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TMI Blog2014 (7) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... - The conduct of the assessee in filing nil returns for April 2006 to November 2006 can never be accepted as bona fide, as the assessee, prior to the filing of the return, had been made aware of the tax liability and virtually admitted the same and had paid some provisional amount. Therefore, there is absolutely no bona fides on the part of the assessee in continuing to file nil returns even for this period and claiming no tax liability. The revised returns were filed only after inspection, etc., and therefore, cannot be accepted as a voluntary return or bona fide return as the assessee has done it after a good deal of persuasion. Even when a revised return or a return subsequently has been made subsequent to passing of the best judgement order, while the original assessment can be withdrawn, best judgement assessment cannot be withdrawn, which, nevertheless does not absolve the assessee from being levied with penalties and interest. Insofar as the argument that the revised return having been filed within six months and taking cue from the provisions of section 38(3) of the Act, the revised return should be accepted and acted upon is concerned, we find this provision is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year 200506 is concerned, the assessee, though had filed such monthly returns, had claimed its tax liability as nil for all the 12 months. The assessee has filed nil returns even for the period April to November, 2006. The assessee, though had taxable turnover during this period, has taken the stand that in the wake of the law laid down by this court in the case of Mittal Investment Corporation v. Additional Commissioner of Commercial Taxes, Zone I [2011] 121 STC 14 (Karn) was under the impression that such transfer of constructed buildings is not one attracting tax, under the Act. The assessee pleaded ignorance of the reversal of this view taken by this court by the Supreme Court in the case of K. Raheja Development Corporation v. State of Karnataka [2005] 141 STC 298 (SC), as per the judgment dated May 5, 2005 and claims to have blissfully filed return indicating nil tax liability up to the period mentioned above. The legal position was otherwise and there was liability for the payment of tax in respect of the transaction in the nature of works contract not only in terms of section 12(1) of the Act, but also the law as understood on analogous provision relating to liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee having not filed its returns within time, but on the other hand having filed incorrect and false returns, and having not corrected on its own a mistake which it had committed by not filing revised returns within the statutorily permitted period in terms of section 35(4) of the Act and a claim towards input-tax credit being enabled only in respect of the assessees who have filed returns either as per section 35(1) or section 35(2) of the Act and that having not been done, held that the assessee was not entitled to claim any input-tax credit for the periods in question and concluded the assessment by way of best judgment and levying penalty and interest, as referred to above. The assessee being aggrieved by these orders, preferred appeals under section 62(6) of the Act to the Joint Commissioner of Commercial Taxes. The assessee's contention found favour with the Appellate Commissioner. The Appellate Commissioner took the view that the assessee though had not produced the list of registered dealers from whom it had made purchases and had paid tax on such purchases and though it had not produced the invoices evidencing the same before the assessing officer, opined that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put forth opposing the proposal for revising the appellate order and for restoration of the assessment orders. The matter was elaborately heard before the revisional authority and the revisional authority after exhaustive examination of the factual background, reassessment orders, order of the Appellate Commissioner and the relevant case law, opined that the assessee was not entitled to the input-tax credit for the period from April 2005 to November 2006 and set aside the order of the Appellate Commissioner for the months covering this period and restored the orders passed by the assessing officer. However, in so far as the months of December 2006 to March 2007, the assessing officer though had denied input-tax credit to the assessee for the reason that the assessee had not produced the list of registered dealers and invoices and the Appellate Commissioner had taken a common view in respect of this period also, viz., that the assessee is entitled for such inputtax credit on the basis of the material placed before the assessing officer, the revisional authority, nevertheless, has not disturbed this order of the Appellate Commissioner giving input-tax credit for the period Dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion enabling passing of best judgment orders on the failure of the assessee to file returns, sub-sections (3) and (4) of section 38 of the Act and the factum of the assessee having filed revised returns though belatedly as on January 12, 2007 covering the period from April 2006 to November 2006. What