9911796707
TMI Blog2015 (4) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Authority for non-imposition of penalty. As a matter of fact, there is nothing on record to show that the Assessing Authority has exercised its discretion arbitrarily or capriciously and therefore interference with the discretionary orders of the Assessing Authority by the learned Commissioner is per-se a decision based on mere ipse-dixit or change in the opinion. While upholding the said order, the learned Tax Board has not at all cared to examine the nature of powers of the revisional authority under Section 87 of the RST Act rendering the said order too vulnerable. The folly, which is apparently clear from the order passed by the learned Commissioner under Section 87 of the RST Act, has been further perpetuated by the Assessing Authority after the remand order, inasmuch as the Assessing Authority has also not cared to issue any notice to the assessee before imposing penalty under Section 64 of the RST Act. It is clearly apparent that after remand order, all the assessment orders were passed by the Assessing Authority castigating the assessee for violation of declaration exposing it for the penalty envisaged therein without affording opportunity of being heard. Non-obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revision under Section 87 is admittedly laid by the Assessing Authority to the learned Commissioner prior to expiry of five years. The revision petition is decided by the learned Commissioner on 10th of August 2005. Therefore, in terms of sub-sec.(2) of Section 87 of the RST Act, revisional power has been exercised by the learned Commissioner within five years. A plain reading of sub-sec.(2) of Section 87 makes it crystal clear that learned Commissioner can exercise revisional powers under sub-sec.(1) of Section 87 within a period of five years from the date order sought to be revived was passed. The order passed by the learned Commissioner speak volumes about the fact that the same was passed on 10th August 2005 and therefore I am not persuaded to hold that it has exercised powers of revision vis-à-vis two assessment year after expiry of period of limitation. - Decided partly in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% exemption of tax payable and as such it purchased raw material i.e. yarn without paying tax by issuing Form ST-17 in terms of the Notification. The process continued in the interregnum period during which the Notification for 100% exemption was invoked. In the year 2000, survey was conducted at the premises of petitioner on 31st March 2000 and 2nd August 2000 by the Assistant Commissioner (Commercial Taxes Officer), Anti Evasion, Commercial Taxes, Bhilwara. During survey, it was revealed that petitioner has erroneously claimed 100% exemption on purchase of raw-material which was taxable @2%, whereas it was entitled to exemption only upto 50% of the tax, as such, was liable to pay 1% purchase tax in terms of Notification dated 13th June 1994. The said discrepancy was noticed by the department on the ground that capital investment of the petitioner unit was less than ₹ 15 crores and as such it was not entitled for 100% exemption from tax. When all these facts were unearthed during survey, the second respondent issued a show cause notice to the petitioner for making provisional assessment for the Assessment Years 1998-99, 1999-2000 and 2000-2001 under Sections 28 & 58 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he explanation tendered by the assessee has persuaded the Assessing Authority not to impose penalty under Section 64 or 65 of the Act and that being so in the provisional assessment order no penalty was imposed. The Assessing Authority has also observed that it is a case of bonafide bidding/doubt by taking into account the requisite entries about the transactions in the books of accounts of the assessee which were disclosed in the return. A finding is also recorded by the Assessing Authority that the assessee has not misused the declaration forms inasmuch as the goods purchased are used for the declared purpose. Similarly, the Assessing Authority also passed reassessment order dated 11th August 2000 in relation to Assessment Year 1997-98, whereby 1% tax is imposed on the assessee and interest levied for delay in making the payment. For the Assessment Year 1997-98, the Assessing Authority has also noticed that it is not a fit case for imposition of penalty either under Section 64 or 65 of the Act. Subsequently, regular assessment order under Section 29 of the RST Act 1994 for the Assessment Year 1998-99 is also passed by respondent No.2 on 6th February 2001 by merging the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 34 of the Rules of 1995 read with Section 64 of the RST Act allegedly passed pursuant to the common order of Commissioner, Commercial Taxes dated 10th August 2005, imposing penalty equal to double the amount of tax for violation of declaration form ST-17. The details of penalty, for every assessment year, are as infra: Assessment Year Penalty 1997-98 4,26,426 1998-99 11,26,502 1999-2000 12,72,612 Assessment Year Penalty 2000-2001 3,38,668 The petitioner-assessee