2023 (7) TMI 295 - HC - VAT and Sales Tax

Levy of penalty under Section 9 (2A) of the CST Act read with Section 37 (6) of HGST Act, 1973 - Evasion of tax - Inter-State Sales shown as branch transfers - HELD THAT - In the present case, a consignment of motor cycles destined to Ghaziabad and Secunderabad Depots were checked at STCB, Faridabad and a penalty was imposed under Section 9 (2A) of the CST Act read with Section 37 (6) of HGST Act, 1973. The verification regarding stock transfer to Ghaziabad and Secunderabad Depots from Faridabad was also made. The assessee admitted the certain branch transfer in the original return as inter state sales. The dealer filed revised returns for first and second quarter showing an enhanced turnover of interstate sales and paid additional tax - the lack of bona fides on the part of appellant s part as he did not file the revised returns under Section 25 (4) of the 1973 Act and waited till the filing of fourth return. The appellant had deliberately filed incorrect return and omitted to pay the amount of tax due and thus contravened Section 25 (2) and 3 of 1973 Act. The penalty has rightly been imposed by the Assessing Officer. The assesse filed his revised return when his vehicle was confiscated. The mens rea and deliberate attempt to conceal and suppress the taxable turnover by fabricating or maintaining false returns with a motive to evade the payment of tax due are the essential ingredient of Section 48 of HGST Act. No material was brought on record by the assessee to prove any deliberateness. The Assessing Officer had enough ground to impose penalty under Section 48 of the Act. No substantial question of law arises for consideration in the present appeal and the same stands dismissed.

Summary

Issues Involved:
1. Justification of penalty under Section 48 of the Haryana General Sales Tax Act, 1973.
2. Deliberateness in filing incorrect returns and suppression of turnover.
3. Applicability of precedents cited by the appellant.

Summary:

1. Justification of Penalty under Section 48 of HGST Act:
The appellant-Company, engaged in motorcycle manufacturing, filed returns showing inter-State sales as branch transfers to evade tax. The Checking Officer imposed a penalty under Section 9(2A) of the CST Act read with Section 37(6) of the HGST Act, which was later reduced. The Deputy Excise and Taxation Commissioner imposed further penalties for the first two quarters of 1990-91. The appellant's appeals were dismissed by the Tribunal, leading to the present appeal.

2. Deliberateness in Filing Incorrect Returns and Suppression of Turnover:
The appellant argued that the revised returns were filed voluntarily before the assessment was finalized and under protest, citing no suppression of turnover. However, the court found that the appellant had deliberately suppressed turnover during the first two quarters by showing inter-State sales as branch transfers, which was only corrected after detection at the Sales Tax Check Barrier. This deliberate act of filing incorrect returns and omission to pay the due tax justified the imposition of penalties.

3. Applicability of Precedents Cited by the Appellant:
The court reviewed the cited judgments but found them inapplicable to the appellant's case. In Lucky Radio House, the issue was about filing a revised return before assessment completion, which did not apply here. In M/s Jagat Tractors, the dealer rectified an incorrect return without suppression of sales, unlike the appellant's case. Khosla Mills and Hindustan Steel Ltd dealt with the necessity of proving mens rea for imposing penalties, which was established in the appellant's case. Anantharam Veerasinghaiah was about the source of unexplained expenditure, irrelevant to the current context.

Conclusion:
The court referenced Sant Lal Tek Chand vs. State of Haryana, which supported the imposition of penalties for deliberate suppression of turnover and filing incorrect returns. The appellant's actions showed a lack of bona fides and justified the penalties imposed by the Assessing Officer. The appeal was dismissed as no substantial question of law arose for consideration.