2024 (5) TMI 987 - HC - VAT and Sales Tax

Penalty u/s 7-A(2) of AP GST Act, 1957 - penalty levied on the ground of mere possession of the bills alleged to be false though the Petitioner did not produce the same before the assessing authority in support of claim or exemption as second sale - burden to prove - case of petitioner is that the petitioner did not claim exemption and that he did not produce the invoices etc., so as to attract Section 7-A(2) - HELD THAT - It is evident from a bare reading of Section 22(1), that the revision lies to this Court against the order of the Appellate Tribunal on the ground either that a question of law has not been decided or a question of law has been erroneously decided - In THE SALES TAX APPELLATE TRIBUNAL VERSUS ANDHRA CEMENTS LIMITED 2023 (2) TMI 1302 - ANDHRA PRADESH HIGH COURT , it was held that as per Section 22(1) of the AP GST Act, the Tax Revision Case lies to the High Court only on the question of law. Recently in the THE STATE OF A.P., REP. BY THE STATE REPRESENTATIVE VERSUS M/S. JAI SREE ENTERPRISES, VIJAYAWADA 2024 (5) TMI 720 - ANDHRA PRADESH HIGH COURT , this Court has held that the revision does not lie on a question of fact. It lies only if the question of law has either not been decided or has been erroneously decided. So there is no dispute on the proposition that under Section 22 of the AP GST Act, revision would not lie on a question of fact. In Eswara Oil Company 1983 (3) TMI 241 - ANDHRA PRADESH HIGH COURT , the STAT Tribunal therein found that the petitioner therein had not actually produced the bill said to have been falsely obtained nor did he file any declaration in Form E. In view thereof it was held that the penalty under Section 7-A(2) could not be imposed. The said case is of no help to petitioner as in the present case the petitioner produced false bills and claimed exemption on part of the turnover as second sale - In South India Agencies 1988 (6) TMI 301 - ANDHRA PRADESH HIGH COURT , it was held that action, under Section 7-A(2) of the Act, 1957 has to be taken by the Assessing Authority on detecting such issue or production . The sub-section itself specifies the starting point for the action there under. It was observed that there could be no question of taking proceedings for levying penalty for issuing or producing a false bill, voucher, etc., unless it is first found that such thing had happened. It was also observed that the Analogy of Section 14 has no application at all. Levy of penalties under Section 14 of the Act and levy of penalty under Section 7-A of the Act are distinct proceedings based on distinct grounds. The revision has no force. The STAT has neither failed to decide a question of law nor has decided the question of law before it erroneously. No case for interference is made out. The Tax Revision Case is dismissed.

Summary

Issues Involved:
1. Legality of the penalty imposed under Section 7-A(2) of the Andhra Pradesh General Sales Tax Act, 1957.
2. Whether the petitioner produced false bills and claimed exemptions as second sales.
3. Applicability of Section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957 regarding the revision jurisdiction of the High Court.

Detailed Analysis:

1. Legality of the penalty imposed under Section 7-A(2) of the Andhra Pradesh General Sales Tax Act, 1957:
The petitioner challenged the penalty for the Assessment Year 1995-96, arguing that the penalty under Section 7-A(2) cannot be levied for mere possession of false bills without production before the Assessing Authority. However, the court noted that Section 7-A(2) applies when a dealer issues or produces a false bill, voucher, declaration, certificate, or other document with a view to support any claim that a transaction is not liable to tax or is liable to be taxed at a reduced rate. The court found the submission contrary to the record, noting that the petitioner did not dispute the fact that he produced fraudulent bills to the department to evade legitimate tax due to the Government. Therefore, the court upheld the penalty, emphasizing that the detection of false bills by the Regional Vigilance and Enforcement Officer justified the proceedings under Section 7-A(2).

2. Whether the petitioner produced false bills and claimed exemptions as second sales:
The petitioner argued that he did not claim any exemption or produce false bills. However, the court found this submission contrary to the record. The penalty notice under Section 7-A(2) explicitly mentioned that the petitioner produced fraudulent bills to evade tax. Additionally, the assessment order and the penalty order both confirmed that the petitioner claimed exemption on the ground that the vendors were registered dealers, but departmental inquiries revealed that the sellers were not real and identifiable dealers. The court concluded that the petitioner did produce false bills and claimed exemptions as second sales, and thus, Section 7-A(2) was rightly attracted.

3. Applicability of Section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957 regarding the revision jurisdiction of the High Court:
The court emphasized that under Section 22(1) of the AP GST Act, a revision lies to the High Court only on the ground that the Appellate Tribunal has either decided erroneously or failed to decide any question of law. The court noted that the revision does not lie on a question of fact. In this case, the petitioner's arguments involved factual controversies, such as whether false bills were produced and whether exemptions were claimed. The court cited precedents, including Sales Tax Appellate Tribunal vs. Andhra Cements Limited and State of A.P. vs. M/s. Jai Sree Enterprises, to affirm that the revision jurisdiction is limited to questions of law. Consequently, the court found no merit in the revision petition as it did not involve any erroneous decision or failure to decide a question of law by the STAT.

Conclusion:
The court dismissed the Tax Revision Case, concluding that the STAT neither failed to decide a question of law nor decided it erroneously. The penalty under Section 7-A(2) was upheld, and no case for interference was made out. The court also noted that miscellaneous petitions, if any, pending shall also stand closed.