2015 (6) TMI 340 - HC - VAT and Sales Tax

Difference between tax due after final assessment and advance tax paid by the assessee - penalty u/s Section 12-B(4) - First Appellate Authority held that the difference of 15% and above should be between the actual tax paid and tax payable as per the return as the said difference is less than 15%; levy of penalty was not justified - Held that - If at the end of the year, it is found that the amount of tax paid in advance for the whole year in the aggregate was less than the tax payable for the whole year as finally assessed and the difference is more than 15%, then the discretion is conferred on the Assessing Authority to levy penalty in addition to the tax. - The actual advance tax paid and the tax payable on the final assessment is a fact to be taken into consideration and if the difference is more than 15%, then the penalty is leviable under sub-section (4) of Section 12B of the Act. The approach of the Appellate Authority was contrary to law, erroneous and prejudicial to the interest of the Revenue. Therefore, the Revisional Authority was duty bound to interfere with such erroneous order which was prejudicial to the interest of the Revenue and the order passed by the Revisional Authority is legal, valid and in accordance with law and does not call for interference of this court. - Decided against assessee.

Issues:
1. Imposition of penalty under Section 12-B(4) of the Karnataka Sales Tax Act, 1987 based on the variance between advance tax paid and tax payable for the whole year.
2. Interpretation of Section 12-B(4) regarding the criteria for levying penalty by the Assessing Authority.
3. Jurisdiction and decision-making authority of the Revisional Authority under Section 22-A(1) of the Act.

Analysis:
1. The case involved an appeal by the assessee against an order imposing penalty under Section 12-B(4) of the Karnataka Sales Tax Act, 1987. The Assessing Authority levied a penalty as the tax paid by the assessee was less than the tax payable after final assessment by more than 15%. The First Appellate Authority set aside the penalty, stating that the difference should be between the actual tax paid and tax payable as per the return. However, the Revisional Authority disagreed, emphasizing that the penalty is leviable if the advance tax paid is less than the tax payable after final assessment by more than 15%.

2. The Revisional Authority, under Section 22-A(1) of the Act, initiated suo-motu revisional proceedings and held that the Appellate Authority's understanding of the law was incorrect. The Revisional Authority clarified that the penalty under Section 12-B(4) is triggered when the advance tax paid is less than the tax payable after final assessment by over 15%. The Revisional Authority set aside the Appellate Authority's order, reinstating the penalty imposed by the Assessing Authority. The court affirmed the Revisional Authority's decision, stating that the Appellate Authority's approach was contrary to law and prejudicial to revenue interests.

3. The court examined the provisions of Section 12-B(4) of the Act, emphasizing that the penalty is applicable if the advance tax paid is less than the tax payable after final assessment by more than 15%. The court rejected the assessee's argument that only the difference between actual advance tax paid and tax payable on the filed return should be considered. The court upheld the Revisional Authority's decision, stating that it was legal, valid, and in accordance with the law. Consequently, the court dismissed the appeal, affirming the imposition of the penalty under Section 12-B(4) based on the variance between advance tax paid and tax payable for the whole year.

This detailed analysis covers the issues related to the imposition of penalty under Section 12-B(4) of the Karnataka Sales Tax Act, 1987, the interpretation of the relevant legal provisions, and the jurisdiction of the Revisional Authority in this case.

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