is urged is that these returns though belated were before the assessing officer prior to passing of the best judgment orders which were passed on January 29, 2008. The submission is that when the assessing officer had placed reliance on the books of accounts of the assessee for the purpose of passing of best judgment assessment orders, the assessing officer could not have ignored the entries relating to the input-tax credit earned by the assessee, in the sense that the books did reveal that the assessee having made purchases and having paid tax on such purchases for the periods in question and therefore submits that the assessing officer could not have ignored this relevant material while passing best judgment assessment orders. A good number of authorities are relied upon to contend that in a circumstance where an assessee is acting in a bona fide manner and has not indulged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad continued to file Nil returns; that in fact it was only on January 12, 2007 the assessee purported to file revised returns only for the period from May 2006 to December 2006 and no revised returns for the earlier period was filed though the assessee was aware of and had admitted the tax liability; that the returns were in fact filed only one day prior to the Deputy Commissioner going through the books of accounts of the assessee after following necessary procedure as a consequence of which notice under section 39 of the Act was issued for reopening of the assessee's assessments for the period from April 1, 2005 up to the date. In this background, what is submitted is that the assessee in fact never filed revised returns for the earlier period even after the inspection and nil returns remained so up to the month of April 2006; that even for the subsequent months, returns filed were not true and correct, but grossly under-stated in the turnover; that the assessee never acted with any bona fides for disclosing the true and correct turnover of his business so also taxable turnover. Mr. Vedamurthy would submit that while it is no doubt the manner of availment of input c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed independently, as it has to be done by determining the tax liability. It is also submitted that under the scheme of the Act, the dealer himself is given liberty to determine his tax liability and indicate that in the returns by claiming appropriate rebate or deductions and the liability indicating the return is taken to be a deemed assessment, unless it is found by the Revenue that the registered dealer has either failed to file a return or has not acted in response to a notice issued in terms of sub-section (2) of section 38 of the Act, the terms of the best judgment can be resorted to. It is therefore submitted that where the assessee-dealer justifies the confidence reposed by disclosing true particulars of his turnover, output tax and input tax, it amounts to compliance on the part of registered dealer in the requirements of the enactment, but where it is found that tax liability as disclosed falls short of the tax liability, it has to be determined following the best judgment assessment. Mr. Vedamurthy would also submit that the returns that was filed by the assessee were all found not true or proper and therefore, there was need for reopening of the assessment and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis and is not supported by particulars and material facts and evidence, etc. It is therefore submitted that assessing officer was justified in not acting upon a claim for deduction of input tax, as neither particulars of the registered dealer had been furnished by the assessee nor proof of payment of tax to the registered dealers. Specific attention is drawn to sub-section (4) of section 45 of the Act to submit that a revised return to be filed by an assessee after furnishing a return under the Act should be voluntary and discovered by the assessee himself to be acted upon by the assessing officer and not in pursuance of any inspection and discovery by the authorities about the short-filing on the part of the assessee. It is also pointed out that the time-limit that has to be adhered to and the longer period of 6 months for filing a revised return will be available only if so permitted by the prescribed authority and not otherwise. It is therefore submitted that the first appellate authority had acted erroneously and without jurisdiction by virtually re-writing the provisions of section 10(4) of the Act read with section 35(4) of the Act; that the first appellate authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input tax in such cases. (3) Subject to input tax restrictions specified in sections 11, 12, 14, 17, 18 and 19, the net tax payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and shall be accounted for in accordance with the provisions of (this Act). (4) For the purpose of calculating the amount of net tax to be paid or refunded, no deduction for input tax shall be made unless a tax invoice, debit note or credit note, in relation to a sale, has been issued in accordance with section 29 or section 30 and is with the registered dealer taking the deduction at the time any return in respect of the sale is furnished, except such tax paid under sub-section (2) of section 3. (5) Subject to input tax restrictions specified