2019 (8) TMI 753 - HC - VAT and Sales Tax

Maintainability of petition - alternative remedy of appeal - violation of the principles of natural justice - unauthorised levy - false purchases and sales or not - HELD THAT - It is seen from the impugned order that the assessing officer came to the conclusion that the petitioner was guilty of producing false invoices without actual movement of goods. This finding was arrived at by the assessing officer on the basis of the facts (a) that both the sales and purchase invoices were of the same date and (b) that there was no actual movement of goods. This factual finding cannot be assailed before this court. The argument that no penalty would flow out of a false invoice cannot be accepted for the reason that the language employed in section 55(2) of the Act is very clear. Section 55(2) of the Act states that any VAT dealer who issues a false tax invoice or receives and uses a tax invoice knowing it to be false shall be liable to pay a penalty of 200 per cent. of tax shown on the false invoice. The expression used in section 55(2) of the Act is tax shown on the false invoice . Therefore it is not relatable to the actual turn over but the tax as shown in the false invoice - the contention that so long as the invoices are found to be false there can be no tax liability and consequently there can be no liability to pay penalty does not hold good. Imposition of penalty at 400% - contention is that the penalty has now been imposed at 400 per cent. which is more than what is prescribed by statute - HELD THAT - A reading of the provision shows that the penalty is relatable to every tax invoice. Unfortunately for the petitioner he has produced two sets of tax invoices one relating to purchase and another relating to sale. Therefore every tax invoice attracted a penalty of 200 per cent., which ultimately totalled to 400 per cent. Therefore the said contention is also liable to be rejected. Petition dismissed.

Summary

Issues:
Challenge to penalty under Andhra Pradesh Value Added Tax Act, 2005 based on violation of natural justice and unauthorized levy.

Analysis:
The petitioner challenged a penalty order under sections 53(1) and 55(2) of the Andhra Pradesh Value Added Tax Act, 2005 through a writ petition. The petitioner contended that there was a breach of natural justice principles and an unauthorized levy. The court noted that while the petitioner had the option to appeal, they opted for a writ petition citing violations of natural justice and unauthorized levy as grounds.

The court observed that the assessing officer did provide the petitioner with ample opportunity to present their case and address the proposal. Although the objections raised by the petitioner were briefly dealt with in the order, the court found that this did not constitute a violation of natural justice. The court highlighted that when objections are addressed briefly and a few are left out, it does not amount to a breach of natural justice, thus rejecting the argument for bypassing the alternative remedy.

Regarding the unauthorized levy contention, the court examined the finding of the assessing officer that the petitioner had issued false invoices without actual movement of goods. The court upheld this finding based on the same-date invoices for sales and purchases and the lack of physical movement of goods. The court emphasized that the penalty under section 55(2) is linked to the tax shown on false invoices, not the actual turnover, leading to the conclusion that a penalty can be imposed even if no tax liability arises from false invoices.

Furthermore, the court addressed the argument that the penalty exceeded the statutory limit by totaling 400 percent. The court clarified that since the petitioner had produced separate sets of tax invoices for purchases and sales, each set attracted a 200 percent penalty, resulting in a cumulative penalty of 400 percent. Consequently, the court dismissed the writ petition, noting that matters related to penalties under other sections of the Act were already remanded for independent consideration. Any pending miscellaneous petitions were also dismissed with no costs awarded.