TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Penalty under Section 54(1)(2) VAT Act requires proof of willful tax evasion, not mere best judgement assessment</h1> <h3>Durga Steel Rolling Mills Thru. Partner Amit Arora Versus Commissioner of Commercial Taxes U.P. Lucknow</h3> Durga Steel Rolling Mills Thru. Partner Amit Arora Versus Commissioner of Commercial Taxes U.P. Lucknow - TMI Issues Involved:1. Whether mens rea is an essential pre-requisite for imposition of penalty under Section 54(1)(2) of the U.P. VAT Act, 2008.2. Whether penalty under Section 54(1)(2) of the Act can be imposed where the assessment is made on the basis of Best Judgement Assessment.3. Whether imposition of penalty of 7 times the total tax imposed towards alleged concealed turnover was justified when the express provision of Section 54(1)(2) of the Act provides for imposition of a maximum penalty of 3 times of concealed turnover.Summary:Issue 1: Mens Rea as Essential Pre-requisiteThe Court examined whether mens rea is an essential element for imposing a penalty under Section 54(1)(2) of the U.P. VAT Act, 2008. It was argued that for the penalty to be imposed, a specific finding must be recorded that the dealer has concealed particulars of turnover, deliberately furnished inaccurate particulars, submitted a false tax return, or evaded payment of tax. The Court referred to various judgments, including *Sanjiv Fabrics*, which emphasized that mens rea is necessary for imposing penalties under taxing statutes. The Court concluded that mens rea is indeed an essential pre-requisite for the imposition of a penalty under Section 54(1)(2).Issue 2: Best Judgement AssessmentThe Court considered whether penalties could be imposed based on assessments made under the 'Best Judgement Assessment' as per Section 28(2) of the Act. It was noted that the assessment was based on a reasonable guess or well-grounded estimate, not a willful attempt to evade tax. The Court held that penalties could not be imposed solely based on Best Judgement Assessments since they do not inherently indicate a willful attempt to evade tax.Issue 3: Imposition of Penalty Beyond Statutory LimitThe Court noted that the penalty imposed was seven times the total tax, while Section 54(1)(2) of the Act provides for a maximum penalty of three times the concealed turnover. The Court left this issue open to be decided in appropriate proceedings, indicating that the imposition of penalties beyond the statutory limit was not justified in this specific case.Conclusion:The revision was allowed, and the judgment and order dated 06.04.2021 passed by the Commercial Tax Tribunal, Lucknow, in Second Appeal No. 50 of 2017, was set aside. The Court emphasized the necessity of proving mens rea for imposing penalties and invalidated penalties based on Best Judgement Assessments without evidence of willful tax evasion.
TaxTMI 
TaxTMI 
