2020 (2) TMI 361 - HC - VAT and Sales Tax

Maintainability of petition - alternative remedy of appeal - requirement of pre-deposit - HELD THAT - In the instant case, if the petitioner were to avail the remedy of appeal under the statute, it would have to make mandatory pre-deposit of 12.5% before the appellate Deputy Commissioner; and in the context of the claim of the petitioner that the addition of two zeros in the figures relating to transit sales in the CST return is a bonafide mistake, the situation does not warrant the petitioner having to comply with the said condition of pre-deposit. Therefore, we are inclined to entertain this Writ Petition under Article 226 of the Constitution of India. Error in the return - rectification of mistake - it is contended that VAT returns are not taken into consideration for finalization of the CST returns and that CST assessment under sub-Rule 5-A of 14 A of CST (Telangana) Rules - HELD THAT - From the above sub-rule it is clear that if a dealer who had filed a return discovers any error in the returns, he is entitled to file revised returns before an original assessment is made - The Supreme Court in PRICE WATERHOUSE COOPERS (P.) LTD. VERSUS COMMISSIONER OF INCOME-TAX, KOLKATA - I 2012 (9) TMI 775 - SUPREME COURT dealt with a similar situating akin to the present one, where a tax audit report filed along with the returns contained a computation error in its returns of income tax and the Supreme Court observed that human errors some time occur and merely because an Assessee has not been careful, it does not mean that Assessee is guilty of furnishing inaccurate particulars or attempting to conceal its income. Since the error committed by the petitioner became known to the petitioner at the time when the show cause notice dt.28.01.2019 was issued to him by the 1st respondent, and by that date there was no assessment on the original return filed by the petitioner, it was incumbent on the part of the 1st respondent to consider the reply filed by the petitioner to the show cause notice on 20.03.2019 and the supporting material, and treat it as a revised return, since admittedly there is no proforma prescribed for filing of a revised CST return in the Act or the Rules framed there under. The petitioner are permitted to file a revised CST return in Form CST-6 or through a representation, which shall be treated as revised return, within a period of four (04) weeks from today along with supporting documents - petition allowed.

Summary

Issues involved:
Challenge to Final Assessment Order under Central Sales Tax Act, 1956 for Tax Period 2014-15 based on transit sales figures; Allegation of mistake in recording turnover figures in CST returns; Petitioner's contention of bona fide mistake and submission of correct figures in VAT-200 returns; Show-cause notice proposing a substantial sum based on incorrect figures; Rejection of petitioner's plea by the assessing authority; Petitioner's appeal through a Writ Petition under Article 226 of the Constitution of India; Consideration of alternative remedy under Section 31 of the Act; Interpretation of CST (Telangana) Rules regarding assessment based on returns filed by the dealer; Comparison with a Supreme Court judgment highlighting human errors in tax filings; Petitioner's request for treating reply to show-cause notice as a revised return; Court's decision to set aside the impugned assessment order and allow filing of a revised CST return.

Analysis:
The Writ Petition challenges the Final Assessment Order under the Central Sales Tax Act, 1956 for the Tax Period 2014-15, focusing on transit sales figures reported by the petitioner. The petitioner, engaged in works contracts, alleged a mistake in recording turnover figures in CST returns, specifically adding two extra zeros to the transit sales amount for April 2014. Despite the petitioner's claim of a bona fide mistake and providing correct figures in VAT-200 returns, a show-cause notice proposed a substantial sum based on the incorrect figures. The assessing authority rejected the petitioner's plea, leading to the Writ Petition under Article 226 of the Constitution of India.

Regarding the alternative remedy under Section 31 of the Act, the assessing authority argued for an appeal to the Appellate Deputy Commissioner, contending that the jurisdiction under Article 226 could not be invoked. However, the Court found that in this situation, where a genuine mistake was made, the condition of mandatory pre-deposit for appeal did not apply. This led the Court to entertain the Writ Petition under Article 226.

Interpreting the CST (Telangana) Rules, the Court noted that while the rules provide for assessment based on returns filed by the dealer, in cases of bona fide mistakes like the present one, it would be unjust to enforce consequences solely based on such errors. The Court referenced a Supreme Court judgment emphasizing human errors in tax filings, highlighting that inadvertent mistakes do not necessarily indicate an intent to conceal income or provide inaccurate particulars.

Considering the petitioner's request to treat the reply to the show-cause notice as a revised return, the Court decided to set aside the impugned assessment order. The Court permitted the petitioner to file a revised CST return within four weeks, which would be treated as a revised return. The fresh assessment order would be issued without reference to the earlier assessment, allowing the petitioner to raise additional grounds in the revised return. This decision aimed to rectify the injustice caused by the incorrect assessment based on the mistaken figures initially reported.