2020 (9) TMI 480 - HC - VAT and Sales Tax

Court upholds assessment order, except for penalty, in favor of petitioner. Interim orders vacated.

The court upheld the assessment order dated 29.09.2016 and the order dated 28.02.2017 by the Revisional Authority, except for the 15% penalty imposed by ... Validity of assessment Order - time limitation - main contention raised on behalf of the revision petitioner is that the impugned assessment order passed by the Superintendent of Taxes(Assessing Officer) Agartala for the period from 2011-12 to 2014-15 was ultra vires the provisions of Section 33 of the TVAT Act, 2004 because such assessment was absolutely time barred - Imposition of penalty on the ground of evasion of tax by way of concealment of taxable turnover was made without affording reasonable opportunity of hearing to the petitioner - imposition of penalty in terms of Section 53(3) of the TVAT Act after affording reasonable opportunity of hearing to the assessee - non submission of the audited accounts of his company in absence of prescribed form in terms of Section 53(1) of TVAT Act. Whether the impugned assessment order dated 29.09.2016 passed by the Superintendent of Taxes(Assessing Officer) Agartala for the period from 2011-12 to 2014-15 is ultra vires the provisions of Section 33 of the TVAT Act, 2004 being hit by limitation? - HELD THAT:- It is an admitted fact that the impugned order of assessment dated 29.09.2016 passed by the Assessing Officer covers the period of the assessment from 2011-12 to 2014-15 meaning thereby the tax period in question ended on 31st March, 2015 - As provided under sub-section (1) of Section 33 of the TVAT Act, 2004, no assessment under Section 31 and 32 shall be made after expiry of five years from the end of the tax period to which the assessment relates. Section 33 of the TVAT Act, 2004 lays down the prescription of limitation of 5 years from the end of the tax period to which the assessment relates. The revision petitioner contends that the order of assessment for the years 2011-12 to 2014-15 being ultra vires of Section 33 need to be quashed and set aside and in consequence the order dated 28.02.2017 of the Revisional Authority upholding the assessment order should also be quashed. Apparently the assessment order dated 29.09.2016 for the tax period from 2011-12 to 2014-15 was made after issuing notice dated 31.08.2016 to the assessee. The tax period of 2011-12 ended on 31st March, 2012 for which the assessment order was made on 29.09.2016 within the period of limitation provided under Section 33 of the TVAT Act and obviously, therefore, the assessment order for the years 2013-14 & 2014-15 also made on 29.09.2016 was well within the period of limitation of five years. As such the contention of the petitioner that the assessment order is hit by limitation is devoid of merit. Whether the imposition of penalty@15% on the petitioner on the ground of evasion of tax by way of concealment of taxable turnover was made without affording reasonable opportunity of hearing to the petitioner? - HELD THAT:- In the case in hand, admittedly no separate show cause notice in terms of Section 75A was issued to the dealer before imposition of 15% penalty on him - from a plain reading of Section 75A and having regard to the strict letter of the law, it becomes abundantly clear that penalty cannot be imposed for mere failure to pay tax unless there are materials to show that such failure was deliberate with a view to evade payment of tax liability. Evidently there was no intention on the part of the assessee to evade or avoid taxes and therefore, levy of 15% penalty being totally illegal is quashed by us for the entire period of assessment. Whether the penalty equal to 0.1% of the turnover was imposed on the assessee in terms of Section 53(3) of the TVAT Act after affording reasonable opportunity of hearing to the assessee? - HELD THAT:- Imposition of penalty equal to 0.1% of the turnover for non submission of the audit report in terms of Section 53 of the TVAT Act is mandatory. The assessment order dated 29.09.2016 as well as the order dated 28.02.2017 of the Commissioner of Taxes in Revision Case No 18 to 21 of 2016 go to show that the dealer failed to submit the audit report within time in terms of Section 53 of the TVAT Act. Neither before the assessing officer nor before the Revisional Authority (Commissioner of Taxes) the assessee ever pleaded that he submitted the audit report in terms of Section 53(1) and (2) of the TVAT Act within the time specified in sub-section (2) of Section 53. Rather he pleaded before the Assessing Authority as well as the Revisional Authority (Commissioner of Taxes) that he could not submit the audit report within time. There is, therefore, no doubt that the assessee did