AI Drafter 
TaxTMI 
TaxTMI 
2018 (12) TMI 1542
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....pellate Tribunal under the PVAT Act by which, the Tribunal granted partial relief to the assessee in reducing the penalty imposed. 3.In the tax case revisions filed by the dealers, the challenge is to the manner in which the assessment proceedings were done by the Assessing Officer; how the first appellate authority failed to perform the statutory duties enshrined upon him; and how the Tribunal failed to interfere with the orders passed by the lower authorities and virtually obliterated the powers conferred on it under the provisions of the PVAT Act. The substantial challenge in the tax case revisions filed by the State is on the reduction of the penalty imposed. 4.It is not in dispute that the tax has already been paid. Though there is a faint plea raised by the assessee with regard to the levy of tax, essentially the challenge is to the levy of penalty. However, in this order, we will consider the correctness of the orders passed by the Assessing Officer, the first appellate authority and the Appellate Tribunal in its entirety. 5.In the tax case revisions filed by the dealer, the following substantial questions of law have been raised. T.C.(R) Nos.29, 31, 68,....
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....uted turnover were paid during the assessment proceedings. (ii) Whether in the facts and circumstances of the case the Hon'ble Appellate Tribunal erred in confirming the levy of penalty under Section 13(3) of the Act that mere non disclosure does not automatically lead to levy of penalty. (iii) Whether in the facts and circumstances of the case the Appellate Tribunal failed to consider the conduct of the petitioner in complying with the payment of the tax on the disputed turnover before the completion of assessment. (iv) Whether in the facts and circumstances of the case mere non disclosure of the disputed turnover without any deliberate intention would attract the levy of penalty under Section 13(3) of the Act, more particularly when Section 13(3) of the Act is not mandatory. (v) Whether in the facts and circumstances of the case the Appellate Tribunal erred in not following the principles rendered by this Hon'ble High Court in WP Nos.4385 to 4392 of 2009 dated 20.12.2013 in similar circumstances. (vi) Whether in the facts and circumstances of the case there is a justification to levy penalty under Section 13(3) of the Act when ....
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....o note that the respondent in spite of service of pre assessment notice by the Presiding Officer for suppressed turnover did not file any objections but chose to remit the arrived tax liability thereby admitting his act of suppression of turnover and hence he cannot escape the penalty amount of Rs. 84,65,244/-. (iii) Whether the Learned Presiding officer failed to consider that the penalty amount was imposed upon the respondent herein as punishment for his act of suppression of turnover and to discourage the dishonest act of tax evasion. While so, reducing the penalty amount will result in encouragement of tax evasion and the Tax payers will indulge in similar act of evasion on the pretext that he can able to avoid penalty burden. (iv) Whether the Learned presiding officer failed to consider that once the respondent/assessee herein prefers to admit the assessment amount arrived based on suppressed turnover, he cannot escape the penalty which is a penal provisions incorporated to prevent the dishonest act of tax evasion. (v) Whether in the absence of any reliable documentary evidence the Learned presiding officer was right in reducing penalty amount as the....
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....ns but chose to remit the arrived tax liability thereby admitting his act of suppression of turnover and hence he cannot escape the penalty amount of Rs. 98,42,348.58. (iii) Whether the Learned Presiding officer failed to consider that the penalty amount was imposed upon the respondent herein as punishment for his act of suppression of turnover and to discourage the dishonest act of tax evasion. While so, reducing the penalty amount will result in encouragement of tax evasion and the Tax payers will indulge in similar act of evasion on the pretext that he can able to avoid penalty burden. (iv) Whether the Learned presiding officer failed to consider that once the respondent/assessee herein prefers to admit the assessment amount arrived based on suppressed turnover, he cannot escape the penalty which is a penal provisions incorporated to prevent the dishonest act of tax evasion. (v) Whether in the absence of any reliable documentary evidence the Learned presiding officer was right in reducing penalty amount as the reasoning that the respondent/assessee was suffering from financial crisis. (vi) Whether the Learned presiding officer failed to consid....
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....t of Rs. 1,01,87,278/-. (iii) Whether the Learned Presiding officer failed to consider that the penalty amount was imposed upon the respondent herein as punishment for his act of suppression of turnover and to discourage the dishonest act of tax evasion. While so, reducing the penalty amount will result in encouragement of tax evasion and the Tax payers will indulge in similar act of evasion on the pretext that he can able to avoid penalty burden. (iv) Whether the Learned presiding officer failed to consider that once the respondent/assessee herein prefers to admit the assessment amount arrived based on suppressed turnover, he cannot escape the penalty which is a penal provisions incorporated to prevent the dishonest act of tax evasion. (v) Whether in the absence of any reliable documentary evidence the Learned presiding officer was right in reducing penalty amount as the reasoning that the respondent/assessee was suffering from financial crisis. (vi) Whether the Learned presiding officer failed to consider that sympathy cannot supplant the assessee's culpable act of dishonest suppression of turnover." T.C.(R) No.160 of 2018:- ....
