2022 (12) TMI 53 - HC - VAT and Sales Tax

Principles of natural justice - order passed without confronting the appellant with the adverse material collected behind its back and without affording opportunity to rebut the same - rejection of C form declaration in question merely on account of their non verification at a non-statutory website like TINXYXS in absence of any suitable statutory provision to that effect under the Act - collusion between the appellant and the purchasing dealer issuing the declaration in question - levy of penalty under section 21(2) of the M.P VAT Act, 2002 - collusion between the appellant and the purchasing dealers issuing the declaration in question - HELD THAT - The appellant cannot escape from its liability to pay tax merely by submitting that he received the certificate and produced before the department and he has no concerned about its genuineness. Since 2015, the appellant has not taken any action against the dealer, who gave the certificate to the appellant. Similar issue came up for consideration before this Court in case M/S. ADANI EXPORTS LIMITED, INDORE VERSUS COMMISSIONER OF COMMERCIAL TAX, INDORE ANOTHER 2018 (9) TMI 1112 - MADRAS HIGH COURT and after considering the aforesaid judgment cited by Shri Choudhary, Division Bench of this Court has held that Form- C submitted by the purchaser have been found forged, which clearly shows that the purchasers are not registered dealer, therefore, the assessee is liable to pay tax and penalty as imposed by the Competent Authority and affirmed by the Appellate Board. It has also been held that The breach of civil obligation will immediately attract penalty irrespective of whether the contravention is with a guilty intention. The High Court of Chhatisgarh in case of M/S AVINASH TRADERS VERSUS STATE OF CHHATTISGARH THROUGH ITS SECRETARY, COMMISSIONER, COMMERCIAL TAX DEPARTMENT, ADDITIONAL COMMISSIONER, COMMERCIAL TAX AND DIVISIONAL DEPUTY COMMISSIONER, COMMERCIAL TAX 2018 (12) TMI 1010 - CHATTISGARH HIGH COURT has also taken the similar view that if a fake or a fraudulent Form-C is produced by an Assessee and if it is found to be so, it will be as good as non production of Form-C and no advantage thereof can be taken therefrom by trying to shift the onus on anybody else. Appeal dismissed.

Issues:
1. Appeal against order under M.P. VAT Act, 2002
2. Reopening of assessment based on non-verification of 'C' forms
3. Imposition of tax and penalty on appellant
4. Appeal process and dismissal by authorities
5. Legal arguments regarding reliance on non-verified 'C' forms
6. Applicability of judgments from other High Courts
7. Questions of law raised by the appellant
8. Verification of 'C' forms and liability of the appellant
9. Finding on collusion between appellant and dealers
10. Liability of appellant to pay tax and penalty
11. Precedents and judgments supporting the decision

Analysis:

1. The appellant filed an appeal under Section 53(2) (b) of the M.P. VAT Act, 2002 against an order passed by the M.P. Commercial Tax Appellate Board. The appellant, a Private Limited Company, is engaged in manufacturing edible oil and selling it interstate using 'C' forms issued by purchasing dealers.

2. The assessment authority reopened the assessment due to non-verification of some 'C' forms by the Anti Evasion Bureau. The appellant had previously submitted 'C' forms accepted during the original assessment. However, in the reassessment, a significant tax amount and penalty were imposed, leading to a demand notice for recovery.

3. The appellant's appeal was dismissed by the Appellate Authority and the Commercial Tax Appellate Board. The appellant argued that reliance on non-verified 'C' forms was unjustified as they had sold goods in good faith based on these forms without the means to verify their authenticity.

4. The appellant raised substantial questions of law, including issues related to natural justice, rejection of 'C' forms based on non-verification, liability for tax and penalty without collusion findings, and justification for penalty imposition under the MP VAT Act.

5. The respondent argued that no questions of law were involved as concurrent findings were made against the appellant. The appellant's failure to verify 'C' forms and take action against dealers issuing them was highlighted as a lack of diligence.

6. The Court noted that the burden was on the appellant to prove the genuineness of the 'C' forms used to avail benefits. The lack of action by the appellant to verify the forms or investigate their authenticity was considered a failure to meet this burden.

7. It was clarified that the reassessment was not based on collusion but on the verification of 'C' forms, which were found to be not genuine. Precedents were cited to support the position that the appellant could not evade tax liability by merely submitting forms without ensuring their authenticity.

8. The Court referenced a previous judgment where forged 'C' forms led to tax and penalty imposition, emphasizing that the breach of obligation attracts penalty regardless of intent. The appellant's lack of action against fraudulent forms was considered a failure to meet obligations.

9. Ultimately, the Court found no substantial question of law in the appeal and dismissed it accordingly, upholding the decision of the authorities and the Commercial Tax Appellate Board.

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