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2015 (4) TMI 425
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....06 and 819 of 2006, pertaining to Assessment Years 1997-98 to 2000- 2001, assailing the order of first appellate authority are decided by a common judgment and order. The facts, relevant and germane to the matter, are that petitioner is a public limited company, incorporated under the Companies Act 1956, having its registered office and works at Mandpam, Bhilwara. At the inception, the petitioner company was registered with the Government of India as 100% Export Oriented New Unit and involved in the business of manufacture and exporting fabrics made from blended yarn. The State Government, in exercise of powers under sub-section (2) of Section 4 of the Rajasthan Sales Tax Act 1954 (for short, 'RST Act'), issued Notification No.F.4(28) FD/GR-IV/94-2 dated 13th of June 1994 granting exemption from tax on sale or purchase, by a 100% Export Oriented New Unit registered with Government of India, on raw material required by such unit for use in manufacture of other goods to the extent and subject to the conditions mentioned therein and the scheduled appended thereto. The said exemption was allowed for a period of five years from the date of first transaction of raw material purchased ....
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....sponded by the petitioner wherein the petitioner-assessee has submitted that it never intended to evade its tax liability and 100% exemption was claimed by it under the bonafide belief in construing the Notification dated 13th of June 1994. It is also averred in the return that the books of accounts are regularly maintained by it indicating the entire transactions of purchase and sales which were candidly disclosed in the returns submitted on its behalf. The petitioner-assessee has also asserted that it has not violated the declarations in any manner. Adverting to the purchase of raw material, the petitioner-assessee has submitted that the same was purchased by furnishing requisite Form ST-17 in accordance with the provisions of the Act and Rajasthan Sales Tax Rules 1995 (for short, 'Rules of 1995') and thereafter such purchased materials have been used in consonance with the declaration made therein, i.e. the purchase for which the declaration was made, viz. manufacturing fabrics. Further reiterating that the assessee has not misused declaration forms in any manner, the petitioner has prayed that it is not liable to be exposed for penalty either under Section 64 or 65 of the Act. ....
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....ember 2001. For the Assessment Year 1999-2000, the Assessing Authority raised a demand for the difference of interest liability and the same was also paid by the assessee. After the regular assessment order, the Assistant Commissioner (Commercial Taxes Officer), Anti Evasion, Bhilwara, second respondent, who conducted survey, laid applications under Section 87 of the RST Act before the Commissioner, Commercial Taxes and thereupon notices dated 3rd August 2005 were issued to the petitioner. The petitioner-assessee contested the notices by filing its written representation on 9th August 2005 alongwith zerox copies of several judgments. The Commissioner, Commercial Taxes, heard the petitioner and by its common order dated 10th August 2005 disposed of all the applications under Section 87 of the RST Act for the Assessment Years 1997-1998 to 2000-2001. In its order, the Commissioner has found that the assessee has availed 100% exemption on purchase of raw material by giving declaration in Form ST-17 against its entitlement for 50% in gross violation of Section 64 of the RST Act. With this finding, the Commissioner has observed that the Assessing Authority ought to have levied penalty....
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.... the appellate authority has upheld the order imposing penalty equal to double the amount of tax under Section 64 of the RST Act finding the same in consonance and in conformity with the order of the Commissioner passed under Section 87 of the RST Act. The petitioner has also averred in the revision petitions that penalty @5% is deposited by it in terms of exparte penalty orders dated 16.12.2005 and the receipts were also enclosed with the appeals which were filed before the Deputy Commissioner (Appeals), Commercial Taxes, Bhilwara. It is also averred that when the appeals were pending, on being threatened by the Assessing Authority for coercive proceedings for recovery, further 5% of the demand in question was deposited by the assessee on 20th March 2006. Therefore, in totality, the petitioner has deposited 10% of the demand of penalty. After dismissal of the appeals by the appellate authority, the petitioner-assessee laid four separate appeals before the Rajasthan Tax Board, Ajmer alongwith stay petitions for the Assessment Years 1997-1998 to 2000-2001 respectively. When these four appeals were laid, the appeal which was earlier filed by the assessee against the order of th....
