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2015 (4) TMI 425 - HC - VAT and Sales TaxImposition of penalty u/s 64 appeal and so also of a revision . If that were so the revisional power would become co-extensive with that of the trial Court or the subordinate Tribunal which is never the case. The classic statement in Dattonpant that revisional power under the Rent Control Act may not be as narrow as the revisional power Under Section 115 of the Code but at the same time it is not wide enough to make the High Court a second Court of first appeal commends to us and we approve the same. In view of legal position emerged out and upon examination of the materials available on record in conjunction with Section 87 of the RST Act learned Commissioner has over-stepped its jurisdiction in finding fault with the orders passed by the Assessing Authority for non-imposition of penalty. As a matter of fact there is nothing on record to show that the Assessing Authority has exercised its discretion arbitrarily or capriciously and therefore interference with the discretionary orders of the Assessing Authority by the learned Commissioner is per-se a decision based on mere ipse-dixit or change in the opinion. While upholding the said order the learned Tax Board has not at all cared to examine the nature of powers of the revisional authority under Section 87 of the RST Act rendering the said order too vulnerable. The folly which is apparently clear from the order passed by the learned Commissioner under Section 87 of the RST Act has been further perpetuated by the Assessing Authority after the remand order inasmuch as the Assessing Authority has also not cared to issue any notice to the assessee before imposing penalty under Section 64 of the RST Act. It is clearly apparent that after remand order all the assessment orders were passed by the Assessing Authority castigating the assessee for violation of declaration exposing it for the penalty envisaged therein without affording opportunity of being heard. Non-observance of principles of natural justice in the backdrop of facts and circumstances of the instant case has not been properly addressed by the first appellate authority as well as by the learned Tax Board and this vital issue has been dealt with in an absolutely casual and cavalier manner. Section 69 of the Act of 1994 also opens with non-obstante clause that no penalty under this Act shall be imposed unless a reasonable opportunity of being heard is afforded to the dealer or the person concerned. In this view of the matter even on the touchstone of RST Act observance of principles of natural justice is to be adhered to mandatorily before imposition of penalty against an erring assessee - use of the expression falsely represents is indicative of the fact that the offence under Section 10(b) of the Act comes into existence only where a dealer acts deliberately in defiance of law or is guilty of contumacious or dishonest conduct. Therefore in proceedings for levy of penalty under Section 10-A of the Act burden would be on the Revenue to prove the existence of circumstances constituting the said offence. Furthermore it is evident from the heading of Section 10-A of the Act that for breach of any provision of the Act constituting an offence under Section 10 of the Act ordinary remedy is prosecution which may entail a sentence of imprisonment and the penalty under Section 10-A of the Act is only in lieu of prosecution. In light of the language employed in the section and the nature of penalty contemplated therein we find it difficult to hold that all types of omissions or commissions in the use of Form C will be embraced in the expression false representation . In our opinion therefore a finding of mens rea is a condition precedent for levying penalty under Section 10(b) read with Section 10-A of the Act. The learned Tax Board while rejecting the contention of the assessee has simply referred to Rule 34 of the Rules of 1995 without discussing the point in issue threadbare. The rival parties have joined issue on this question and requisite material is also available to embark on this question. I have also made endeavor to examine this question de-novo on the touchstone of relevant provisions governing the said province. Insofar as Assessment Years 1997-98 and 1998-99 are concerned the Assessing Authority has passed the order on 11th August 2000 and revision under Section 87 is admittedly laid by the Assessing Authority to the learned Commissioner prior to expiry of five years. The revision petition is decided by the learned Commissioner on 10th of August 2005. Therefore in terms of sub-sec.(2) of Section 87 of the RST Act revisional power has been exercised by the learned Commissioner within five years. A plain reading of sub-sec.(2) of Section 87 makes it crystal clear that learned Commissioner can exercise revisional powers under sub-sec.(1) of Section 87 within a period of five years from the date order sought to be revived was passed. The order passed by the learned Commissioner speak volumes about the fact that the same was passed on 10th August 2005 and therefore I am not persuaded to hold that it has exercised powers of revision vis- -vis two assessment year after expiry of period of limitation. - Decided partly in favour of assessee.
