2024 (5) TMI 987 - HC - VAT and Sales Tax

Penalty under Section 7-A(2) AP GST Act upheld for possessing false bills despite no exemption claim

M/s. Sri Balaji Industries Versus State of Andhra Pradesh

M/s. Sri Balaji Industries Versus State of Andhra Pradesh - TMI Issues Involved:1. Legality of the penalty imposed under Section 7-A(2) of the Andhra Pradesh General Sales Tax Act, 1957.2. Whether the petitioner produced false bills and claimed exemptions as second sales.3. Applicability of Section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957 regarding the revision jurisdiction of the High Court.Detailed Analysis:1. Legality of the penalty imposed under Section 7-A(2) of the Andhra Pradesh General Sales Tax Act, 1957:The petitioner challenged the penalty for the Assessment Year 1995-96, arguing that the penalty under Section 7-A(2) cannot be levied for mere possession of false bills without production before the Assessing Authority. However, the court noted that Section 7-A(2) applies when a dealer issues or produces a false bill, voucher, declaration, certificate, or other document with a view to support any claim that a transaction is not liable to tax or is liable to be taxed at a reduced rate. The court found the submission contrary to the record, noting that the petitioner did not dispute the fact that he produced fraudulent bills to the department to evade legitimate tax due to the Government. Therefore, the court upheld the penalty, emphasizing that the detection of false bills by the Regional Vigilance and Enforcement Officer justified the proceedings under Section 7-A(2).2. Whether the petitioner produced false bills and claimed exemptions as second sales:The petitioner argued that he did not claim any exemption or produce false bills. However, the court found this submission contrary to the record. The penalty notice under Section 7-A(2) explicitly mentioned that the petitioner produced fraudulent bills to evade tax. Additionally, the assessment order and the penalty order both confirmed that the petitioner claimed exemption on the ground that the vendors were registered dealers, but departmental inquiries revealed that the sellers were not real and identifiable dealers. The court concluded that the petitioner did produce false bills and claimed exemptions as second sales, and thus, Section 7-A(2) was rightly attracted.3. Applicability of Section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957 regarding the revision jurisdiction of the High Court:The court emphasized that under Section 22(1) of the AP GST Act, a revision lies to the High Court only on the ground that the Appellate Tribunal has either decided erroneously or failed to decide any question of law. The court noted that the revision does not lie on a question of fact. In this case, the petitioner's arguments involved factual controversies, such as whether false bills were produced and whether exemptions were claimed. The court cited precedents, including Sales Tax Appellate Tribunal vs. Andhra Cements Limited and State of A.P. vs. M/s. Jai Sree Enterprises, to affirm that the revision jurisdiction is limited to questions of law. Consequently, the court found no merit in the revision petition as it did not involve any erroneous decision or failure to decide a question of law by the STAT.Conclusion:The court dismissed the Tax Revision Case, concluding that the STAT neither failed to decide a question of law nor decided it erroneously. The penalty under Section 7-A(2) was upheld, and no case for interference was made out. The court also noted that miscellaneous petitions, if any, pending shall also stand closed.