2018 (6) TMI 1241 - HC - VAT and Sales Tax

Revision of returns - KVAT Act, 2003 - The assessee s application for revision was kept without any action and hence the assessee was before this Court - Held that - The sole prohibition as available in the various Sections is only against revision of returns when the dealer has been proceeded against for a defalcation or offense. This is specifically to not enable a dealer who had by his contumacious conduct attempted evasion, to wriggle out of the consequences of penalty. When there is a penal proceeding initiated, permission of revision of return, incorporating such figures in the return, which would efface the offense thus absolving the dealer from the liability of penalty, is alone prohibited. The other provisions above referred, which permits revision of returns, are enabling provisions facilitating such revision on specified contingencies within a time limit. Merely based on the said enabling provision, there cannot be inferred an interdiction or prohibition from filing a revised return in circumstances where a mistake is detected after the period specified. The enabling provision mandates that on a revision of return being attempted to as provided therein, the Assessing Authority is obliged to accept it. At the risk of repetition, it has to be stated that there is no prohibition in attempting a revision of return after the time specified, if no penal proceeding is initiated. Appeal dismissed.

Summary

Issues Involved:
1. Revision of returns beyond the statutory period under the Kerala Value Added Tax Act, 2003 (KVAT Act).
2. Grounds for allowing or rejecting the revision of returns.
3. The impact of penal proceedings on the revision of returns.
4. The role and responsibilities of the Assessing Officer (AO) in facilitating or rejecting the revision of returns.
5. The implications of the Division Bench decision in O.T.Rev.No.22/2012 [State of Kerala v. M/s.M.M.Enterprises].

Issue-wise Detailed Analysis:

1. Revision of Returns Beyond the Statutory Period:
The primary issue in these Writ Appeals revolves around whether the assessees can revise their returns beyond the statutory period as prescribed under the KVAT Act. The statute allows for revision within a specific timeframe, typically two months from the last day of the return period. However, the assessees sought revisions beyond this period due to discrepancies detected in their audit reports or other genuine mistakes.

2. Grounds for Allowing or Rejecting the Revision of Returns:
In W.A.No.2636/2017, the assessee detected discrepancies in their returns through an audit report and sought revision, which was initially ignored by the AO. The learned Single Judge allowed the revision, emphasizing that the issuance of notice under Section 25(1) does not constitute penal action. Similarly, in W.A.No.2541/2017, the assessee failed to disclose the purchase of machinery in the return and sought revision later. The AO's inaction led to the learned Single Judge permitting the revision, stating that the potential claim for input tax credit should not prevent the revision if no penal action has been initiated.

3. The Impact of Penal Proceedings on the Revision of Returns:
The appeals highlight that the statutory provisions prohibit the revision of returns if penal proceedings have been initiated against the dealer. This is to prevent dealers who have attempted evasion from escaping penalties by revising their returns. For instance, in W.A.No.270/2018, the penalty proceedings and assessment were conducted independently without considering the discrepancies pointed out by the Data Mining Team. The learned Single Judge noted the lack of coordination between the officers and allowed the revision, as no penal proceedings were pending when the application for revision was made.

4. The Role and Responsibilities of the Assessing Officer (AO):
The judgment underscores the need for AOs to adopt a practical and pragmatic approach in dealing with requests for revision of returns. The learned Single Judge criticized the Department's officers for their rigid and oppressive mindset, urging them to become facilitators of finance and commerce. The AOs are expected to examine the bona fides of the claims for revision and decide accordingly, rather than strictly adhering to the statutory timeframe.

5. Implications of the Division Bench Decision in O.T.Rev.No.22/2012:
The Division Bench decision in O.T.Rev.No.22/2012 [State of Kerala v. M/s.M.M.Enterprises] was pivotal in these cases. The decision clarified that notice under Section 25 does not amount to penal action and that revision of returns is permissible if no penal proceedings are initiated. This precedent was relied upon by the learned Single Judge in allowing the revisions in the present appeals.

Conclusion:
The High Court dismissed the Writ Appeals, confirming the judgments of the learned Single Judge, which permitted the revision of returns beyond the statutory period in the absence of penal proceedings. The Court emphasized the need for a more facilitative approach by the Department's officers and directed the assessees to file revised returns within one month. The potential claim for input tax credit should not be a reason to deny the revision if it is a bona fide claim, provided the statutory timeframe for such claims has not elapsed.