in sections 11, 12, 14, 17, 18 and 19, where under sub-section (3) the input tax deductible by a dealer exceeds the output tax payable by him, the excess amount shall be adjusted or refunded together with interest, as may be prescribed. Sub-section (4) of section 10 mandates that for the purpose of calculating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit is therefore regulated by the statutory provisions. The requirements are that the assessee who filed the returns at the first instance for claiming any input tax rebate or reduction should disclose the same in the returns filed with full particulars of registered dealer from whom purchases are effected by the assessee. Dealers' names are to be furnished along with return and proof of payment of tax in the form of invoices issued by the selling registered dealers should also accompany the same. In the present case, it is not in dispute that all the requirements were not fulfilled by the assessee for the period involved in the appeals, viz., from April 2005 to March 2006-subject matter of appeals in STA 59 of 2009and from April 2006 up to November 2006-the subject-matter of appeals in STA 60 of 2011. The assessee never filed any revised return in respect of the period from April 2005 to March 2006 nor claimed any input credit return, but, on the other hand only filed nil tax liability return. The assessee persisted and did not file any revised return or anything at all even after inspection, notice, etc. In this view of the matter, there was nothing at all before the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever be accepted as bona fide, as the assessee, prior to the filing of the return, had been made aware of the tax liability and virtually admitted the same and had paid some provisional amount. Therefore, there is absolutely no bona fides on the part of the assessee in continuing to file nil returns even for this period and claiming no tax liability. The assessee is not a small dealer but with a huge turnover running to crores of rupees. It is not as though the assessee could be accepted to be a novice or ignorant dealer or a small businessman who was ignorant of his responsibility. A return claiming nil tax liability on the face of it appears to be an obvious attempt on the part of the assessee to take undue advantage of the due assessment procedure. The revised returns were filed only after inspection, etc., and therefore, cannot be accepted as a voluntary return or bona fide return as the assessee has done it after a good deal of persuasion. It is not known as to what would have been the conduct of the assessee if he was not compelled to do so. In the circumstances we find levy of penalty and interest is fully justified on the difference of tax payable by the assessee. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal inspection and much time gap was there between filing of the returns and revised returns and further interval before passing of the assessment order. The assessee who had appeared before the assessing authority and represented, did not place any material or particulars as had been put forth before the appellate authority at the time of assessment or prior to the assessment. The assessee had ample opportunity for making the same. Notwithstanding the assessee had not fulfilled any compliance of the requirements of the statutory provisions, the particulars of registered dealers from whom purchases had been made had not been furnished, particulars of register, etc., nor corresponding tax invoices issued by the registered dealers were provided, but only a claim statement was made for claiming credit for input tax on purchases said to have been effected from the dealers. We have already noticed that insofar as the claim for input-tax deduction is concerned, the Act mandates strict compliance with the requirements of section 10 which is reflected in the return as per section 35 of the Act. While the argument of Mr. Keshava Murthy, learned counsel for the appellant-assessee, that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input-tax credit can only be in specified form and not in a generalised form and therefore, the arguments cannot succeed. We have discussed this aspect elaborately as above. Therefore, on comparison of provisions of section 38(3) of the Act, the benefit cannot be extended by overlooking the statutory requirements under section 10(4) of the Act read with sub-sections (1) and (4) of section 35 of the Act. In the circumstances we find that the impugned order passed by the Commissioner setting aside the appellate authority's order for the periods April 2005 to March 2006 and April 2006 to November, 2006 and restoring the assessment order cannot be said to be suffering from any illegality or want of jurisdiction and therefore, the appeals to that extent are dismissed. The judgments relied cannot further the case of the appellant/assessee, as when a statutory provision mandates compliance in a particular manner in examining as to whether the compliance is secured or otherwise a broad based approach is not called for, more so in tax matters, where the liability is strictly as per the sections and compliance, both on the part of the Revenue and on the part of the assessee, also shou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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