2022 (2) TMI 728 - HC - VAT and Sales Tax

Court quashes tax board order, upholds penalty for fake submission.

The court allowed the Sales Tax revision petition, quashed the Rajasthan Tax Board's order setting aside the penalty, and held the assessee liable to pay ... Levy of penalty - tax and interest imposed by the petitioner- Assistant Commissioner Commercial Tax has been upheld - Form-C found to be fake and forged - HELD THAT:- After recording the concurrent findings, the Assessing Officer and both the Appellate Courts have found that Forms-C submitted by the Assessee were not genuine. Even then the Tax Board has exonerated the assessee from payment of penalty - the Assessee has miserably failed to prove before all the Authorities that he acted bonafideliy upon the Forms-C submitted by the Dealers of the other States. From the bare perusal of the provision contained under section 61 of the RVAT Act, 2003, it is clear that the penalty can be levied for avoidance or evasion of tax where (i) any Dealer has concealed any particulars from any returns furnished by him; or (ii) has deliberately furnished inaccurate particulars therein; and (iii) has concealed any transaction of sale or purchase from its accounts, registers or documents required to be maintained by him under the RVAT Act of 2003 - the three situations provide for levy of penalty in cases of active concealment and deliberate fraud or misinformation by the Assessee. The Tax Board has neither recorded any cogent finding on merits of the case before setting aside the penalty nor it has considered the provisions of section 61 of the RVAT Act, 2003, more particularly, when the fact was proved before all the Authorities that Forms-C submitted by the Assessee were forged and fake to avoid payment of Tax. The penalty was rightly imposed upon the Assessee by the Authorities as he (Assessee) furnished inaccurate particulars and he also concealed the transactions of sale and purchase to avoid the payment of Tax. Therefore, the Assessee is liable to pay penalty u/s 61 of the RVAT Act, 2003. Revision petition allowed. Issues Involved:1. Whether the Rajasthan Tax Board erred in setting aside the penalty imposed despite the tax and interest being upheld and the Form-C being found fake and forged.Issue-wise Detailed Analysis:1. Error in Setting Aside the Penalty:The primary issue in the petition is whether the Rajasthan Tax Board committed an error of law by setting aside the penalty imposed on the assessee despite the tax and interest being upheld and the Form-C being found fake and forged. The petitioner, Assistant Commissioner, Commercial Taxes, challenged the order dated 09.05.2017 by the Rajasthan Tax Board, Ajmer, which set aside the penalty under Section 61 of the RVAT Act, 2003.2. Facts of the Case:The assessee, engaged in the business of mustard oil, sold mustard oil against declaration Form-C to firms in Bihar and claimed a refund under Section 17(2) of the RVAT Act, 2003. During the inquiry, it was found that the declaration Form-C was fake and forged. The Assessing Officer imposed tax, interest, and penalty under Section 61 of the RVAT Act, 2003, after giving the assessee an opportunity to show cause.3. Appeals and Decisions:The assessee appealed the order dated 31.03.2010, which was dismissed by the Deputy Commissioner (Appeals) on 11.02.2011. The assessee then appealed to the Rajasthan Tax Board, which upheld the imposition of tax and interest but set aside the penalty under Section 61 of the RVAT Act, 2003.4. Arguments by the Petitioner:The petitioner argued that the Tax Board, without recording any findings, upheld the findings of the Assessing Authority and the Deputy Commissioner but set aside the penalty. The petitioner emphasized that the Form-C was proven to be fake and forged, and thus, the Tax Board had no grounds to set aside the penalty.5. Arguments by the Respondent:The respondent's counsel argued that the assessee was unaware that the Forms-C were bogus, fabricated, and fake, and thus, could not be held liable for the penalty. The counsel cited previous judgments to support the argument that the Tax Board did not commit any illegality in setting aside the penalty.6. Court's Analysis:The court noted that the Assessing Officer and both Appellate Courts had found the Forms-C submitted by the assessee to be not genuine. The court emphasized that the liberal approach of the Tax Board was not justified, considering the scheme of the Act and the Rules. The court referred to the Supreme Court's judgment in Guljag Industries Vs. Commercial Taxes Officer, which stated that mens rea is not an essential ingredient for contravention of such provisions, and the breach would attract a penalty.7. Provisions of Section 61 of the RVAT Act, 2003:The court quoted Section 61 of the RVAT Act, 2003, which provides for the imposition of a penalty for avoidance or evasion of tax where a dealer has concealed particulars, furnished inaccurate particulars, or concealed transactions of sale or purchase. The court concluded that the penalty was rightly imposed on the assessee as he furnished inaccurate particulars and concealed transactions to avoid tax.8. Conclusion:The court allowed the Sales Tax (VAT) revision petition, quashed the order dated 09.05.2017 by the Rajasthan Tax Board, and held that the assessee is liable to pay the penalty as per the order dated 31.03.2010 by the Assessing Authority. All pending applications were disposed of accordingly.