has categorically averred that before issuing these orders whereby penalty was imposed for the Assessment Years 1997-98 to 2000-2001, no show cause notice or opportunity of being heard was afforded to it. Thus, precisely, the petitioner-assessee has shown its discontentment and alleged vulnerability of these orders on the anvil of violation of principles of natural justice. In this behalf, the petitioner-assessee has also taken shelter of Section 69 of the RST Act and Rule 47 of the Rules of 1995 and castigated these orders as void and nonest. Be that as it may, being dismayed by the said orders, the petitioner-assessee preferred appeals before the Deputy Commissioner (Appeals), Commercial Taxes under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding to pass the orders imposing penalty without even issuing notice to the dealer? 3. Whether any penalty could have been imposed against the dealer in the absence of a notice under Section 64 of the Rajasthan Sales Tax Act, 1994? 4. Whether in the facts and circumstances of these cases, the Department has been justified in imposing penalty against the dealer? After admission on the aforementioned questions of law, an endeavour was made by the petitioner assessee for seeking amendment to urge additional grounds in the revision petitions. The Court was pleased to allow the amendment on 26th November 2008 and framed under mentioned additional questions of law for determination: 5. Whether non-imposition of penalty by the Assessing Authority being a discretionary order could have been interfered with by invoking revisional powers under Sec.97 of RST Act by the Commissioner? 6. Whether the impugned penalty order dated 16.12.2005 has been passed without issuing any notice to the petitioner and without affording any opportunity of hearing to the petitioner, contrary to the mandatory provisions as well as fundamental principles of natural justice was void and non-est and hence li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h by the revisional authority under Section 87 of the RST Act, was a very vital issue, which has not been addressed by the learned Tax Board in the impugned order, and as such the same cannot be sustained. Learned counsel for the petitioner has questioned the quantum of penalty, which is twice the amount of tax, by urging that it is optimum limit prescribed under the statute which is to be resorted sparingly and not in a routine manner. Emphasizing credentials of the assessee, learned counsel submits that a bonafide mistake by the assessee in claiming exemption cannot be overstretched to saddle it with optimum penalty. Highlighting the parameters and yardsticks, which are to be adhered to by a quasi-judicial authority, learned counsel submits that when such authority is endowed with power to adjudicate, it is required to act in a judicious manner while adhering to the principles of natural justice. Learned counsel has urged that when no motive can be imputed against the assessee, a quasi judicial authority is not expected to resort to the provision of penalty as the penalty provision is not automatic. Learned counsel has strenuously urged that in the backdrop of fact situation, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel, therefore, submits that vis-à-vis these two assessment orders, the order of the revisional authority is clearly vitiated in law, was not taken note of by the learned Tax Board, is sufficient to conclude that the learned Tax Board has not examined the matter in its entirety. Mr. Singhvi has also argued that there was no mens-rea of the assessee in furnishing declaration form and as such imposition of penalty is not warranted. Mr. Singhvi has, therefore, argued that in absence of mens-rea imposition of penalty is uncalled for, is an issue not properly addressed by the learned Tax Board. Lastly, Mr. Singhvi submits that the provision of penalty under Section 64 and 65 of the RST Act is not akin to that of Section 78(5), as the language employed clearly suggests that under Section 64 & 65 imposition of penalty is discretionary whereas under Section 78(5) it is mandatory, but this vital issue has not been dealt with by the learned Tax Board in the impugned order. Mr. Singhvi has also strenuously urged that the learned Tax Board has not examined the order passed by learned Commissioner under Section 87 of the RST Act, while upholding the same, inasmuch as, the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64 & 65 of the RST Act. Learned counsel for the Revenue has strenuously urged that the Commissioner and learned Tax Board have not committed any error much less jurisdictional error in construing the declaration furnished by the assessee in Form ST-17 dehors the RST Act and the rules made thereunder. Countering the submissions of the learned counsel for the petitioner that submission of Declaration Form ST-17 was a bonafide mistake, learned counsel for the Revenue would urge that facts unearthed and revealed during survey of the assessee establishment has completely erased all misconceptions about bonafide mistake. According to Mr. Godara, interpretation of Section 64, as canvassed by the learned counsel for the