2010 (9) TMI 971 - HC - VAT and Sales Tax

Whether the presumption under section 43(6) of the Act is a rebuttable presumption and the material, which was produced by the petitioners before the revisional authority to rebut the presumption has not been considered, therefore, the revisional order cannot be sustained? Held that -In the present case, the petitioners had filed the declarations, issued by them to the purchasing dealers in terms of the exemption notification before the assessing authority. They had also filed the affidavit about producing these declaration. Before the revisional authority, they had filed the certificates issued by the purchasing dealers stating that they had not claimed any set-off in respect of the purchase from the petitioners during the relevant period either at the time of filing return of commercial tax or during the assessment proceedings. It is not in dispute that this additional material could be submitted by the petitioners before the revisional authority.This material was produced by the petitioners in rebuttal of presumption about facilitation of evasion of tax, therefore, it was required to be considered while imposing or affirming the penalty under section 43(6) on the presumption of evasion of tax. the impugned order passed by the revisional authority is not sustainable in law and the same is accordingly, set aside and the matter is remitted back to the revisional authority to pass afresh reasoned order. Appeal allowed.

Summary

Issues:
Challenge against order imposing penalty under section 43(6) of the Madhya Pradesh Commercial Tax Act, 1994.

Analysis:
The writ petition challenged the order imposing penalty under section 43(6) of the Madhya Pradesh Commercial Tax Act, 1994, passed by the Additional Commissioner, Commercial Tax, Indore. The petitioner, a registered dealer, had purchased goods from an exempt unit and resold them to dealers under specific notifications. The assessing authority imposed a penalty for non-affixation of the seal on the invoice, as required under section 43(3) read with rule 66(2). The petitioners' revision was rejected, leading to the writ petition.

The key argument raised was that the presumption under section 43(6) is rebuttable, and the material presented by the petitioners to rebut the presumption was not considered by the revisional authority. The respondent contended that the impugned order was error-free. The court examined the provisions of section 43(3), 43(6), and rule 66(2) requiring a dealer to affix a rubber stamp on the invoice for exempted goods. It noted that failure to affix the seal raised a presumption of facilitating tax evasion.

Referring to legal precedents, including judgments from the Supreme Court and the Madhya Pradesh High Court, the court emphasized that the presumption under section 43(6) is rebuttable. The court highlighted the need for the dealer to have a reasonable opportunity to prove non-facilitation of tax evasion. The petitioners had submitted declarations and certificates to rebut the presumption, which the revisional authority failed to consider.

Consequently, the court set aside the impugned order and remitted the matter back to the revisional authority for a fresh reasoned decision. The revisional authority was directed to consider all material presented by the petitioners to rebut the presumption under section 43(6) and to take into account relevant legal judgments. The court did not address other grounds raised by the petitioners, leaving them the option to raise them at a later stage if necessary. The petition was disposed of without costs.