2020 (3) TMI 5 - HC - VAT and Sales Tax

Levy of penalty - suppression of turnover - whether in the facts and circumstances of the case the penalty for suppression of turnover can be sustained when the turnover was reflected in the books of account? HELD THAT - In the present case, inspite of the fact that the assessment was finalised under Section 15(3) of the Act, the turnover as shown in the returns was assessed. The appellant filed an appeal and the matter was remanded back even thereafter the suppressed turnover was never brought to the notice of the Assessing Officer, rather the returns filed were pressed upon. Section 38 of the Act envisages imposition of penalty where a return furnished is false or incorrect in any material particular. In the case in hand, the appellant had successfully suppressed the turnover not only in the returns but also in proceedings under Section 15(3) of the Act and the tax charged was illegally retained by the appellant. In such event, even if the transaction was disclosed in the books of account it will be of no benefit. Moreover, Section 38 of the Act is worded in a manner that it applies not only to maintaining false or incorrect account but also to filing incorrect or false returns, which the appellant did in the present case. The contention of the appellant that mischief was committed by authorised representative-Mr. Ram Tirath has rightly been rejected by the Tribunal by stating that no benefit could have been derived by Mr. Ram Tirath by suppressing the sales in question and filing false returns. The saving of tax, if any, was to the appellant. The sustaining of penalty by the Tribunal warrants no interference - Appeal dismissed.

Summary

Issues:
1. Whether the statutory notice issued in the name of another state makes the assessment illegal?
2. Whether the reassessment and consequential penal proceedings are barred by limitation?
3. Whether penalty proceedings without a statutory notice are legal?
4. Whether turnover amounts to suppressed turnover when records are seized by Central Excise Authorities?
5. Whether penalty can be imposed for suppressed turnover reflected in books but not in returns?

Analysis:
1. The appellant filed appeals under the Haryana Value Added Tax Act, challenging the assessment for the years 2004-05 and 2006-07. The main issue raised was the legality of the statutory notice issued in the name of another state, Gujarat. The High Court examined the facts and legal provisions. The Court concluded that the jurisdiction of the assessing authority is confined to the state's boundaries. The Court held that the notice issued in the name of Gujarat did not make the assessment illegal.

2. The Court addressed the issue of limitation regarding reassessment and penal proceedings. The appellant argued that the reassessment and penalty proceedings were barred by limitation. The Court analyzed the timeline of events and relevant provisions. It was observed that the reassessment notice was issued within the statutory time limit. Therefore, the Court held that the reassessment and penalty proceedings were not barred by limitation.

3. The legality of penalty proceedings without a statutory notice was another issue raised. The Court examined the procedural aspects and relevant provisions of the Act. It was held that penalty proceedings can be initiated even without a specific statutory notice if there is evidence of suppression of turnover. The Court found that in this case, the penalty proceedings were legally initiated.

4. The Court considered whether turnover amounts to suppressed turnover when records are seized by Central Excise Authorities. The appellant argued that turnover reflected in the books but not in the returns should not be considered suppressed turnover. The Court analyzed the facts and provisions of the Act. It was held that even if turnover is reflected in the books, failure to disclose it in returns can still constitute suppressed turnover subject to penal action.

5. The issue of imposing penalty for suppressed turnover reflected in books but not in returns was extensively discussed. The appellant contended that there was no malafide intention to conceal sales. However, the Court found that the appellant had suppressed turnover and retained tax charged from purchasers. The Court emphasized that filing incorrect or false returns attracts penalty under Section 38 of the Act. The Court rejected the appellant's arguments and upheld the penalty imposed. Various legal precedents were cited to support the Court's decision. Ultimately, the Court dismissed the appeals, affirming the imposition of penalty for suppressed turnover.