not submit the audit report in terms of Section 53(1) and (2) of the TVAT Act within the time prescribed under the said Section. The findings of the assessing officer as well as the Revisional Authority, as quoted above, are not disputed by the petitioner. Evidently, the assessment order dated 29.09.2016 imposing mandatory penalty equal to 0.1% of the turnover of the company of the assessee was imposed on the assessee in terms of Section 53(3) after hearing the assessee. Therefore, the assessment order with regard to imposition of penalty equal to 0.1% of the turnover of the company of the assessee suffers from no illegality. Whether the assessee can be saddled with the liability of non submission of the audited accounts of his company in absence of prescribed form in terms of Section 53(1) of TVAT Act? - HELD THAT:- It is no case of the petitioner that he could not submit the audit report within time in terms of Section 53(2) of the TVAT Act due to non availability of such Form. Assessment Order upheld except the penalty equal to 15% imposed by the assessing officer - petition allowed in part. Issues Involved:1. Whether the assessment order dated 29.09.2016 was ultra vires the provisions of Section 33 of the TVAT Act, 2004 due to being time-barred.2. Whether the imposition of a 15% penalty for evasion of tax by concealing taxable turnover was made without affording a reasonable opportunity of hearing to the petitioner.3. Whether the penalty equal to 0.1% of the turnover was imposed in terms of Section 53(3) of the TVAT Act after affording reasonable opportunity of hearing to the assessee.4. Whether the assessee can be held liable for non-submission of audited accounts in the absence of a prescribed form under Section 53(1) of the TVAT Act.5. Whether the order dated 28.02.2017 by the Commissioner of Taxes upholding the assessment order was lawful.Issue-wise Detailed Analysis:1. Time-barred Assessment Order:The petitioner argued that the assessment order dated 29.09.2016 for the period 2011-12 to 2014-15 was ultra vires Section 33 of the TVAT Act, 2004, as it was time-barred. Section 33 provides a limitation of five years from the end of the tax period for making an assessment. The court noted that the tax period for 2011-12 ended on 31st March 2012, and the assessment order was made on 29.09.2016, within the five-year limitation period. Thus, the contention that the assessment order was time-barred was found to be devoid of merit.2. Imposition of 15% Penalty Without Hearing:The petitioner claimed that the 15% penalty for evasion of tax by concealing taxable turnover was imposed without a reasonable opportunity of hearing, violating Section 75A of the TVAT Act. The court observed that no separate show cause notice was issued before imposing the penalty, which is mandatory under Section 75A. The court held that penalty cannot be imposed for mere failure to pay tax unless there is evidence of deliberate evasion. Consequently, the imposition of the 15% penalty was quashed as it was deemed illegal.3. Penalty Equal to 0.1% of Turnover:The petitioner argued that the penalty equal to 0.1% of the turnover was imposed without affording a reasonable opportunity of hearing. The court reviewed the provisions of Section 53(3) of the TVAT Act, which mandates a penalty for non-submission of the audit report within the specified time. The court found that the petitioner admitted to not submitting the audit report within the required time and that the penalty was imposed after giving a reasonable opportunity of hearing. Therefore, the imposition of the 0.1% penalty was upheld as lawful.4. Liability for Non-submission of Audited Accounts:The petitioner contended that the penalty for non-submission of audited accounts should not apply due to the absence of a prescribed form under Section 53(1) of the TVAT Act. The court noted that the petitioner did not claim that the audit report was not submitted due to the non-availability of the form. The court concluded that the penalty for non-submission of audited accounts was correctly imposed as the petitioner failed to comply with the statutory requirements.5. Lawfulness of the Revisional Authority's Order:The petitioner challenged the order dated 28.02.2017 by the Commissioner of Taxes upholding the assessment order. The court reviewed the relevant provisions and found that the Revisional Authority acted within its jurisdiction and followed the statutory procedures. The order was found to be lawful except for the 15% penalty, which was quashed.Conclusion:The court upheld the assessment order dated 29.09.2016 and the order dated 28.02.2017 by the Revisional Authority, except for the 15% penalty imposed by the assessing officer. The petition was thus partly allowed, and any interim orders were vacated.