2023 (7) TMI 295 - HC - VAT and Sales Tax

Appellant Company Penalized for Tax Evasion and Lack of Bona Fides

M/s. Escorts Ltd, Faridabad Versus State of Haryana and ors.

M/s. Escorts Ltd, Faridabad Versus State of Haryana and ors. - TMI Issues Involved:1. Justification of penalty under Section 48 of the Haryana General Sales Tax Act, 1973.2. Deliberateness in filing incorrect returns and suppression of turnover.3. Applicability of precedents cited by the appellant.Summary:1. Justification of Penalty under Section 48 of HGST Act:The appellant-Company, engaged in motorcycle manufacturing, filed returns showing inter-State sales as branch transfers to evade tax. The Checking Officer imposed a penalty under Section 9(2A) of the CST Act read with Section 37(6) of the HGST Act, which was later reduced. The Deputy Excise and Taxation Commissioner imposed further penalties for the first two quarters of 1990-91. The appellant's appeals were dismissed by the Tribunal, leading to the present appeal.2. Deliberateness in Filing Incorrect Returns and Suppression of Turnover:The appellant argued that the revised returns were filed voluntarily before the assessment was finalized and under protest, citing no suppression of turnover. However, the court found that the appellant had deliberately suppressed turnover during the first two quarters by showing inter-State sales as branch transfers, which was only corrected after detection at the Sales Tax Check Barrier. This deliberate act of filing incorrect returns and omission to pay the due tax justified the imposition of penalties.3. Applicability of Precedents Cited by the Appellant:The court reviewed the cited judgments but found them inapplicable to the appellant's case. In Lucky Radio House, the issue was about filing a revised return before assessment completion, which did not apply here. In M/s Jagat Tractors, the dealer rectified an incorrect return without suppression of sales, unlike the appellant's case. Khosla Mills and Hindustan Steel Ltd dealt with the necessity of proving mens rea for imposing penalties, which was established in the appellant's case. Anantharam Veerasinghaiah was about the source of unexplained expenditure, irrelevant to the current context.Conclusion:The court referenced Sant Lal Tek Chand vs. State of Haryana, which supported the imposition of penalties for deliberate suppression of turnover and filing incorrect returns. The appellant's actions showed a lack of bona fides and justified the penalties imposed by the Assessing Officer. The appeal was dismissed as no substantial question of law arose for consideration.