TaxTMI 
TaxTMI 
2024 (3) TMI 791
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....instant revision would be as follows: "(I) Whether the men-rea on the part of the assessee is an essential pre-requisite condition for imposition of penalty under Section 54(1)(2) of the U.P. VAT Act, 2008? (II) 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? (IV) 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?" 5. Shri Mudit Agarwal, learned counsel for the revisionist states that although a counter affidavit has been filed in the revision but he does not intend to file any reply thereto and wants to argue the matter finally. 6. As such the Court proceeds to hear and decide the matter finally. 7. The instant revision has been filed challenging the judgement and order dated 06.04.2021 passed by the learned Commercial Tax Tribunal, Bench-2, Lucknow (hereinafter referred to as learned Tribunal) in Second Appeal No. 50 of 2017. 8. The case set forth by learned counsel for the revisionist is....
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....rieved the revisionist filed a second appeal before the learned Tribunal which has also been dismissed vide the judgement and order dated 06.04.2021 as annexed to the revision. Being aggrieved the instant revision has been filed. 11. The argument of learned counsel for the revisionist is that a perusal of serial no. 2 of the table, as provided in Section 54(1) of the Act, 2008, would indicate that in order to attract the penalty, a finding has to be specifically recorded that the dealer has concealed the particulars of his turnover or has deliberately furnished inaccurate particulars of such turnover or has submitted a false tax return or has evaded payment of tax which he is liable to pay under the Act and only after such a finding has been recorded by the competent authority can the penalty be imposed. 12. The contention is that a perusal of the order impugned would indicate that no finding of the revisionist having deliberately concealed the particulars of his turnover or having deliberately furnished inaccurate particulars or having deliberately evaded payment of tax has been indicated and consequently the competent authority patently erred in imposing the penalty which aspec....
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....s 2,45,250/- has attained finality and the revisionist has also deposited the tax as such the said payment of tax by revisionist would fall within the ambit of being an evasion of payment of tax which the revisionist has been held liable to pay under the provisions of the Act, 2008 and consequently the penalty can validly be imposed on the revisionist which in fact has been been done by means of the order impugned dated 06.04.2021. 20. Shri Sarin however fairly submits that as the amount of tax has been reduced from one stage to another and finally stood at Rs 2,46,250/- consequently three times the aforesaid amount can validly be imposed on the revisionist but in the instant case a still higher amount has been imposed. 21. So far as the judgements of this Court in the case of M/s Moti Lal Jawahar Lal (supra), S/s Shanti Swarup Raj Kumar Katra Naj (supra), Sanjiv Fabrics (supra) and S.S. Flabours (supra) are concerned more particularly the division bench judgement of this Court in the case of S.S. Flabours (supra) the argument of Shri Sarin is that the division bench, although has held that the provisions of Section 15A of the Act, 1948 are pari-materia to provisions of Section 5....
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....ealer, in this case the revisionist, has concealed particulars of turnover or has deliberately furnished inaccurate particulars of such turnover or has submitted a false tax return or has avoided payment of tax which he is liable to pay under the Act and only when a specific finding to the said effect has been recorded by the competent authority can the penalty be imposed. 26. The argument of learned counsel for the revisionist is that there has to be a specific finding of mens-rea by the authorities concerned of a deliberate attempt to evade tax and only after such a finding has been recorded can a penalty be imposed and in the absence of such finding the penalty as imposed on the revisionist vide the order impugned dated 08.05.2013 cannot be said to be legal and valid in the eyes of law. 27. In order to consider the arguments of learned counsel for the revisionist as to whether mens-rea would be an essential ingredient in the levy of penalty under Section 54(1)(2) of the Act, 2008 the Court may refer to the provisions of Section 54 of the Act, 2008. 28. For the sake of convenience, the relevant extract of Section 54 of the Act 2008 is reproduced as under: 54. Penalties in ce....
