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2017 (4) TMI 309 - HC - VAT and Sales TaxWhether in the facts and circumstances of the case the learned Tribunal is right in law and in facts in confirming the order passed by the Revisional Authority imposing penalty u/s 45(6) of the Act which has been imposed upon the Revisional Authority for the first time as the same was not imposed by the AO while passing the original order of assessment? Whether that while calculating / considering the difference of 25% between tax paid and tax payable, while imposing penalty u/s 45(6) of the whether any amount paid by the assessee/dealer is first to be applied towards tax payable as sought to be contended on behalf of the appellant assessee or the same is required to be first applied towards interest, thereafter for penalty and thereafter for tax as contended on behalf of the Revenue? Held that - on bare reading of subsection (5) and (6) of Section 45, it is integral part of the assessment and the levy of penalty on the difference of amount of tax paid and amount of tax payable as per the order of assessment or reassessment as the case may be shall be automatic. Therefore, when the penalty on the difference of amount tax paid and tax payable is more than 25% of the amount of tax so paid, there shall be automatic levy of penalty under Section 45(6) of the Act and therefore, no separate notice is required to show cause as to why penalty under subsection (6) of Section 45 may not be imposed. However, a notice may require to be issued while imposing penalty in other cases, more particularly, Section 45(1)(b) When the AO failed to impose the statutory penalty, it can be said that there was an omission on the part of the AO and therefore, the same was revisable by the Revisional Authority in exercise of powers u/s 67 of the Act. Even matter is required to be viewed from another angle. In the present case, even the First Appellate Authority who incidentally was also a Revisional Authority, in fact enhanced the amount of tax payable. The AO levied the purchase tax on lignite at 19.75% while passing the assessment order and the First Appellate Authority held that purchase tax was leviable at 25% and therefore, in fact enhanced demand of tax. Under the circumstances, in the present case even the original assessment order came to be modified by the First Appellate Authority and the tax liability came to be enhanced and therefore, it can be said that the original assessment order merged into order passed by the First Appellate Authority and therefore, also the penalty under Section 45(6) of the Act was leviable/imposable on the difference of tax paid at the time of filing of return and tax payable as determined by the Appellate Authority. Under the circumstances also, penalty imposed u/s 45(6) of the Act is not required to be interfered with. The learned Tribunal has not committed any error in confirming the order passed by the Revisional Authority in imposing the penalty u/s 45(6) of the Act on the difference of amount of tax paid with the return and the amount of tax held to be payable by the Appellate Authority. If the amount paid along with return is first applied towards the tax, the difference of tax shall be less than 25% and therefore, penalty u/s 45(6) of the Act was not imposable is concerned, the aforesaid cannot be accepted. Section 47(4a) and 47(4b) is very clear. That as per the aforesaid provision any amount paid/deposited by the assessee/dealer shall be first applied towards the interest, thereafter the penalty and thereafter, the balance amount, if any, shall be applied/adjusted towards tax liability. Under the circumstances, applying Section 47(4a) and section 47(4b) of the Act, the difference in the amount of tax paid with the return (after deducting the interest of ₹ 28,234/- as per the order passed by the Appellate Authority) and the tax payable would be more than 25% (para 15 of the impugned judgment and order) passed by the learned Tribunal). Under the circumstances, penalty u/s 45(6) is rightly imposed on the difference of tax paid and tax payable. Appeal dismissed - decided against appellant-assessee.
Issues Involved:
1. Jurisdiction of the Revising Authority for levying penalty under Section 45(6) of the GST Act. 2. Application of the Supreme Court's judgment in the case of M/s. Shree Balaji Rice Mill versus the Gujarat High Court's decision in M/s. Bhavnagar Chemical Works Ltd. 3. Interpretation of subsections 5 and 6 of Section 45 regarding the adjustment of the amount of interest against the tax paid. 4. Imposition of penalty in light of the absence of intention to evade tax. Detailed Analysis: Issue 1: Jurisdiction of the Revising Authority for Levying Penalty The appellant contended that the Revising Authority lacked jurisdiction to impose a penalty under Section 45(6) of the GST Act for the first time in revision. The court examined the provisions of Section 45 and Section 67 of the Gujarat Sales Tax Act, concluding that the penalty under Section 45(6) is a statutory penalty that is mandatory and automatic when the difference between the tax paid and the tax payable exceeds 25%. The court held that the Revising Authority has the jurisdiction to impose such a penalty, even if the Assessing Officer did not initially impose it. Issue 2: Application of Supreme Court's Judgment versus Gujarat High Court's Decision The appellant argued that the Tribunal erred in applying the Supreme Court's judgment in the case of Sree Balaji Rice Mill, Bellary, instead of following the Gujarat High Court's decision in Bhavnagar Chemical Works Ltd. The court noted that the penalty under Section 45(6) is integral to the assessment process and does not require a separate notice. The court distinguished the cases by explaining that the penalty under Section 45(1)(b) is independent and distinct from the assessment proceedings, whereas the penalty under Section 45(6) is directly connected to the assessment and is mandatory. Thus, the Tribunal correctly applied the Supreme Court's judgment. Issue 3: Interpretation of Subsections 5 and 6 of Section 45 The appellant contended that the Tribunal wrongly interpreted the provisions by adjusting the amount of interest against the tax paid before determining the 25% difference. The court referred to Sections 47(4A) and 47(4B) of the Act, which mandate that any amount paid by the dealer should first be applied towards interest, then penalty, and finally towards tax liability. The court upheld the Tribunal's interpretation, confirming that the difference between the tax paid and the tax payable was correctly calculated, and the penalty was rightly imposed. Issue 4: Imposition of Penalty in Light of Absence of Intention to Evade Tax The appellant argued that the penalty should not be imposed due to the absence of an intention to evade tax. The court reiterated that the penalty under Section 45(6) is a statutory penalty that is automatically levied when the difference between the tax paid and the tax payable exceeds 25%, regardless of the intention. The court found no merit in the appellant's argument and upheld the imposition of the penalty. Conclusion: The High Court dismissed the appeal, holding that: - The Revising Authority had jurisdiction to impose the penalty under Section 45(6). - The Tribunal correctly applied the Supreme Court's judgment in Sree Balaji Rice Mill. - The interpretation of subsections 5 and 6 of Section 45 by the Tribunal was correct. - The imposition of the penalty was justified, irrespective of the appellant's intention to evade tax. All questions were decided in favor of the revenue and against the assessee.
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