2015 (3) TMI 958 - HC - VAT and Sales Tax

Imposition of penalty u/s 78(5) - Non production of books of accounts - Held that - Despite of ample opportunity having been granted by, the petitioner-assessing officer to the representative of the respondent-assessee, it did not produce the necessary bill books and books of accounts for satisfaction or verification of the petitioner-assessing officer and on the contrary, requested that the matter may be closed. The representative of the respondent-assessee admitted the mistake, requested for imposition of penalty then and there and requested for payment of even penalty amount and requested for release of the goods. On the face of it, when there was clear cut admission by the representative of the respondent-assessee, in my view, nothing more was required to be proved by the petitioner-assessing officer. Secondly, when ample opportunity was granted by the petitioner-assessing officer to satisfy him by production of books of accounts and supporting material and if such an opportunity was not availed of by the respondent-assessee, then the petitioner-assessing officer cannot be said to be faulted with. It was for the respondent-assessee to satisfy the petitioner-assessing officer about the discrepancy, if any. If the respondent-assessee objected, then possibly, in my view, the petitioner-assessing officer was duty-bound to get the things verified from the seller but in a case like this when the representative of the respondent-assessee accepts the mistake and requests for closing the case, then according to me, nothing remained to be proved by the petitioner-assessing officer. Even before the DC (A) only some photo copies have been produced and not even the supporting books, bills and other vouchers and even the DC (A) simply mentions by deleting the penalty that merely by not mentioning bill number on the bill, it does seem the intention of the respondent-assessee of evading the tax. In my view, nonmentioning of bill number on the bill is a major defect/discrepancy which cannot be simply brushed aside. If bill number is not there, then both, i.e., the purchaser as well as seller can manipulate the things the way they want. The DC (A) was not proper in deleting the penalty. I am also of the view that when on one hand, the imposition of penalty was agreed/admitted by the representative of the respondent-assessee, then how penalty could have been challenged even by the respondent-assessee. In my view, the Tax Board has also simply followed the order of the DC (A) without coming to a definite finding and has simply mentioned that there was no intention of evasion of tax, in my view, the Tax Board is also unjustified in arriving at a finding, that by not mentioning bill number on the bill, it does not prove evasion. The Tax Board is the final fact finding body and it ought to have come to a definite finding. Secondly, how the Tax Board agreed with the finding of the DC (A) that the photo copies of books produced by the respondent-assessee before the DC(A) were correct when before the petitioner-assessing officer, it was avoided to be produced. - petitioner-assessing officer was justified in imposing the penalty and the orders impugned passed by both the appellate authorities deserve to be reversed. - Decided in favour of Revenue.

Summary

Issues:
Assessment of penalty under section 78(5) of the Rajasthan Sales Tax Act based on discrepancies in bill presented during vehicle interception.

Analysis:
The High Court of Rajasthan heard a revision petition filed by the petitioner-assessing officer challenging the deletion of penalty imposed on the respondent-assessee under section 78(5) of the Rajasthan Sales Tax Act. The penalty was imposed after discrepancies were found in a bill presented during the interception of a vehicle loaded with goods. The bill lacked a bill number, leading the authorities to suspect it was forged. The respondent-assessee admitted the mistake but requested the case be closed after levying the penalty. The Deputy Commissioner (Appeals) (DC (A)) deleted the penalty based on photostat copies of bill books produced, stating there was no tax evasion as the goods were sold on C form. The Tax Board upheld this decision, prompting the revision petition.

The petitioner-assessing officer argued that the bill was clearly forged, as goods cannot be transmitted without a bill number. Despite granting ample time to produce books of accounts, the respondent-assessee's representative admitted the mistake and requested penalty imposition. The petitioner-assessing officer contended that the DC (A) erred in accepting alleged photocopies as evidence without proper verification. The respondent-assessee's counsel defended the decision, stating that the sale was tax paid and no evasion occurred. They cited previous judgments to support their case.

The High Court found in favor of the petitioner-assessing officer, noting that the respondent-assessee admitted the mistake and requested the penalty. The Court criticized the DC (A) for admitting photocopies without allowing rebuttal and faulted the Tax Board for blindly following the DC (A)'s decision. The Court emphasized the importance of bill numbers, stating that their absence could lead to manipulation. The Court concluded that the penalty was justified, and the orders deleting it were reversed. Consequently, the orders of the Tax Board and DC (A) were quashed, and the petitioner-assessing officer's original penalty order was upheld.