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....s when atleast 2 out of 5 assessments were barred by time? Learned Senior Counsel for the petitioner, Mr. M.S. Singhvi, while assessing the impugned order, submits that the learned Tax Board has failed to examine the ambit and scope of revision under Section 87 of the RST Act inasmuch as order dropping the penalty is beyond the scope of revision. Elucidating with vehemence the scope of revision, learned counsel submits that the scope of revision cannot be equated with an appeal and its ambit and scope is much narrower vis-a-vis an appeal. Learned counsel for the petitioner, thus, submits that a very vital issue relating to scope of revision, under Section 87 of the RST Act, by the Commissioner against dropping penalty, has not been appreciated by the learned Tax Board in the impugned order, which is essentially the edifice for the consequential assessment order to petitioner's detriment for the Assessment Years 1997-98 to 2000-01, and therefore, the impugned order is vitiated in law. Learned counsel for the petitioner, Mr. Singhvi, would contend that the very assumption of revisional jurisdiction by the Commissioner under Section 87 is dehors the statute inasmuch as exerc....
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....onafide mistake in construing Notification dated 13th June 1994 and therefore, this sort of omission ought not to have been construed as deliberate to fasten the liability of penalty under Section 64 of the RST Act. Mr. Singhvi further submits that the learned Tax Board has miserably failed to appreciate the afflictions of the petitionerassessee in right perspective while interpreting Section 64 of the RST Act. Mr. Singhvi has also urged that the findings of Commissioner are based on mere ipse-dixit and conjectures, more particularly, in evaluation of the alleged culpability of the assessee in construing Notification dated 13th June 1994, and the learned Tax Board, in upholding the said laconic order, has failed to exercise the jurisdiction so vested in it. Taking shelter of the principles of natural justice, learned Senior Counsel submits that after order of remand by the learned Commissioner, the Assessing Authority has straightway passed the order imposing penalty against the assessee without giving any notice or opportunity of being heard. With this submission, learned counsel has urged that the Assessing Authority has violated the principles of natural justice and the fi....
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....t be sustained. In support of his various contentions, learned counsel, Mr. Singhvi, has placed reliance on following legal precedents: * Commissioner, Commercial Taxes, Rajasthan, Jaipur & Anr. Vs. M/s. Asian Paints India Ltd., Jaipur [Tax Up-Date Vol.15 Part 1, page 3] * Hindustan Petroleum Corporation Limited Vs. Dilbahar Singh [(2014) 9 SCC 78] * Assistant Commercial Taxes Officer Vs. Gaurav Steels Ltd. [(2006) 147 STC 36(Raj)]. * Commercial Taxes Officer Vs. Sojat Lime Co. [1989 (74) STC 288 (Raj)]. * Lord Venketshwara Caterers Vs. Commercial Taxes Officer, Anti Evasion, Zone-I [(2007) 10 VST 535 (Raj.)]. * Hindustan Steel Ltd. Vs. State of Orissa [1969 (2) SCC 627] * Commissioner of Income Tax Vs. Jain Construction Co. [(2013) 257 CTR (Raj) 336] E converso, learned counsel for the Revenue, Mr. D.K. Godara for Mr. V.K. Mathur, submits that Notification dated 13th June 1994 is clear and unequivocal, prescribing the criteria of unit and extent of exemption of tax, and therefore, the very act of the petitioner-assessee in furnishing declaration in Form ST-17 is a deliberate attempt by it to use the Declaration Form dehors the provisions of the RST Act a....
