2011 (3) TMI 1547 - HC - VAT and Sales Tax

Whether the sale of hydraulic excavator by the petitioner-assessee, a registered dealer of stones, was taxable in the hands of the petitioner-assessee? Held that - The three authorities below have also concurrently held that sale of hydraulic excavator by the assessee for ₹ 23 lacs was not disclosed by the assessee in the returns of turnover filed by it for the assessment year in question. Had it been disclosed as a sale and claimed to be exempted from sales tax liability, being a sale of capital asset, not falling within regular course of business, it could have been a different matter, but now before this court in the revisional jurisdiction for the first time this question cannot be permitted to be raised. The findings of fact returned by the assessing authority below in this regard as far as imposition of tax on the sale hydraulic excavator is concerned, are not required to be disturbed in revisional jurisdiction and to that extent the orders passed by the lower authorities deserve to be upheld. For imposition of penalty in these circumstances at the rate double the amount of tax imposed by the assessing authority was not justified. Revision petition is partly allowed and as far as penalty under section 16(1)(i) of the Act is concerned, the same is set aside, however, the levy of tax and interest on the petitioner-assessee in these circumstances, is upheld

Summary

Issues:
1. Taxability of the sale of hydraulic excavator by the petitioner-assessee.
2. Imposition of penalty under section 16(1)(i) of the Rajasthan Sales Tax Act, 1994.

Issue 1: Taxability of the sale of hydraulic excavator by the petitioner-assessee:

The revision petition was filed against the Tax Board's order upholding the imposition of tax, interest, and penalty on the petitioner-assessee for the sale of a hydraulic excavator, a registered dealer of stones, for the assessment year 1991-92. The petitioner argued that the excavator was a capital asset and not taxable since the transaction was recorded in their books. However, the Revenue contended that the sale was taxable as it was not disclosed in the turnover returns and was discovered through Income-tax Department information. The court held that the findings of fact by the lower authorities were binding, and the sale was taxable. The court also noted that the sale was not disclosed in the turnover returns, which could have impacted the tax liability if claimed as exempt. Therefore, the court upheld the tax liability on the sale of the excavator.

Issue 2: Imposition of penalty under section 16(1)(i) of the Rajasthan Sales Tax Act, 1994:

Regarding the penalty imposed on the petitioner-assessee under section 16(1)(i) of the Act, the court found that the transaction of the sale was recorded in the books of accounts, contrary to the penalty provision for deliberate concealment. Citing a previous case, the court emphasized that penalties cannot be imposed without establishing deliberate concealment to evade tax. The court concluded that the penalty imposed was not justified in this case and set it aside. However, the court upheld the tax and interest levied on the petitioner-assessee. Therefore, the revision petition was partly allowed, setting aside the penalty but upholding the tax and interest imposition.

In conclusion, the court upheld the tax liability on the sale of the hydraulic excavator by the petitioner-assessee but set aside the penalty imposed under section 16(1)(i) of the Act, noting that the transaction was recorded in the books of accounts. The judgment provides clarity on the taxability of transactions and the criteria for imposing penalties under the Rajasthan Sales Tax Act, 1994.