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....ndent herein as punishment for his act of suppression of turnover and to discourage the dishonest act of tax evasion. While so, reducing the penalty amount will result in encouragement of tax evasion and the Tax payers will indulge in similar act of evasion on the pretext that he can able to avoid penalty burden. (iv) Whether the Learned presiding officer failed to consider that once the respondent/assessee herein prefers to admit the assessment amount arrived based on suppressed turnover, he cannot escape the penalty which is a penal provisions incorporated to prevent the dishonest act of tax evasion. (v) Whether in the absence of any reliable documentary evidence the Learned presiding officer was right in reducing penalty amount as the reasoning that the respondent/assessee was suffering from financial crisis. (vi) Whether the Learned presiding officer failed to consider that sympathy cannot supplant the assessee's culpable act of dishonest suppression of turnover." T.C.(R) No.162 of 2018:- "(i) Whether the Appellate Tribunal erred in not considering in proper perspective the provisions of PVAT Act 2007 before reducing the percenta....
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....alty amount will result in encouragement of tax evasion and the Tax payers will indulge in similar act of evasion on the pretext that he can able to avoid penalty burden. (iv) Whether the Learned presiding officer failed to consider that once the respondent/assessee herein prefers to admit the assessment amount arrived based on suppressed turnover, he cannot escape the penalty which is a penal provisions incorporated to prevent the dishonest act of tax evasion. (v) Whether in the absence of any reliable documentary evidence the Learned presiding officer was right in reducing penalty amount as the reasoning that the respondent/assessee was suffering from financial crisis. (vi) Whether the Learned presiding officer failed to consider that sympathy cannot supplant the assessee's culpable act of dishonest suppression of turnover." T.C.(R) No.164 of 2018:- "(i) Whether the Appellate Tribunal erred in not considering in proper perspective the provisions of PVAT Act 2007 before reducing the percentage of penalty amount from 100% to 75%. (ii) Whether the Appellate Tribunal failed to note that the respondent in spite of service of pr....
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....o avoid penalty burden. (iv) Whether the Learned presiding officer failed to consider that once the respondent/assessee herein prefers to admit the assessment amount arrived based on suppressed turnover, he cannot escape the penalty which is a penal provisions incorporated to prevent the dishonest act of tax evasion. (v) Whether in the absence of any reliable documentary evidence the Learned presiding officer was right in reducing penalty amount as the reasoning that the respondent/assessee was suffering from financial crisis. (vi) Whether the Learned presiding officer failed to consider that sympathy cannot supplant the assessee's culpable act of dishonest suppression of turnover." T.C.(R) No.166 of 2018:- "(i) Whether the Appellate Tribunal erred in not considering in proper perspective the provisions of PVAT Act 2007 before reducing the percentage of penalty amount from 100% to 75%. (ii) Whether the Appellate Tribunal failed to note that the respondent in spite of service of pre assessment notice by the Presiding Officer for suppressed turnover did not file any objections but chose to remit the arrived tax liability there....
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....e supply details said to have been received from the Oil Corporation (HPCL Limited, Calicut) without verifying the assessee's account and their earlier notice dated 17.03.2008. 11.Further, it was stated that in the statement of supply details sent along with the pre-assessment notice, most of which do not relate to the dealer's business and therefore, they are objecting to the proposal. Referring to certain decisions of the Hon'ble Supreme Court, the dealer stated that opportunity to cross verify the third party in person, along with their accounts has to be given, and in their case, no such opportunity was given as required by law. Therefore, the dealer requested an opportunity before taking a final decision to cross verify the third party (Oil Corporation) in person, along with their accounts to establish the correctness and completeness of their transaction. The dealer reiterated that the returns and accounts submitted by them are correct and complete and it requires no enhancement as proposed in the pre-assessment notice. The Assessing Officer considered the objections and was not convinced with the same, rejected the objections and confirmed the proposal in the preasses....
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....ned counsel for the petitioner, submitted that the request made by the dealer for cross examination was not rejected by the Assessing Officer, but, he observed that such a claim is vague. However, that should not have been the approach of the Assessing Officer, especially in the light of Section 58 of the PGST Act, which gives powers to summon witnesses and produce documents and such power is exercisable not only by the Assessing Officer, but also by the appellate authority including the Appellate Tribunal. Thus, it is submitted that the Assessing Officer abdicated his powers conferred under the statute. The learned counsel referred to the grounds raised by the dealer before the first appellate authority which, we have noted in the preceding paragraph. 15.Further, it is submitted that the first appellate authority has miserably erred in not assigning any reason for its conclusion and the learned counsel referred to the findings recorded in paragraph 18 of the order of the first appellate authority. Further, it is submitted that the first appellate authority has committed a serious error in coming to a conclusion that penalty is automatic and there is no requirement to establish ....
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....er accepted to pay the tax but, nevertheless, the first appellate authority and the Tribunal ought to have considered as to whether the denial of cross examination of the officials of the Oil Corporation was proper and without embarking upon such an exercise, the authorities ought not to have rejected the case of the dealer. Further, it is submitted that none of the three authorities had assigned any reasons in their order and non-assigning of reasons renders the order as nullity. In support of such contention, the learned counsel relied on the decision of the Hon'ble Supreme Court in the case of The Commissioner of Income-tax, Bombay vs. Walchand and Co. (Pvt.) Ltd., Bombay, AIR 1967 Supreme Court 1435. On the above grounds, the learned counsel sought to set aside the orders passed by the Tribunal. 21.Mrs.N.Mala, learned Additional Government Pleader (Puducherry) appearing for the respondent in the revision cases filed by the dealer and for the petitioners in the revision cases filed by the State submitted that, while considering the power exercisable by a statutory authority, it is necessary to examine the source of power under the specific statute and this is more so i....