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....entualities suo-moto power of revision can be exercised by the Commissioner within five years under sub-sec.(2) of Section 87 of the RST Act and as such the contention of the assessee about limitation is not tenable. For strengthening his arguments, learned counsel for the Revenue has placed reliance on following legal precedents: * Guljag Industries Vs. Commercial Taxes Officer [(2007) 7 SCC 269] * Commissioner of Sales Tax, U.P. Vs. Sanjiv Fabrics [(2010) 9 SCC 630] I have heard learned counsel for the parties, perused the impugned judgment and order of the learned Tax Board, and thoroughly scanned the entire record. Rival counsels have made sincere endeavour to bring home the issues they have canvassed to elicit favourable answers on the questions of law formulated by the Court. Now I propose to deal with the questions of law framed in the backdrop of facts and circumstances as well as the rival submissions. Question No.1 & Question No.5 are almost interrelated, therefore, these questions are taken up together. With a view to find a plausible answer to these two questions, it is worthwhile to examine the revisional powers and jurisdiction of the learned Commiss....
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....s having an investment of Rs. 5 Crores or more but less than Rs. 15 Crores in land, new factory building and new plant and machinery. 50% of tax payable 3. Agro-based industrial units having an investment of Rs. 1 Crore or more but less than Rs. 15 Crores in land, new factory building and new plant and machinery. 50% of tax payable While examining the true purport of the Notification dated 13th June 1994, the Assessing Authority in all the assessment orders has concluded that the petitioner unit is having an investment of Rs. 5 Crores or more but less than Rs. 15 crore in land, new factory building and new plant and machinery, and accordingly, applying the ratio of extent of exemption of tax, has levied 50% tax to enrich the coffers of the revenue. As such, the Assessing Authority has discharged its quasi judicial function to protect the interest of the revenue by imposing interest on the amount of tax under Section 58 of the RST Act. While adverting to imposition of penalty under Section 65 of the RST Act, the Assessing Authority has observed that prima facie it is not satisfied that the assessee has made an attempt to avoid or evade payment of tax, and as....
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....of the Act which is discretionary by Assessing Authority, cannot be held tobe revisable under Sec.87 of the Act." The Constitution Bench of Hon'ble Apex Court in Hindustan Petroleum Corporation Ltd. (supra) while examining the scope of revisional jurisdiction vis-à-vis appellate jurisdiction, when both the expressions are employed in the statute, made a micro analysis of both the jurisdictions and defined ambit and scope of the respective jurisdictions. The Court held: We are in full agreement with the view expressed in Sri Raja Lakshmi Dyeing Works that where both expressions "appeal" and "revision" are employed in a statute, obviously, the expression "revision" is meant to convey the idea of a much narrower jurisdiction than that conveyed by the expression "appeal". The use of two expressions "appeal" and "revision" when used in one statute conferring appellate power and revisional power, we think, is not without purpose and significance. Ordinarily, appellate jurisdiction involves a re-hearing while it is not so in the case of revisional jurisdiction when the same statute provides the remedy by way of an 'appeal' and so also of a 'revision'. If that ....
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....e imposition of penalty. Therefore, both these questions are dealt with in unison. The answer of the first and the fifth question favouring cause of the assessee has its obvious ramification on these two questions. Well it is true that the learned Commissioner has accepted the revision under Section 87 of the RST Act for remanding the matter back to the Assessing Authority for imposition of penalty against the assessee under Section 64 of the RST Act, this order has not ipso facto conferred jurisdiction on the Assessing Authority to impose penalty without adhering to principles of natural justice. After remand order, the Assessing Authority has imposed penalty twice the amount of tax for each assessment year against the assessee without giving any notice or opportunity of hearing to it. Every action which visits someone with evil and civil consequences is required to be in strict adherence of audi-altrem[ partem. Observance of principles of natural justice, in the instant case, has acquired significance for obvious reasons. In that background, if the application of the Assessing Authority addressed to the Commissioner for invoking its jurisdiction under Section 87 of the RST ....
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.... 87 of the RST Act, the learned Commissioner ought to have called upon the assessee to put its defence before resorting to invoke Section 64 of the RST Act for imposition of penalty. As a matter of fact, the action of the learned Commissioner for switching on to Section 64 instead of 65 for imposition of penalty, has seriously prejudiced the cause of the assessee which cannot be overlooked, may it be, under the RST Act - a taxing statute. The tax proceedings are no-doubt quasi judicial proceedings and the sales-tax authorities are not bound strictly by rules of evidence, nevertheless, the authorities must base their orders on materials, which are known to the assessee, and after he is given a chance to rebut the same. The folly, which is apparently clear from the order passed by the learned Commissioner under Section 87 of the RST Act, has been further perpetuated by the Assessing Authority after the remand order, inasmuch as the Assessing Authority has also not cared to issue any notice to the assessee before imposing penalty under Section 64 of the RST Act. It is clearly apparent that after remand order, all the assessment orders were passed by the Assessing Authority castigat....
