2011 (6) TMI 712 - HC - VAT and Sales Tax

Orders of the VAT Appellate Tribunal confirming penalty levied under section 67 of the Kerala Value Added Tax Act, 2003 for evasion of tax during the year 2005-06 challenged Held that - We do not propose to consider the transactions covered by all slips, which were taken as unaccounted sales because the Tribunal has considered entries in large number of slips and found no substance in the petitioner s challenge against the same. Consequently, we do not find any justification to interfere with the order of the Tribunal sustaining penalty. In view of the contest made by the petitioner in assessment, we do not think there is any scope for reduction of penalty which could have been considered, if the petitioner offered suppressed turnover for assessment and remitted the tax without contest. Consequently, there is no scope for reduction of penalty. Revision dismissed.

Summary

Issues:
Challenge to penalty under section 67 of the Kerala Value Added Tax Act, 2003 for tax evasion during 2005-06.

Analysis:
The petitioner, a dealer in gold ornaments, challenged the penalty levied under section 67 of the Kerala Value Added Tax Act, 2003 for tax evasion during 2005-06. The Tribunal confirmed the penalty, citing common tax evasion practices in the gold business. The Department conducted a sample purchase from the petitioner's shop, revealing significant unaccounted sales through slips. The Tribunal upheld the penalty, emphasizing the burden of proof on the dealer to explain entries in seized slips. The Tribunal's decision was supported by legal precedents, holding the petitioner responsible for proving the nature of entries in the slips. The Department's sample purchase established the pattern of unaccounted sales through slips, shifting the burden of proof to the petitioner. The Tribunal's decision on burden of proof was deemed justified, and the petitioner's contention was rejected.

The estimation of turnover from unaccounted sales was challenged by the petitioner, with specific objections raised but rejected by the Tribunal. The petitioner's explanation regarding a particular transaction was refuted based on discrepancies in their audited accounts. The Tribunal meticulously considered the objections raised by the petitioner but found no merit in them. The Tribunal's decision on estimating unaccounted sales turnover was upheld, with no grounds for interference identified. The petitioner's challenge against the addition of a specific amount as unaccounted sales was dismissed based on evidence from their own financial records.

The petitioner also contested the quantum of penalty imposed, which was double the evaded tax amount. The petitioner did not concede suppressed turnover in their returns, leading to the maximum penalty imposition. The court highlighted that reduction of penalty could have been considered if the petitioner had offered suppressed turnover for assessment and paid the tax without contest. Since the petitioner contested the assessment, there was no basis for reducing the penalty. Consequently, the court dismissed the revision case, upholding the Tribunal's decision on penalty imposition.