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....concealed particulars of his turnover or has deliberately furnished inaccurate particulars of such turnover or submits a false tax return under the Act 2008 or evades the payment of tax which he is liable to pay under the Act, 2008 then three times of amount of tax concealed or avoided can be imposed as penalty. 31. So far as the present controversy is concerned, the wrong as has been attributed to the revisionist, is evasion of payment of tax which he is liable to pay under the Act, 2008. The evasion of payment of tax has been indicated to be on the basis of assessment order dated 30.10.2010 as passed under the provisions of Section 28(2) of the Act, 2008 further reduced by order dated 27.06.2012 and still reduced vide the judgement and order dated 22.06.2016 whereby learned Tribunal has assessed the tax liable to be paid at 2,46,250/-. 32. Here it would also be pertinent to refer to the provisions of Section 28 of the Act 2008 per which the initial assessment order dated 30.10.2010 had been passed. 33. For the sake of convenience, the provision of Section 28 of the Act, 2008 is reproduced below: "28. Assessment of tax after examination of Records.- (1) In following types o....
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....termine to the best of its judgment the turnover of sale or purchase or both, as the case may be, and assess the tax payable on such turnover and determine admissible amount of input tax credit and reverse input tax credit payable by the dealer. (3) Before making an assessment under sub-section (2), dealer shall - (i) be required to furnish annual return of turnover and tax referred to in sub-section (7) of section 24, if he has not already submitted such return; (ii) be given reasonable opportunity of being heard; and (iii) be served with a notice to show cause, where determination of turnover, input tax credit or reverse input tax credit, or assessment of tax, all or any one of them, as the case may be, are to be made to the best of the judgment of the assessing authority. (4) The show cause notice referred to in sub-section (3) shall contain all such reasons on which the assessing authority has formed its opinion about incorrectness of the turnover of sale or purchase or both, as the case may be, amount of tax, amount of input tax credit or amount of reverse input tax credit: (5) Order of assessment shall be in writing and copy of assessment order along with prescrib....
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....tion 28(2) of the Act 2008 indicates that the power of assessment of the amount of tax payable by the dealer on such turnover and for determining the amount of input tax credit admissible to the dealer has been given to the assessing authority and further where the assessing authority is of the opinion that turnover of sale or purchase or both disclosed by the dealer is not worthy of credence it may determine to the best of its judgement the turnover of sale or purchase or both and assess the tax payable on such turnover. Exercising the power, as vested in the assessing authority, the order dated 30.10.2010 had been passed which upon further scrutiny after challenge at various levels, has resulted in judgement and order dated 22.06.2016 whereby the second appeal of the revisionist has been partly allowed and on the basis of the tax liable to be paid by the revisionist, the penalty as provided under Section 54 (1) (2) of the Act, 2008 has been imposed. 36. The assessment order dated 30.10.2010 would indicate that the same has been passed considering the provisions of Section 28(2) of the Act, 2008 on the basis of best of its judgement meaning thereby that it is an assessment which ....
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.... as held by Hon'ble Supreme Court meaning thereby that the said order does not indicate the willful attempt to defeat or circumvent the tax law to reduce the tax liability. Once the sine qua non to imposition of penalty is evasion of payment of tax and for evasion there has to be a willful act consequently the Court will have to examine as to whether there has been willful act on the part of the revisionist in evasion of tax. 43. For this, the Court will also have to consider as to whether mens-rea would be an essential ingredient or element in order to attract the offences under Section 54(1)(2) of the Act, 2008. 44. In this regard, Hon'ble Supreme Court in the case of Sanjiv Fabrics (supra) has held as under: "24. Whether an offence can be said to have been committed without the necessary mens rea is a vexed question. However, the broad principle applied by the courts to answer the said question is that there is a presumption that mens rea is an essential ingredient in every offence but the presumption is liable to be displaced either by the words of the statute creating the offence or by the subject matter with which it deals and both must be considered. (See: Sherra....
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....essential element of an offence created under a taxing statute, regard must be had to the following factors: (i) the object and scheme of the statute; (ii) the language of the section and; (iii) the nature of penalty. 31. It is true that the object of Section 10(b) of the Act is to prevent any misuse of the registration certificate but the legislature has, in the said Section, used the expression "falsely represents" in contradistinction to "wrongly represents." Therefore, what we are required to construe is whether the words "falsely represents" would cover a mere incorrect representation or would embrace only such representations which are knowingly, wilfully and intentionally false. 32. According to the Black's Law Dictionary (6th Edition), the word "false" has two distinct and well-recognized meanings: (1) intentionally or knowingly or negligently untrue; (2) untrue by mistake or accident, or honestly after the exercise of reasonable care. A thing is called "false" when it is done, or made, with knowledge, actual or constructive, that it is untrue or illegal, or is said to be done falsely when the meaning is that the party is in fault for its error. 33. Likewi....