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....contumacious conduct, or for a deliberate violation of the provisions of a particular statute. The essence of invoking penalty provision pre-supposes guilty animus on the part of assessee or its mens-rea. Every contravention of a statutory provision cannot expose an assessee for penalty in want of proof about mens-rea. Hon'ble Apex Court in Hindustan Steel Ltd. (supra), while construing the penalty provisions under Section 9(1), 12(5) and Section 25(1)(a) of the Orissa Sales Tax Act 1947, has concluded that for imposing penalty under these provisions, proceedings undertaken by the competent authority is of quasi criminal nature. The Court held: "Under the Act penalty may be imposed for failure to register as a dealer : Section 9(1) read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious d....
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....h which it deals. A penalty imposed for a tax delinquency is a civil, obligation, remedial and coercive in its nature, and is different from the penalty for a crime." The judgment in Guljag Industries (supra) is clearly distinguishable for the reason that it deals with a mandatory provision for imposition of penalty under sub-sec. (5) of Section 78 of the RST Act. Bare reading of sub-sec. (5) of Section 78 of the RST Act makes it crystal clear that an authorized officer, or incharge of the check-post, after making inquiry shall impose fine on owner of the goods, or person authorized in writing by such owner, or the person incharge of the goods, for possession or movement of goods, whether seized or not, in violation of the provisions of clause (a) of sub-sec.(2), or for submission of false or forged documents or declaration. The penalty envisaged under sub-sec.(5) of Section 78 is 30% of the value of such goods. If the provisions of Section 64 & 65 of the RST Act are examined vis-à-vis the provisions under Section 78(5) of the RST Act, then it will ipso facto reveal that the provision for penalty envisaged under these Sections is not mandatory but discretionary. As such, ....
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....rom the fact that for all these assessment years when provisional assessment was made by the Assessing Authority, complete books of accounts were furnished. It may be noteworthy that none of the taxing authorities including learned Commissioner has found any discrepancy in the books of accounts of the assessee, for all these assessment years, showing details about purchase and sale transactions by the assessee, is sufficient to dispel the conclusion that assessee has misused the declaration forms. This sort of situation has persuaded the Assessing Authority while passing provisional assessment order to conclude that the alleged act or omission of the assessee was bonafide and it has not intended to use declaration forms for the purpose other than mentioned therein. Furthermore, there is nothing on record to show any concealment on the part of the assessee and the tax exemption claimed by the assessee was approved after through scanning of record by the Assessing Authority. Therefore, in totality, the explanation tendered by the assessee in construing Notification dated 13th June 1994 to claim 100% exemption from tax appears to be a bonafide act and not a contumacious or a deliberat....
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.... by addressing the letter dtd 25th June, 1970. We accordingly reject the plea of waiver raised on behalf of the State Government. Penalty as such is not a source of revenue, is aptly dealt with by this Court in Gaurav Steels Ltd. (supra). The Court made following observations in this behalf: "After all, the penalty is not tax and huge collections in the form of penalties cannot be allowed to be made attractive source of revenue or a target fulfilling method and the departmental authorities cannot be made to go out of the way to impose and collect illegally imposed penalties leaving the traders and transporters to sort out their grievances in the departmental remedies or even the remedies before this Court and even up to the apex Court, the very foundation of which from the side of Revenue was never so legally sustainable. The indirect loss of trade volume by such an atmosphere of Penalty Raj or Inspector Raj cannot be lost sight of and imposition of penalties on such technical or venial breaches if at all they can be said to be even that, cannot be allowed in a welfare State governed by the rule of law." The outcome of the above discussion is that this question deserves an....