2019 (4) TMI 1249 - HC - VAT and Sales Tax

Whether the issue of Form C under the Central Sales Tax by the revisionist was under the bona fide belief or deliberately issued to evade tax? HELD THAT - The revisionist had made an application under Form A of the Central Sales Tax and in the Form, he had disclosed only two items namely, diesel generating sets and control panel. In the said Form, he had also enclosed the list of items for which he was likely to trade in and for which, he would be issuing Form C under the Central Sales Tax. However, the order dated 29.06.1991 passed by the Deputy Commissioner (Executive) Trade Tax, which has been passed after perusal of the record and also after calling for a report from the Assessing Authority, discloses the fact that the revisionist had in fact enclosed the list of items for which he was likely to trade in and for which he was thereby authorized to issue Form C. The revisionist under the mistaken belief submitted that the registration has been granted even for the items for which he had disclosed in the list, continued to issue Form C. It is clear that the revisionist had in fact submitted a list of items, which was contained in the Form A. The registration was granted only with respect of two items and not for all the items as mentioned in the list - The revisionist was never given an opportunity nor any proceedings undertaken with respect of two items contained in the list in pursuance to order dated 29.06.1991 and from the conjoined reading of the entire facts as mentioned above, it cannot be said that there was a deliberate intention on the part of the revisionist to evade tax. The finding of the Tribunal is that the revisionist did not act in a bona fide manner seems to be perverse as there is no material to show that there was intention to evade tax by the revisionist. There is no lack of bona fide on the part of the revisionist, who has voluntarily submitted the list of goods but the same was not duly considered by the respondents. Malafide/malice is a necessary ingredient for imposition of penalty. It cannot be concluded that there was mala-fide/malice which can be attributed to the revisionist for imposition of penalty - revision allowed.

Issues:
1. Whether the Trade Tax Tribunal's order upholding the penalty imposed by the First Appellate Authority is legally justified.
2. Whether the penalty imposed on the applicant is based on relevant material and legally justified.
3. Whether the applicant has been able to establish a case of bonafide belief and reasonable cause.
4. Whether there was any mens rea or willful intention to commit any default by the applicant.
5. Whether the Tribunal was justified in confirming the penalty despite the absence of mens rea or willful intention.
6. Whether the amount of penalty imposed is legally justified and based on material.

Analysis:

1. The revisions challenged the Trade Tax Tribunal's decision upholding the penalty imposed by the First Appellate Authority. The revisions raised questions regarding the registration granted to the applicant for specific goods, the justification for the penalty, and the applicant's intent.

2. The applicant had applied for Central Sales Tax Registration, mentioning specific goods in the application. The registration was granted for only two items, but the applicant continued trading under the belief that the registration covered all goods listed. The Deputy Commissioner's order highlighted the discrepancy but did not reject the list of goods, leading to confusion.

3. The Assessment Commissioner imposed a penalty on the applicant for issuing Form C without proper registration. The applicant argued that the issuance was done in good faith, believing the registration covered all listed goods. The court examined whether the applicant acted deliberately to evade tax or under a genuine belief.

4. The court found that the applicant had submitted a list of goods along with the application, but the registration was granted for only two items. The failure to reject the list or provide an opportunity for clarification indicated a lack of deliberate tax evasion on the applicant's part.

5. Citing legal precedents, the court emphasized the necessity of proving mala fide intention before imposing penalties in tax matters. The court analyzed the nature of false representation and the importance of intent in tax-related offenses.

6. Ultimately, the court concluded that there was no lack of bona fide on the applicant's part, as the list of goods was submitted in good faith but not duly considered by the authorities. The court found no evidence of malice or deliberate intent to evade tax, leading to the allowance of the revisions and setting aside of the Tribunal's order.

This detailed analysis of the judgment highlights the legal intricacies involved in the case, focusing on the applicant's intent, the validity of the penalty, and the importance of bona fide belief in tax matters.

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