2013 (3) TMI 255 - HC - VAT and Sales Tax

Penalty under Section 69(3) of the M.P. Commercial Tax Act, 1994 - whether nonpayment of less than 80% of the tax alongwith return amounts to filing of a false return so as to attract the levy of penalty - Held that - The petitioner was fully aware of its liability inasmuch as they knew the amount in terms of return, tax payable yet they have not deposited the tax. They deposited less than 80% of the due amount. This provision makes Section 69(3) of M.P.C.T.Act applicable in this case. The very fact that the petitioner knew as to what was its liability, non-payment of the said amount certainly amounted to negligence. The judgments cited by assessee does not come to rescue the petitioner. Here it was a case where the petitioner was fully aware of its liability yet decided not to deposit the tax which made it a defaulter within the definition of Section 69 of M.P.C.T.Act so as to call the return filed by him as false return. It is now well settled that the order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. To make the assessee liable for penalty fallacy should be in the disclosure of the facts required to be stated in the return. On perusal of the provisions of Section 69 and 26 of the M.P.C.T.Act it is clear that in Section 69, the liability for imposition of penalty arises on account of less payment of tax that also below 80%, when it was known fully well that it was their liability to pay full tax, whereas in the case of Section 26, the liability to pay penalty at the time of filing of the return and payment of tax, at that time of filing of the return, when tax is paid simultaneously. Both these situations are different and deals with the different situation. However, even otherwise fiscal statutes are to be construed strictly and on their plain reading reference can be made to a judgment of in the case of Catholic Syrian Bank Limited Vs.Commissioner of Income Tax, Thrissur(2012 (2) TMI 262 - SUPREME COURT OF INDIA) In these circumstances, while answering the issue framed above against the petitioner, no infirmity in the order of the revisional authority. However, in the facts and circumstances of the case, it is find appropriate to reduce the penalty from 5 times to 3 times. The petitioner would therefore be liable to pay penalty three times of the tax. If the tax un-paid and in case, he has already paid the penalty, as imposed by the assessing authority they would be entitled for refund of the balance.

Issues Involved:
1. Whether nonpayment of less than 80% of the tax along with the return amounts to filing a false return under Section 69(3) of the M.P. Commercial Tax Act, 1994.
2. The applicability of Section 26 versus Section 69(3) of the M.P. Commercial Tax Act, 1994.
3. The interpretation of "false return" and "concealment" under Section 69(3).
4. The relevance of mens rea (intention) in the imposition of penalties under Section 69(3).

Issue-wise Detailed Analysis:

1. Whether nonpayment of less than 80% of the tax along with the return amounts to filing a false return under Section 69(3) of the M.P. Commercial Tax Act, 1994:
The core issue in this writ petition revolves around whether the nonpayment of less than 80% of the tax along with the return constitutes filing a false return, thereby attracting the penalty under Section 69(3) of the MPCT Act. According to Section 69(3), if the total tax shown as payable and paid by a dealer is less than 80% of the total tax assessed, the dealer is deemed to have concealed their turnover or furnished false returns unless proven otherwise. The petitioner argued that mere non-payment should not attract the penalty, suggesting that Section 26 might be more appropriate for such situations. However, the respondents contended that Section 69(3) and Section 26 address different circumstances, with Section 69(3) specifically dealing with cases where less than 80% of the tax is paid.

2. The applicability of Section 26 versus Section 69(3) of the M.P. Commercial Tax Act, 1994:
The petitioner argued that Section 26, which deals with the filing of returns and payment of tax, should apply instead of Section 69(3). Section 26 requires dealers to pay the full amount of tax payable according to the return and furnish proof of such payment. The respondents, however, maintained that Section 69(3) applies when less than 80% of the tax is paid, while Section 26 applies to delayed payment of tax along with returns. The court found that both sections deal with different situations, with Section 69(3) addressing the specific issue of paying less than 80% of the tax due.

3. The interpretation of "false return" and "concealment" under Section 69(3):
The petitioner contended that they had filed the return correctly and calculated the tax accurately, arguing that non-payment did not amount to filing a false return. The court examined the provision of Section 69(3), which creates a rebuttable presumption of concealment or false return if less than 80% of the tax is paid. The petitioner attempted to rebut this presumption by arguing that their actions were not due to fraud or gross negligence. However, the court found that the petitioner was aware of their liability and still chose not to deposit the full tax, which constituted negligence.

4. The relevance of mens rea (intention) in the imposition of penalties under Section 69(3):
The petitioner argued that there was no mens rea or intention to avoid payment of tax, citing various judgments that emphasized the need for deliberate action or dishonest conduct for imposing penalties. The court reviewed these judgments but concluded that the specific provision of Section 69(3) creates a presumption of false return if less than 80% of the tax is paid, regardless of intention. The court found that the petitioner's knowledge of their liability and failure to pay the full tax amounted to negligence, making them liable for the penalty under Section 69(3).

Conclusion:
The court concluded that the petitioner's non-payment of less than 80% of the tax due constituted filing a false return under Section 69(3) of the MPCT Act. The court upheld the penalty imposed by the revisional authority but reduced it from five times to three times the tax due. The petitioner was directed to pay the reduced penalty, with any excess amount already paid to be refunded. The petition was disposed of with no order as to costs.

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