Issues Involved:
1. Revisional powers of the Commissioner under Section 87 of the RST Act. 2. Issuance of penalty orders without notice to the dealer. 3. Imposition of penalty in the absence of notice under Section 64 of the RST Act. 4. Justification of penalty imposition against the dealer. 5. Interference with discretionary orders by invoking revisional powers. 6. Validity of penalty orders passed without adhering to principles of natural justice. 7. Imposition of penalty under Section 64 when the application was under Section 65. 8. Clubbing of assessments when some were barred by time. Detailed Analysis: 1. Revisional Powers of the Commissioner under Section 87 of the RST Act: The court examined the scope of revisional powers under Section 87 of the RST Act, emphasizing that such powers are not absolute and must be exercised only if the order is erroneous or prejudicial to the interest of the State revenue. The court found that the Assessing Authority had properly construed the Notification dated 13th June 1994 and had levied 50% tax accordingly. The Commissioner's interference, which led to the imposition of penalties, was deemed beyond the scope of his revisional powers as it was based on mere change of opinion. The court concluded that the Tax Board failed to appreciate the limited scope of revisional jurisdiction under Section 87. 2. Issuance of Penalty Orders without Notice to the Dealer: The court held that the Assessing Authority violated principles of natural justice by imposing penalties without issuing a notice or providing an opportunity of being heard to the petitioner. This action was deemed contrary to the mandatory provisions and fundamental principles of natural justice, rendering the penalty orders void and non-est. 3. Imposition of Penalty in the Absence of Notice under Section 64 of the RST Act: The court found that the Commissioner's order for imposing penalties under Section 64 was flawed as the original application by the Assessing Authority referred to Section 65. The switch from Section 65 to Section 64 without giving the petitioner a chance to defend itself was prejudicial and violated principles of natural justice. 4. Justification of Penalty Imposition against the Dealer: The court emphasized that penalties under taxing statutes are not automatic and require proof of contumacious conduct or deliberate violation. It was concluded that the petitioner's act of claiming 100% tax exemption was a bonafide mistake and not a deliberate attempt to evade tax. The court noted that the petitioner had disclosed all transactions in its books of accounts and had not misused the declaration forms. 5. Interference with Discretionary Orders by Invoking Revisional Powers: The court reiterated that the imposition of penalties is discretionary and not mandatory. The Assessing Authority had exercised its discretion not to impose penalties, and the Commissioner's interference with this discretion was unwarranted and based on a mere change of opinion. 6. Validity of Penalty Orders Passed without Adhering to Principles of Natural Justice: The court held that the penalty orders were invalid as they were passed without adhering to the principles of natural justice. The Assessing Authority's failure to issue a notice or provide an opportunity of hearing before imposing penalties was a significant procedural lapse. 7. Imposition of Penalty under Section 64 when the Application was under Section 65: The court found that the Commissioner's action of imposing penalties under Section 64, when the application was under Section 65, was improper. This switch without giving the petitioner a chance to defend itself was prejudicial and violated principles of natural justice. 8. Clubbing of Assessments when Some were Barred by Time: The court examined the issue of clubbing assessments and found that the revisional powers were exercised within the prescribed five-year period. However, the court noted that the Commissioner's order dated 10th August 2005 was conveyed to the petitioner after the expiry of the five-year period, rendering the clubbing of assessments questionable. Conclusion: The court allowed the revision petitions, set aside the impugned judgment and order of the Tax Board, and annulled the Commissioner's order dated 10th August 2005. Consequently, all consequential orders/proceedings were also set aside. The court emphasized adherence to principles of natural justice and the limited scope of revisional powers under Section 87 of the RST Act.
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