VAT penalty requires proof of deliberate evasion and notice before penalising failure to file a revised return.

Penalty under the Tripura VAT Act requires material showing deliberate tax evasion; incorrect entries in a return, by themselves, do not justify penal action where the books of account correctly reflect taxable transactions, the tax has been paid, and no revenue loss is shown. Penalty for failure to file a revised return also depends on statutory notice and an opportunity to show sufficient cause before liability is fastened. In the absence of such notice and hearing, the penalty could not be sustained. The article concludes that the impugned penalty and consequential demand were unsustainable.

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Issues: (i) whether penalty under section 75A of the Tripura Value Added Tax Act, 2004 could be imposed where the dealer's books of account correctly reflected the taxable transactions and the tax payable had been duly paid, but the return contained incorrect entries; (ii) whether penalty could be sustained for not filing a revised return within the prescribed period in the absence of notice and opportunity to show cause under section 25(4)(c) of the Tripura Value Added Tax Act, 2004.

Issue (i): whether penalty under section 75A of the Tripura Value Added Tax Act, 2004 could be imposed where the dealer's books of account correctly reflected the taxable transactions and the tax payable had been duly paid, but the return contained incorrect entries.

Analysis: Section 75A authorises penalty only where the Commissioner is satisfied that the dealer has evaded, in any way, the liability to pay tax. Mere incorrect entries in a return do not, by themselves, establish evasion. The decisive factor is whether there is material showing deliberate suppression or a guilty intent to evade tax. Here, the books of account were correctly maintained, the taxable liability was properly recorded in the accounts, and the admitted tax was paid in monthly instalments. The error was confined to the return, and no loss of revenue was shown.

Conclusion: Penalty under section 75A was not sustainable and was against the assessee.

Issue (ii): whether penalty could be sustained for not filing a revised return within the prescribed period in the absence of notice and opportunity to show cause under section 25(4)(c) of the Tripura Value Added Tax Act, 2004.

Analysis: Liability under section 25(4)(c) arises only when a revised return is not filed within time without sufficient cause. Before penalty can be imposed on that basis, the dealer must be put to notice and given an opportunity to explain whether sufficient cause existed. No such notice was issued, and no opportunity was given before the penalty was fastened.

Conclusion: Penalty could not be sustained on the ground of failure to file a revised return, and this issue was against the Revenue.

Final Conclusion: The impugned penalty and consequential demand were unsustainable because the case disclosed no proved tax evasion and the statutory procedure for penal action was not followed.

Ratio Decidendi: Penalty for tax evasion under the VAT law requires material showing deliberate evasion, and a mere or incorrect return, without revenue loss and without the procedural safeguards required by the statute, does not justify penal action.

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