2023 (4) TMI 123 - HC - VAT and Sales Tax

Court upholds penalty under JVAT Act, citing mens rea for delayed return, distinguishes case from precedent.

M/s. Balaji Rakesh, Versus State of Jharkhand, Commissioner of Commercial Taxes, Ranchi, Joint Commissioner of Commercial Taxes (Appeal), Jamshedpur, Assistant Commissioner of Commercial Taxes, Urban Circle, Jamshedpur, State Tax Officer,

The court dismissed the writ application, upholding the penalty under Section 40(2) of the JVAT Act. The petitioner's delayed filing of the revised return ... Impact of the regular assessment order on the penalty imposed before assessment - misinterpretation of section 40 (2) of the JVAT Act - concealed turnover - evasion of tax or not - HELD THAT:- It appears that on 27.4.2015 the petitioner filed NIL Returns for the month of March though before that on 30.3.2015 itself it had raised a bill for Rs 6,73,233/- and this fact finds mention in the order dated 29.4.2016 of the Appellate Court and nowhere denied by the petitioner. Further, since the petitioner was aware of having raised bill of Rs 6,73,233/-, there was no occasion for the petitioner to file returns for the month of March, 2015 showing it be NIL returns. This filing of NIL returns itself is self- sufficient to make out a case under Section 40(2)(b) of the JVAT Act, 2005 - The petitioner himself has admitted the fact that it had received the TDS certificate from the Government on 01.07.2015. Though, the TDS certificate was received by the petitioner on 01.07.2015 but he did not revise the returns for the month of March, 2015 on any day prior to 30.07.2015. If the same would have been revised on any day prior to 30.07.2015; then the proceeding under Section 40(2) of the Act would not have been initiated; rather the conduct of petitioner in not revising the returns despite admittedly having received the TDS certificate from the government on 01.07.2015, appears to be indicative of the mens- rea of the petitioner. The proceeding u/s 40(2) was initiated on 30.07.2015 and notice was issued to the petitioner. Thereafter, the returns were revised only after initiation of the proceeding and issuance of notice to the petitioner and therefore, any attempt to revise the returns after the initiation of proceeding will be hit by the mischief of rule 14(7) of JVAT Rules, 2006. Further, Section 40(2) states that if the prescribed authority in the course of any proceeding or upon any information, which has come into his possession before assessment is satisfied that any registered dealer has concealed any sales or purchases or any particulars thereof, with a view to reduce the amount of tax payable by him under this Act, or has furnished incorrect statement of his turnover or incorrect particulars of his sales or purchases in the return furnished under sub-section (1) of Section 29; or otherwise, it could initiate penalty proceedings - In the instant case when ‘information’ regarding excess turnover than what was disclosed by the petitioner came into the possession of the prescribed authority and that petitioner has not disclosed the Turnover of March, 2014 inspite of having full knowledge, concealed the same in the Returns filed by him and thereby furnished incorrect particulars, the prescribed authority rightly initiated the penalty proceedings and issued notice upon the petitioner. In the instant case, the actual turnover was shown as NIL for March 2015 in the return filed on 27.04.2015 in-spite of the fact that the petitioner had raised bill for the amount of Rs.6,73,233 on 30.3.2015 itself. Further though TDS certificate was received by the petitioner on 1.7.2015 but Returns were not revised till 30.7.2015 when proceedings u/s 40(2) was initiated. Thus, the intent to evade tax or conceal/suppress turnover appears to be clear indicative of mens rea on his part. As a matter of fact, after the proceeding under section 40(2) of the JVAT Act was initiated and the notice was served to the petitioner he filed the return on 05.08.2015 i.e., after the period of three months for filing revised return. There is no document on record to suggest or any averments giving reason for non-filing of revised return within time. As such, the element of mens rea on the part of the petitioner is also made out. The fact of the instant case as enunciated herein before clearly shows absence of bona-fide on the part of the petitioner in not filing the revised return even after getting the TDS certificate as he filed the revised return only on 05.08.2015 after initiation of proceeding under section 40(2) of the JVAT Act on 30.07.2015. It is thus clear that the instant case does not fall under section 30 (4)(d); rather is covered by the condition prescribed under Rule 14(7) of the JVAT Rules. As such the action of the respondent revenue authority is fully justified; no error has been committed by the learned Tribunal by rejecting the revision petition of the petitioner. Application dismissed. Issues Involved:1. Quashing of the Commercial Taxes Tribunal's order.2. Quashing of the Commissioner of Commercial Taxes' revision order.3. Quashing of the Joint Commissioner of Commercial Taxes' appellate order.4. Quashing of the Assistant Commissioner of Commercial Taxes' penalty order.Summary:Issue 1: Quashing of the Commercial Taxes Tribunal's orderThe petitioner sought to quash the order dated 07.06.2022 by the Commercial Taxes Tribunal dismissing the revision application. The Tribunal failed to appreciate the impact of the regular assessment order on the penalty imposed before assessment. The penalty was levied under Section 40(2) of the JVAT Act for the alleged concealment of turnover. The Tribunal did not consider that the revised return for March 2015 was accepted in the regular assessment, and no tax evasion was found.Issue 2: Quashing of the Commissioner of Commercial Taxes' revision orderThe petitioner challenged the order dated 24.07.2019 by the Commissioner of Commercial Taxes, which dismissed the revision petition summarily. The petitioner argued that the penalty was imposed based on the revised return being held non-acceptable, but the regular assessment accepted the revised return and found no tax evasion.Issue 3: Quashing of the Joint Commissioner of Commercial Taxes' appellate orderThe petitioner sought to quash the order dated 29.04.2016 by the Joint Commissioner of Commercial Taxes, which dismissed the appeal on a misinterpretation of Section 40(2) of the JVAT Act. The petitioner contended that the penalty was imposed without establishing mens rea to defraud the revenue and that the revised return was filed based on the TDS certificate received, not due to any departmental action.Issue 4: Quashing of the Assistant Commissioner of Commercial Taxes' penalty orderThe petitioner challenged the order dated 28.08.2015 by the Assistant Commissioner of Commercial Taxes, which levied a penalty of Rs.1,97,930/- under Section 40(2) of the JVAT Act. The penalty was based on the alleged concealed turnover. The petitioner argued that the penalty was imposed provisionally and should depend on a final assessment order. The regular assessment proceedings accepted the revised return and found no tax evasion, making the penalty unjustified.Court's Decision:The court dismissed the writ application, holding that the penalty under Section 40(2) was justified. The petitioner filed NIL returns for March 2015 despite raising a bill for Rs.6,73,233/- on 30.03.2015. The revised return was filed only after the initiation of proceedings under Section 40(2). The court found the petitioner's action indicative of mens rea and upheld the penalty. The court distinguished the case from M/s Shiv Jyoti Enterprises, noting that the revised return in that case was filed within the permissible period, unlike the present case. The court agreed with the Tribunal's finding that the revised return filed after the initiation of proceedings was of no avail and upheld the penalty imposed.