U.P. Commercial Tax Department fine Rs.7.5 Crore Penalty on Railways

Lucknow: Commercial Tax Department of the Uttar Pradesh state government has slapped a fine on Railways after it defaulted to pay the tax. The fine of Rs.7.55 Crore has been imposed on the Rae Bareli Rail Coach Factory after the railways failed to pay the taxes on time. The delay in the payment of commercial tax has been treated as a “serious lapse” on the part of the Railways by the Commercial Tax Department. Railways it seems may not get an easy exit from the situation.

Though the penalty will not affect production at the coach factory, it has put the railway officials in an overdrive to settle the matter. “It’s not at all an issue,” said a senior official at the coach factory in a bid to downplay the imposition of penalty, saying it has been imposed as railways failed to deposit sales tax deducted from the contractors’ bills.

Railways have decided to appeal against the penalty order of the commercial tax department. It is mandatory to deposit the commercial tax deducted at source by 20th of the month without fail. The department’s order says that the penalty imposed on this account is not waived usually if genuine delay is not proved beyond doubt.

“Railways are not defaulters. We have met the commercial tax officials and explained that we follow a system here which might have delayed the payment of tax,” said the official. If sources in commercial tax department are to be believed, the department has not found the reasons acceptable.

Railways accepted there has been technical delay due to financial closure of the month in May. But the commercial tax department did not buy the argument saying that all government departments are honestly complying with the commercial tax provision for depositing VAT by 20th of the following month.

The copy of the penalty was received by the coach factory on June 29. The department ordered to pay the penalty within 30 days time, or file an appeal before the appellate authority before July 22. Railway officials, however, said it’s not a big issue and “such matters are common between government departments.”