TaxTMI 
TaxTMI 
2016 (10) TMI 83
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.... reported in the returns and in the audited books of accounts, for the tax period 2013-14 and 2014- 15. The petitioner invoked the jurisdiction of this Court by way of W.P.No.1858 of 2016 which was dismissed by order dated25.01.2016 on the ground that the petitioner had the alternative remedy of preferring an appeal to the Appellate Deputy Commissioner. The petitioner approached the Appellate Authority who dismissed the appeal on 30.05.2016. Consequent thereto, the assessment order attained finality. Even before the appeal was dismissed by the appellate authority on 30.05.2016, the 1st respondent issued notice dated 28.12.2015 proposing to levy 100% penalty on the petitioner under Section 53(3) of the Act. The petitioner submitted their reply thereto. However, by order dated 26.03.2016, penalty of Rs. 24,85,358/- was imposed on them. Aggrieved thereby, the petitioner carried the matter in appeal and, by the order impugned in this writ petition, the appellate authority dismissed the appeal affirming the order of penalty passed by the assessing authority. In the show cause notice, proposing imposition of penalty under Section 53(3) of the Act, the 1st respondent stated that, ev....
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....the account books, and were reflected in their audited trading and P&L account; the used waybills record was also uploaded into the VATIS package; however this sales turnover was not reported in the monthly returns, and tax was not paid on such sales; all these factors were taken into account before arriving at the conclusion that the dealer had, intentionally, not reported the sales turnover in their monthly VAT 200 returns with a view to evade the legitimate tax due to the department; a demand was raised accordingly; and this clearly showed wilful neglect on the part of the dealer in not reporting the sales turnover in their monthly returns. After extracting Section 53 of the Act, in its entirety, the 1st respondent held that, from the aforesaid findings, it was established that the petitioner had intentionally under-declared tax to the department in order to escape the tax liability on the sales turnover; and hence the contention that penalty could not be imposed under Section 53(3) of the Act was not correct. In the order under challenge in this writ petition, the Appellate Deputy Commissioner observed that the audit officer had inspected the business premises of the petitio....
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....s able to establish the mala fide conduct of a dealer, in wilfully and deliberately under-declaring tax in the returns filed by them, can they levy penalty under Section 53(3) of the Act. Learned counsel would rely on Sree Krishna Electricals v. State of Tamil Nadu and Uniworth Textiles Limited v. Commissioner of Central Excise, Raipur in this regard. On the other hand Sri S.Suri Babu, learned Special Standing Counsel for Commercial Taxes, would draw our attention to the order of penalty, and the impugned order passed by the Appellate Deputy Commissioner, to submit that, as against the actual turnover of Rs. 3.47 crores for the year 2013-14, the petitioner had only declared a turnover of Rs. 6.9 lakhs; again for the year 2014-15, as against the actual turnover of Rs. 1.73 crores, the petitioner had declared a turnover of only Rs. 26.65 lakhs; the petitioner had utilised 54 VAT way bills for around Rs. 4.97 crores; it was only because an audit was conducted, and the books of accounts wereverified, did the undisclosed turnover come to light; the only contention put forth, in justification for such under-declaration, is that the petitioner did not receive the sale consideration; li....
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....nder Section 20(3)(a) of the Act, without prejudice to the powers of the authority prescribed under sub- section (3) of Section 21, every return shall be subject to scrutiny to verify the correctness of calculation, application of correct rate of tax and input tax credit claimed therein, and the full payment of tax payable for such tax period. Section 20(3)(b) of the Act stipulates that, if any mistake is detected as a result of the scrutiny made as specified in clause (a), the authority prescribed shall issue a notice of demand in the prescribed form for any short payment of tax or for recovery of any excess input tax credit claimed. Section 20(4) of the Act provides that every dealer shall be deemed to have been assessed to tax based on the return filed by him, if no assessment is made within a period of four years from the date of filing of the return. The requirement under Section 20 of the Act, with regards examination of a return, is only to subject such returns to scrutiny to verify the correctness of calculation, application of the correct rate of tax, the input tax credit claimed thereunder, and the full payment of tax payable for such tax period. The correctness of the....