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....so, he cannot now question that the revision of assessment as being in violation of principles of natural justice. Further, no prejudice was caused to the dealer, since the documents were relatable to them and it is their duty to disprove that the assessment is wrong and they having failed to do the same, the authorities were right in rejecting the contentions of the dealer. Further, in the earlier round of litigation in W.P.Nos.4385 to 4392 of 2009, the dealer had straightaway approached this Court and the evidence could not be examined and in the instant case, the C-Forms were examined and found to be signed by the dealer in all pages. Furthermore, it is the presumption that the details furnished by the Oil Companies are correct, since they are Government of India enterprises and there is no reason for them to furnish false information. Therefore, it is for the dealer to establish his innocence and having failed to do so, it has been established that there is willful suppression warranting full penalty and therefore, the Tribunal was not justified in granting partial relief to the dealer and that too, it has not recorded the reasons as to why it has reduced the penalty imposed by....
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....oss verify the details furnished by the Oil Corporation (HPCL), cross examination of their officers, before the assessment proceedings could be completed. The dispute in the instant case revolves around the details furnished by the dealer in the Form C declarations and the details of the turnover furnished by the dealer in their returns. The Intelligence Wing of the Department came to know that there is large scale suppression of the taxable turnover by the dealer. This has led to the issuance of the preassessment notice. It is seen that along with the pre-assessment notice, the copies of the supply details, the copy of the C-Forms received from HPCL and the other related information were fully furnished to the dealer. Therefore, the dealer had to submit their objections as to why the proposal of the Department to revise the assessment is not proper. It is important to note that Form C declaration is issued in a statutory form as prescribed under Rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957. The statutory form has an original, a duplicate and a counterfoil, that is, a Triplicate document. 31.Be it noted that Form C declaration is a "form of decl....
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....rson, the first step he should have taken is to verify these details with his selling dealers, namely, HPCL, who has granted dealership to do such business. Instead of adopting such a modus operandi, the petitioner/dealer has proceeded at a tangent by blaming the State Corporation without any details by making vague allegations, which cannot be appreciated. Thus, the fundamental basis on which the dealer has built up his case has crumbled because of the above fact that the Form C declaration is a solemn form made by the petitioner/dealer and is estopped from contending otherwise. Therefore, the initial burden has been fully discharged by the Department and it is for the petitioner/dealer to disprove the allegation against them and prove their innocence. 33.As rightly pointed out by the learned Additional Government pleader, no iota of evidence has been produced by the dealer to dislodge his own declaration made in Form C. Thus, we are of the clear view the question of applying Section 101 of the Indian Evidence Act, 1872 would not arise. In fact, such argument was advanced before us by the learned counsel for the dealer drawing support from the order passed in W.P.Nos.4385 to 43....
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....ms were handed over to the HPCL, then the case of the petitioner would be hit by Section 106 of the Indian Evidence Act, which speaks of burden of proving an act especially within its knowledge. When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. Therefore, even on that score, the petitioner cannot wriggle out of their obligation. Thus, in our considered view, the decision in W.P.Nos.4385 to 4392 of 2009 does not lay down the correct legal position. It is not clear as to why the Department had not proceeded further in the matter, especially when they are contesting the present proceedings by filing tax case revisions to sustain the orders passed by the assessing authority. Thus, the first contention, regarding the requirement for cross examination, has to necessarily fail and accordingly, decided against the dealer. 36.So far as the decisions, which were relied on, more particularly, the decisions in A.N.S.Guptha and Sons (supra) and Vijayaraj Surana vs. Commissioner of Customs, Chennai-III, (supra) are concerned, the documents were either documents produced by the dealers such as sale bills etc., or documents secured f....
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....lso discussed as to why the burden of proof has always remained with the petitioner. We reiterate the same and hold that the burden of proof had remained with the dealer and it is not for the Department to establish anything in the matter, as it is a document generated by the dealer. 40.The final aspect would be whether penalty levied by the Assessing Officer requires interference or not. The arguments of the learned counsel for the petitioner is that mens rea is required and in this regard, placed strong reliance in Tvl. Nu-Tread Tyres (supra), which was a case arising under the provisions of the Central Sales Tax Act, 1956. 41.The Hon'ble Full Bench pointed out that the expression "falsely represents" clearly shows that the element of mens rea is necessary component of the offence and in the absence of mens rea, resort to penal provision would not be proper, unless it is established that the conduct of the dealer was contumacious or that there was deliberate violation of the statutory provisions or wilful disregard. The Hon'ble Full Bench had referred to the decision in the case of Vijaya Electricals vs. State of Tamil Nadu, (1991) 82 STC 268, wherein, the dealer, w....