2016 (6) TMI 389 - HC - VAT and Sales Tax

Assessment of tax due @ 150% - Section 25(4) of the Act - Pea-gravel - Petitioner submitted that it remained under the impression that since Review Petition has been filed the assessment proceeding should be stayed and therefore he did not appear before the assessing officer - Held that - we are not at all in agreement with the submission of petitioner. When there was no stay order by any higher authority, it was the duty of the assessee to have appeared before the assessment officer. After the Division Bench delivered its Judgment, the petitioner knew that there was a judgment against him which he very candidly admitted in his communication. Therefore, he was duty bound to appear before the assessing officer with all his accounts. If he has not done so it is at his own peril and now he cannot Turn around and say that he should be granted another opportunity to place his accounts before the assessing officer. Therefore, the prayer of the petitioner is rejected and the assessment order in so far as the assessment of the tax is concerned is upheld. Demand of interest - Section 25(4) of the Act - Petitioner contended that plaintiff did not deposit the tax in view of the judgment delivered by the Court in the year 2006 and therefore, he should not be made liable to pay tax for this period - Held that - this is not a case where a person has not paid tax on the basis of some litigation or decision rendered in a case of other parties. It is the petitioner himself who approached this Court. Once a party approaches this Court and gets a stay order or gets an order in his favour the party must be aware that if the stay order is vacated or if the final judgment is set aside or modified all consequences will follow. Interest is statutorily payable and we, therefore, have no hesitation in holding that the petitioner is liable to pay interest on the amount of tax assessed by the assessing officer from the date when the amount fell due till payment of the assessed amount as per the rates fixed in the TVAT Act. Imposition of penalty - Section 31(5) of the Act - petitioner was not trying to evade the payment of tax - Held that - every citizen has right to approach this Court. The petitioner had approached this Court and a Single Judge had decided the matter in his favour in the year 15.06.2007 that pea-gravel is not exigible to tax. Therefore, there was no question of the petitioner filing any returns because once this judgment had been passed in favour of the petitioner the petitioner was justified in not submitting returns because no returns are required to be submitted in respect of an item which is not exigiible to tax. Furthermore, penalty under Section 31(5) can only be imposed if the Commissioner is satisfied that the dealer in order to evade or avoid payment of tax has not filed the returns within the prescribed period. As held by us above this is not a case of the dealer avoiding to file returns on this ground. Therefore, for the same reasons penalty under Section 25(4) can also not be imposed because the petitioner had sufficient cause not to file a return during that period. - Decided partly in favour of petitioner

Summary

Issues involved:
1. Taxability of pea-gravel under Tripura Sales Tax Act and Tripura Value Added Tax Act.
2. Assessment proceedings and appeal process.
3. Liability for tax, interest, and penalty.
4. Compliance with assessment orders and judicial decisions.

Analysis:

Issue 1: Taxability of pea-gravel under Tripura Sales Tax Act and Tripura Value Added Tax Act
The petitioner, a dealer in pea-gravel, initially claimed that pea-gravel was not taxable under the Tripura Sales Tax Act or the Tripura Value Added Tax Act. A Single Judge of the Gauhati High Court held that pea-gravel was taxable under the Sales Tax Act but not under the Value Added Tax Act. However, a Division Bench later ruled that pea-gravel was taxable under both acts. The petitioner's subsequent legal actions, including filing a Special Leave Petition, were unsuccessful. The High Court upheld the taxability of pea-gravel under both acts.

Issue 2: Assessment proceedings and appeal process
Following the Division Bench's judgment, the assessing officer initiated assessment proceedings for the petitioner's tax liability. Despite the petitioner's legal challenges and review petitions, the assessing officer proceeded with the assessment and imposed tax, interest, and penalties. The High Court emphasized that the absence of a stay order did not excuse the petitioner from participating in the assessment process, leading to the rejection of the petitioner's request for another opportunity to present accounts.

Issue 3: Liability for tax, interest, and penalty
Regarding interest, the High Court held that the petitioner was liable to pay interest on the assessed tax amount as per statutory rates, emphasizing that approaching the court did not absolve the petitioner from interest obligations. The court also addressed the issue of penalties, ruling that since the petitioner acted in good faith based on the initial judgment in his favor, penalties under the tax acts were not justified. Consequently, the High Court upheld the tax and interest assessment but set aside the penalties imposed by the assessing officer.

Issue 4: Compliance with assessment orders and judicial decisions
The High Court directed the petitioner to comply with the revised tax and interest assessments, allowing for installment payments and specifying the due dates and conditions for payment. The court granted the petitioner the opportunity to provide proof of payments and set clear guidelines for payment schedules and consequences of non-compliance. The High Court emphasized the importance of meeting tax obligations promptly and outlined the consequences of default in payment.

In conclusion, the High Court partially allowed the writ petition, upholding tax and interest assessments while setting aside penalties. The court provided a structured payment plan for the petitioner to settle the assessed amounts and emphasized the importance of timely compliance with tax obligations to avoid further legal consequences.