2015 (4) TMI 1125 - HC - VAT and Sales Tax

Levy of penalty - under-reporting of sales turnover - bonafide error - Held that - A reading of the order of the Tribunal reveals that, on facts, there is no dispute that there was no wilful non-disclosure, but the claim for deduction from the total turnover, viz., the component of sales tax collected, was negatived, as the assessee did not produce any material in support of their claim. Insofar as levy of penalty is concerned, the finding and the reasoning of the Tribunal affirming the order of the Appellate Assistant Commissioner that there was no willfulness attributable to the dealer and therefore penalty under Section 16(2) of the Act is not leviable, does not warrant any interference. - No penalty - Decided against the revenue.

Summary

Issues:
1. Disallowance of claim of deduction of sales tax collected by the dealer from the total turnover.
2. Levy of penalty under Section 16(2) of the Act.

Analysis:

Issue 1: Disallowance of claim of deduction of sales tax collected
The primary issue in this case revolved around the disallowance of the claim of deduction of sales tax collected by the dealer from the total turnover. The assessment order was passed based on the discrepancy observed during an inspection by Enforcement Wing Officials, where the sales consideration was shown as a consolidated sum without segregating the sales tax and surcharge collections separately. The Assessing Officer subsequently reopened the assessment and subjected the sales tax and surcharge collections to tax. The Appellate Assistant Commissioner upheld the assessment, which was further appealed to the Tribunal. The Tribunal confirmed the assessment, emphasizing that the dealer failed to produce essential documents such as sale invoices, price lists, and sales registers to verify the tax element in the bills. As a result, the claim for deduction was disallowed due to the lack of supporting material.

Issue 2: Levy of penalty under Section 16(2) of the Act
Regarding the levy of penalty under Section 16(2) of the Act, the Tribunal concurred with the Appellate Assistant Commissioner's view that there was no willful non-disclosure of turnover by the dealer. The Tribunal referred to relevant case laws and highlighted that penalties cannot be imposed if the turnover considered taxable by the department is available in the dealer's own books of accounts and was disclosed during assessment. The Tribunal emphasized that penalization under Section 16(2) requires a showing of willful non-disclosure, which was not present in this case. Additionally, the Tribunal noted that penalties imposed after the expiry of five years from the relevant assessment year are time-barred, citing specific legal provisions and case laws to support this conclusion. Therefore, the Tribunal set aside the penalty levied by the Assessing Officer, and the Appellate Assistant Commissioner's decision in this regard was upheld.

In conclusion, the High Court upheld the Tribunal's order, confirming the disallowance of the claim for deduction of sales tax collected and dismissing the levy of penalty under Section 16(2) of the Act. The Court found no grounds for interference in the Tribunal's decision, as there was no willful non-disclosure of turnover by the dealer, and the penalty imposition was deemed time-barred. Consequently, the Tax Case (Revision) was dismissed with no costs awarded.