2018 (1) TMI 742 - HC - VAT and Sales Tax

Tax evasion - Puducherry General Sales Tax Act, 1967 r/w Puducherry Value Added Tax Ac, 2007 - petitioner is praying to discharge him from the charges on the ground that he got retired from the partnership firm as early as on 01.10.1999 due to some personal reasons - Held that - Admittedly, the petitioner/A2 was a partner of the firm. During the financial year 2000-2001, 2001-2002, 2002-2003 and 2003-2004 A1 firm is stated to have reported incorrect sales turnover and there were huge variance noticed between the purchase value of petroleum products and sales turn over and therefore, the authority initiated proceedings under law - the department has accepted the receipt of Form-10 filed by A1 firm intimating that on account of the fact that two existing partners have retired from 31.03.2003, the constitution has been changed from partnership to proprietory concern w.e.f. 01.04.2003, the petitioner, who was the erstwhile partner, cannot be mulcted with any liability. Even if it is assumed that the petitioner retired from the partnership firm from on 01.10.1999, there is absolutely nothing on record to show that it was duly intimated to the department forthwith as required under law - the tax evasions relate prior to the said communication. Criminal revision fails and is dismissed.

Summary

Issues:
1. Discharge of Accused No.2 from tax evasion charges under Puducherry General Sales Tax Act, 1967 and Puducherry Value Added Tax Act, 2007.
2. Validity of retirement claim by Accused No.2 and its impact on tax liability.
3. Adequacy of communication regarding retirement to tax authorities.
4. Assessment of evidence and legality of Magistrate's decision.

Issue 1: Discharge of Accused No.2 from tax evasion charges
The revision petitioner, Accused No.2, sought discharge from tax evasion charges under Puducherry General Sales Tax Act, 1967 and Puducherry Value Added Tax Act, 2007. The Magistrate refused to discharge the petitioner from the charges, leading to the challenge in the revision case.

Issue 2: Validity of retirement claim and tax liability
Accused No.2 claimed retirement from the partnership firm on 01.10.1999 and argued that the partnership was reconstituted with a new partner. The petitioner contended that the retirement was duly intimated to the authorities. However, the complainant opposed the discharge, stating that there was no proper intimation of retirement to the department and that the petitioner cannot absolve from tax liability without proving retirement during trial.

Issue 3: Adequacy of communication regarding retirement
The petitioner claimed retirement in 2003, supported by a departmental letter dated 08.04.2003 acknowledging the change in partnership constitution. The Government Advocate argued that there was no formal intimation of retirement to the department and that the application regarding retirement was not accepted. The court emphasized the need for proper communication and evidence to establish retirement and its impact on tax liability.

Issue 4: Assessment of evidence and legality of Magistrate's decision
After considering submissions, the court noted discrepancies in the timing of retirement claimed by Accused No.2 and the tax evasion period. The court highlighted the lack of conclusive evidence regarding retirement communication to the department. The court upheld the Magistrate's decision, stating that the issue of retirement and its effect on tax liability should be determined during trial with oral and documentary evidence. The court dismissed the revision cases and directed the trial court to expedite the trial within six months.

In conclusion, the judgment upheld the Magistrate's decision, emphasizing the importance of proper communication and evidence in determining the impact of retirement on tax liability. The case highlights the need for thorough evidence presentation during trial to establish claims effectively.