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....under-declared tax. Section 53(2) of the Act stipulates that where any dealer, prior to the detection by any prescribed authority, voluntarily declares that the tax due for a tax period is under-declared, and he pays the tax due along with interest, no penalty shall be imposed provided that such declaration is made within the time limit and in the manner prescribed. Unlike Rule 23(6) of the Rules, which enables the dealer to file a revised return within six months, and the consequences of filing such a revised return is that the dealer is required to pay the under-declared tax with interest due on the late payment, Section 53(2) of the Act prohibits the Revenue from imposing any penalty as long as the dealer, prior to detection by the prescribed authority, voluntarily declares that the tax, due for a tax period, is under-declared and he pays the tax due along with interest. Section 53(3) of the Act stipulates that any dealer who has under-declared tax, and where it is established that fraud or wilful neglect has been committed, shall be liable to pay penalty equal to the tax under-declared, besides being liable for prosecution. The power to impose penalty either under Section....
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.... to light only on an audit of their books of accounts, and on verification of the turnover disclosed in the way bills utilised by them. It only after the petitioners accounts were audited, did it result in their being subjected to assessment proceedings, and levy of tax under the Act. As noted hereinabove, both the assessing and appellate authorities have, after giving elaborate reasons for their conclusion, held that petitioner had under-declared tax with wilful intent. Findings of fact reached by statutory authorities/tribunals, as a result of appreciation of evidence, cannot be reopened or questioned in writ proceedings. While an error of law, apparent on the face of the record, can be corrected by a writ, an error of fact, however grave it may appear to be, cannot. In regard to a finding of fact recorded by the Tribunal, a writ can be issued if it is shown that the Tribunal had erroneously refused to admit admissible and material evidence, or had erroneously admitted inadmissible evidence which has influenced the impugned finding. Similarly, if a finding of fact is based on no evidence, that would be regarded as an error of law which can be corrected in writ proceedings. It ....
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....ithin these limits that the jurisdiction conferred on the High Courts under Article 226 can be legitimately exercised. (Syed Yakoob 1964 (5) SCR 64 = AIR 1964 SC 447). It is not even the case of the petitioner that they suffered from any doubt that the turnover was liable to tax under the Act, as the only justification given in this regard is that they had not received the sale consideration. The liability to pay tax under the Act is on the transfer of title to the goods, and not when consideration for the sale is received. Even if no consideration is received, it would nonetheless be a sale as long as the title to the goods has been transferred by the seller to the buyer. No other defence has been put forth by the petitioner in justification of their having under-declared tax. In the facts of the present case, and in the light of the findings recorded by both the assessing authority and the appellate authority that there was a deliberate intention on the part of the petitioner to under-declare tax, we see no reason to take a different view. In Sree Krishna Electricals (2009) 11 SCC 687, on which reliance is placed on behalf of the petitioners, the Supreme Court observed: So far....
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....urns, and as the Act does not mandate that, in each and every case, an assessment order should be passed, accepting the contention that no penalty can be levied if the turnover is disclosed by the dealer in their books of accounts, would only encourage them not to disclose the turnover, recorded in their books, in the monthly returns for, even if the books of accounts were to be verified later, they would only have to pay the differential tax with interest thereon, and not be liable to penalty. Such a construction would also render Section 53(2) redundant, and obliterate the distinction between voluntary disclosure of turnover and the under-declared tax under Section 53(2), and under-declaration unearthed during the course of assessment justifying imposition of penalty either under Section 53(1) or under Section 53(3) of the Act. In Uniworth Textiles Limited (2013) 9 SCC 753, on which also reliance is placed on behalf of the petitioner, Section 28 of the Customs Act, and the proviso thereto, was under consideration. The proviso to Section 28(1) stipulated that it is only where duty has not been levied, by reason of collusion or wilful mis-statement or suppression by the person c....
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.... deliberate; intending the result which actually comes to pass; an act or omission is wilfully done, if done voluntarily and intentionally and with the specific intent to do something the law forbids, or with the specific intent to fail to do something the law requires to be done..; an inference of bonafide conduct in favour of the appellant was required to be drawn as he laboured under the very doubt which formed the basis of the issue before them, and had to be decided; the burden of proof, of proving malafide conduct under the proviso to Section 28, lay with the Revenue; in furtherance of the same, no specific averments found mention in the show cause notice which was a mandatory requirement for commencement of action under the said proviso; and nothing on record displayed a wilful default on the part of the appellant. As noted hereinabove both the assessing and appellate authorities have recorded a finding, on the basis of the material on record, that the petitioner wilfully intended to under-declare tax in the monthly returns filed by them. Reliance placed on behalf of the petitioner on Uniworth Textiles Limited (2013) 9 SCC 753 is therefore misplaced. The distinction betwe....