2014 (11) TMI 922 - HC - VAT and Sales Tax

Validity of coercive proceedings of Punishment - sales tax evasion - petitioner having already been mulcted with the penalty of thrice the tax amount sought to be evaded under section 17(5A) of the KGST Act - Held that - Admittedly, the liability under section 17(5A) has become final as per exhibit P11 order and it has been satisfied by the petitioner as well. This being the position, the said assessee is not liable to be punished for the same offence by referring to the general provision of section 45A, as to the failure to maintain proper accounts and non-response to the summons/ notice, which stands on a much lower pedestal. Even though sections 17(5A) and 45A are distinct and different, governing separate situations, the offence involved is measured in greater scales, imposing punishment in a mandatory manner, that too by three times of the tax effect in respect of the years 1998-99 and 1999-2000, while leaving the rest in respect of 2000-01 as the turnover did not touch the limit. It is relevant to note that, as observed by the Supreme Court in Maharashtra State Board of Secondary and Higher Secondary Education v. Paritosh Bhupeshkumar Sheth 1984 (7) TMI 355 - SUPREME COURT , when a special provision is there, the general provision has to be excluded, so as to give way to the former. In the instant case, section 17(5A) is the special provision and section 45A is the general provision, which in turn has to yield to the former. Above all, in fiscal statutes, interpretation has to be given, taking the choice of construction which is favourable to the assessee, as held by the apex court in Commissioner of Income-tax, West Bengal v. Vegetable Products Ltd. 1973 (1) TMI 1 - SUPREME Court It is declared that, when punishment under section 17(5A) is imposed, further punishment under section 45A in respect of the same offence/ingredients is not correct or proper. - Decided in favor of assessee.

Summary

Issues Involved:
1. Whether the imposition of penalty under section 45A of the KGST Act, in addition to the penalty under section 17(5A), constitutes "double jeopardy" and is unconstitutional.

Detailed Analysis:

1. Double Jeopardy and Constitutionality of Imposing Penalty under Sections 17(5A) and 45A:

The primary issue in this case is whether imposing a penalty under section 45A of the Kerala General Sales Tax Act (KGST Act) in addition to the penalty under section 17(5A) amounts to "double jeopardy" and is therefore unconstitutional.

The petitioner, a dealer in furniture, was assessed under section 17(4) of the KGST Act for the years 1998-99, 1999-2000, and 2000-01. However, an investigation revealed unreported sales to SIDCO, leading to reassessment and imposition of penalties under section 45A for the three years. The petitioner challenged these penalties, arguing that they constituted double jeopardy since penalties had already been imposed under section 17(5A) for the same offenses.

The court analyzed both sections 17(5A) and 45A. Section 17(5A) mandates a penalty of "thrice the amount of tax difference" upon reopening an assessment completed under section 17(4) if the tax paid is less than the tax due. This provision is specific and leaves no discretion to the assessing authority.

Section 45A, on the other hand, is a general provision that allows penalties for various offenses, such as failing to keep true accounts or submitting incorrect returns. This section requires the presence of "mens rea" and provides the authority with discretion regarding the imposition of penalties.

The court noted that section 17(5A) applies to dealers opting for simplified assessments under section 17(4), who later are found to have filed incorrect returns. This provision aims to deter such dealers from making false claims and ensures they face severe penalties without discretion. In contrast, section 45A covers a broader range of offenses and involves discretionary penalties.

The court concluded that penalties under sections 17(5A) and 45A serve different purposes and apply to different situations. Section 17(5A) deals specifically with the reassessment of simplified assessments, while section 45A addresses general offenses under the Act. Thus, the imposition of penalties under both sections does not constitute double jeopardy.

However, in this case, the petitioner had already been penalized under section 17(5A) for the same offenses, and the penalty under section 45A was deemed excessive. The court held that once a penalty is imposed under section 17(5A), further penalties under section 45A for the same offenses are not justified.

The court referenced previous judgments, including M.K. Pushparanjini, Chikku's Wood Crafts v. Sales Tax Officer and Surajmal Parsuram Todi v. Commissioner of Income-tax, to support its decision. It emphasized that special provisions (section 17(5A)) take precedence over general provisions (section 45A) and that fiscal statutes should be interpreted in favor of the assessee.

Conclusion:

The court declared that imposing penalties under section 45A in addition to penalties under section 17(5A) for the same offenses is incorrect and improper. The orders imposing penalties under section 45A were set aside, and the writ petition was allowed.