2021 (5) TMI 44 - HC - VAT and Sales Tax

Failure to furnish audited accounts for the years 2010-11, 2011- 12 2012-13 by the end of the month after expiry of the period of six months, despite notice - Section 53(3) of Tripura VAT Act - Penalty - HELD THAT - The contention of the petitioner that having filed such audit report for the year 2018-19, cannot raise the lack of prescription for the period in question, cannot be accepted for multiple reasons. Firstly, in the present group of petitions, we are concerned with the period of the years 2010-11, 2011-12, 2012-13. If the petitioner has filed audit report as prescribed under the Chartered Accountants Act for the year 2018-19, it is not estopped from taking a defence in these petitions of the State Legislature not having prescribed the format under the Rules. Further, this is only an oral contention made by the counsel for the department - Neither in the order imposing penalty nor in the affidavits filed in response to these petitions, the department has taken such a stand. As noted, the petitioner had taken the contention of lack of prescription of the audit report in reply to the show-cause notice. While passing the final order of penalty the Superintendent of Taxes has made no reference to the petitioner filing such reports for the subsequent years. Lastly, even if the petitioner has filed such reports for any years subsequent or even previous, its legal contention that in absence of the prescription of the audit report under the Rules, there can be no breach of the condition of sub-section (2) of Section 53, cannot be taken away. Being a pure legal contention, the conduct of the petitioner for a particular period or year, would not estop the petitioner from raising such contention for any other period. The petitioner fairly brought to our notice a decision of Division Bench of this Court in case of Ruchi Soya Industries Ltd. versus the State of Tripura 2020 (9) TMI 480 - TRIPURA HIGH COURT in which a somewhat similar contention was raised by the petitioner to oppose the penalty imposed under sub-section (3) of Section 53 of the TVAT Act - the Division Bench proceeded on the basis that the petitioner therein had not raised this ground of non-availability of prescribed form for the report for its failure to file the same within the prescribed time as required under sub-section (2) of Section 53 of the TVAT Act. In this decision the Court thus did not examine the legal contention which has been raised before us by the petitioner in these petitions. Petition allowed.

Summary

Issues involved:
- Interpretation of Section 53 of the Tripura Value Added Tax Act, 2004 (TVAT Act) regarding penalty for failure to furnish audited accounts.
- Whether the absence of a prescribed format for filing audited reports under the TVAT Act exempts a dealer from penalty proceedings.

Analysis:

Issue 1: Interpretation of Section 53 of the TVAT Act regarding penalty for failure to furnish audited accounts

The case involved a petitioner who was issued a notice for failing to furnish audited accounts for the years 2010-11, 2011-12, and 2012-13 under Section 53 of the TVAT Act. The Superintendent of Taxes imposed a penalty for non-compliance. The petitioner contended that as no format for filing the audited report was prescribed by the Government, the penalty was unjustified. The Court analyzed Section 53, which mandates dealers with turnover exceeding a specified limit to get their accounts audited and furnish a report in the prescribed form. The Court emphasized that for the penalty provision of sub-section (3) to apply, it must be established that the dealer failed to comply with the audit requirements as prescribed. Since no form or particulars were prescribed in the Rules under the TVAT Act, the penalty could not be imposed.

Issue 2: Absence of a prescribed format for filing audited reports under the TVAT Act

The petitioner argued that the absence of a prescribed format for filing audited reports under the TVAT Act meant that penalty proceedings could not be initiated. The Court agreed, stating that the penal provision in sub-section (3) of Section 53 must be strictly construed. The Court rejected the argument that the format prescribed under the Chartered Accountants Act should be adopted, as the State Legislature did not make such a provision. The Court highlighted that the absence of prescription in the Rules meant the penalty could not be justified. The Court also dismissed the argument that the petitioner's filing of audit reports for subsequent years negated the lack of prescription for the relevant years, emphasizing that the legal contention of lack of prescription remained valid.

Conclusion:

The Court quashed the impugned order imposing penalties and allowed all petitions, emphasizing that in the absence of a prescribed format for audited reports under the TVAT Act, penalty proceedings could not be sustained. The Court's decision was based on a strict interpretation of the statutory provisions and the absence of prescribed requirements under the Rules. The judgment clarified that the failure to comply with audit requirements due to the lack of prescribed formats cannot lead to penalty proceedings under Section 53 of the TVAT Act.