sales tax penalty

THE INTEREST PAID ON LATE PAYMENT OF SALES TAX / VAT IS AN ALLOWABLE EXPENDITURE.

BUT ANY PENALTY PAID FOR NON- FILING OF SALES TAX / VAT RETURN ETC. CANNOT BE CLAIMED AS EXPENSE. 

SECTION 37 OF I.T. ACT SPECIFIES ANY EXPENSE IS ALLOWABLE ONLY IF " NOT INCURRED FOR ANY PURPOSE WHICH IS ANY OFFENCE OR PROHIBITION BY ANY LAW"

(ANY KIND OF PENALTY OR FINE PAID BY THE ASSESSEE IS DISALLOWED, THOUGH SOME CONTRADICTORY CASE LAWS EXIST)