2005 (2) TMI 780 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Justification of penalty under section 48 of the Haryana General Sales Tax Act, 1973.
2. Inference of deliberateness in filing the third quarterly return.
3. Confusion between 'withholding' and 'evasion of tax' and the correctness of upholding the penalty.

Issue-Wise Detailed Analysis:

1. Justification of Penalty under Section 48 of the Haryana General Sales Tax Act, 1973:
The petitioner, a registered dealer, failed to disclose the purchase of paddy valued at Rs. 9,20,554 and did not deposit the tax of Rs. 65,727 in the third quarterly return for the period ending December 31, 1975. The Assessing Authority observed that this was done to avoid tax payment and imposed a penalty of Rs. 1,31,455 under section 48. The Tribunal confirmed this penalty, rejecting the petitioner's argument that the assessment should be for the whole year and that the deficiency was rectified in the fourth quarter. The court held that the petitioner had contravened sections 25(2) and (3) and was liable for penalty under section 48, as the petitioner had deliberately filed an incorrect return and failed to pay the full tax amount.

2. Inference of Deliberateness in Filing the Third Quarterly Return:
The petitioner argued that the tax was withheld to manage a financial crisis and that the fourth quarter return should be treated as a revised return under section 25(4). However, the court noted that the petitioner did not file a revised return within the prescribed time and that the explanation provided was insufficient. The court emphasized that the existence of deliberateness or mens rea is not a prerequisite for imposing a penalty under section 48. The Tribunal and the Appellate Authority found that the petitioner had intentionally filed an incorrect return to avoid tax payment, and the court upheld this finding.

3. Confusion between 'Withholding' and 'Evasion of Tax':
The petitioner contended that the Tribunal confused 'withholding' with 'evasion of tax' and argued that since the turnover for the whole year was accepted, no penalty should be imposed. The court rejected this argument, stating that the petitioner had deliberately suppressed the purchase of paddy in the third quarter and did not pay the tax due. The court referred to previous judgments, including Vardhman Spinning & General Mills Limited v. State, which supported the imposition of penalties for incorrect quarterly returns even if the annual assessment was correct. The court concluded that the petitioner had acted in violation of section 25(2) and (3) and upheld the penalty under section 48.

Conclusion:
The court found that the petitioner had deliberately filed an incorrect return and suppressed the purchase of paddy to avoid tax payment. The explanations provided by the petitioner were deemed insufficient, and the court upheld the penalty imposed under section 48 of the Haryana General Sales Tax Act, 1973. The reference was answered in favor of the department and against the petitioner.