2018 (12) TMI 1010 - HC - VAT and Sales Tax

Penalty - Concessional rate of tax - forged and fake C-Form - Held that - The facts are that Form-Cs were produced by the appellant, before the assessing authority. Those Form-Cs are fraudulent and fake. On a defence being put up that they were provided by the purchasers, the assessing authority tried to locate them but then admittedly, even the appellant is neither in a position to identify the dealer or the purchaser, who had supplied him with Form-C. Therefore, it becomes a case where Form-C was not tendered to the seller by any legal entity but by some elusive source which is unidentifiable. If such lee-way, concession or immunity is granted to such selling dealers, it will open a flood gate where large scale fraudulent forms seeking concessional rates of assessment will be used to avoid payment of taxes by putting the onus on non-existent purchasing dealers, who will only exist for argument or defence but not in reality. The revisional authority has already reduced the element of penalty from twice the assessed amount to as much as the assessed amount which is the least which could be done under Section 28 (1) of Chhattisgarh Commercial Taxes Act, 1994 - appeal dismissed.

Summary

Issues:
1. Challenge to order imposing tax and penalty.
2. Assessment year 2004-05 related to alleged use of forged C-Form.
3. Reduction of penalty by revisional authority.
4. Appeal against imposition of penalty.
5. Interpretation of legal judgments on penalty imposition.
6. Existence of purchasing dealer in disputed cases.
7. Validity of Form-C submitted by the appellant.
8. Applicability of legal precedents on penalty imposition.
9. Conclusion on the appeal and penalty reduction.

Analysis:
1. The appellant's writ application challenged an order imposing tax and penalty related to the assessment year 2004-05. Allegations were made against the appellant for availing a concessional tax rate using a forged C-Form, leading to a re-opening of assessment by the Sales Tax authorities.
2. The revisional authority upheld the assessment but reduced the penalty imposed on the appellant. Dissatisfied with both authorities' decisions, the appellant filed a writ application.
3. During the hearing, the appellant focused on challenging the penalty imposition, conceding the issue of reassessment. Legal arguments were presented, citing judgments like The State of Madras Vs Radio and Electricals Limited, to support the appellant's case for non-imposition of penalty.
4. The State authorities contended that the crux of the cited judgments was the existence of a purchasing dealer, which was absent in the appellant's case. The appellant failed to identify the dealer or purchaser who provided the fraudulent Form-C, rendering it unenforceable.
5. The learned Single Judge dismissed the appellant's plea, noting the distinction in facts from the cited judgments. The court emphasized that the production of a fake Form-C equated to non-production, precluding any benefit for the appellant by shifting the onus to others.
6. The court cautioned against granting leniency to selling dealers using fraudulent forms, as it could encourage tax evasion by attributing liabilities to non-existent purchasing dealers. Consequently, the court upheld the Single Judge's decision, finding no grounds for interference.
7. Additionally, the revisional authority had already reduced the penalty to the assessed amount, as per the Chhattisgarh Commercial Taxes Act, 1994. The appeal was ultimately dismissed based on the above considerations.