failure to submit statements or to make payment of advance tax. The authority cannot impose penalty in such a case, after accepting the belated payments, alleging that there was failure to furnish statement or to pay tax due within the date required under the Act, the court held.
This article first appeared here