assessee, is alien to the basic principles of construction of taxing and fiscal statutes and such a benevolent interpretation may render the statute otiose. Dilating on mens-rea of the assessee, Mr. Godara has urged that claim of 100% exemption from tax during regular assessment is a deliberate and voluntary act or omission on the part of the assessee, which pre-supposes the essence of mens-rea. Joining issue on limitation for exercise of revisional jurisdiction by Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the date on which the order sought to be revised was passed. The powers of the Commissioner to call for and examine the records of any proceedings under the RST Act, in the event of infirmity in any order passed by a competent authority empowered to impose tax, is not an absolute power exercisable at the whims and fancy of the Commissioner. The power to exercise revisional jurisdiction is circumscribed by the legislature by prescribing certain conditions, viz., if the order is erroneous, or is prejudicial to the interest of the State revenue. The emphasis is on two terms; namely, erroneous order, or if it is prejudicial to the interest of the State revenue. Even by applying the principles of interpretation of statutes vis-à-vis a taxing or a fiscal statute, it is difficult to presume that revisional powers of the Commissioner is blanket, or such power is akin to panacea of all ills in any order passed under the RST Act. Taking into account the factual background of the case, it is noticed that the Assessing Authority, while passing the assessment orders for various assessment years, has properly construed the Notification dated 13th of June 1994 issued by the Commercial T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gher rate of tax of 16% would be applicable on the sale of distemper as against 12% as claimed by the assessee. The imposition of penalty is never automatic and depends upon the facts and circumstances of each case and such imposition of penalty is always discretionary and if the Assessing Authority on the appreciation of relevant evidence comes to the conclusion that there was no deliberate admission on the part of the assessees to evade the tax in view of his bonafide contention that a commodity would be taxable at lower rate falling in particular entry, even if such contention is not accepted, it would not attract the penalty under Sec.65 of the Act, which can be imposed in the case of concealment of deliberate furnishing of inaccurate particulars by the assessees or for evasion of tax. Therefore, the Tax Board in the impugned order dated 24.7.03 has only rightly observed that learned Commissioner has committed error while remanding the case to learned Assessing Authority with a direction that appellants were required to pay not only tax but also interest and penalty under Sec.65 of the Act and, therefore, these observations of learned Commissioner in the impugned order under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Commissioner of Income-tax under Section 263 of the Act. The Division Bench found that the revisional powers are not liable to be invoked for mere change of opinion. The Court held: "Settled legal position for limitation on the revisional powers of Commissioner under Section 263 of the Act is that, firstly, they are limited in nature, and secondly, such revisional powers are not be invoked merely for reviewing the order passed by the Assessing Authority on a mere change of opinion." In view of legal position emerged out, and upon examination of the materials available on record in conjunction with Section 87 of the RST Act, in my opinion, the learned Commissioner has over-stepped its jurisdiction in finding fault with the orders passed by the Assessing Authority for non-imposition of penalty. As a matter of fact, there is nothing on record to show that the Assessing Authority has exercised its discretion arbitrarily or capriciously and therefore interference with the discretionary orders of the Assessing Authority by the learned Commissioner is per-se a decision based on mere ipse-dixit or change in the opinion. While upholding the said order, the learned Tax Board has not at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispose of the goods in accordance with the declared purpose, the Assessing Authority may direct that such person shall pay by way of penalty in addition to the tax payable under subsection (2) of section 11, a sum equal to double the amount of tax to the extent to which it was not required to be paid by such dealer on the strength of the declaration forms furnished by him. 65. Penalty for avoidance or evasion of tax Where any dealer, whether or not registered, has concealed any particulars from any return furnished by him or has deliberately furnished inaccurate particulars therein or has concealed any transaction of sale or purchase from his accounts, registers and documents required to be maintained under this Act or has avoided or evaded tax in any other manner, the Assessing Authority may direct that such dealer shall pay by way of penalty, in addition to the tax payable by him under law, a sum equal to double the amount of tax avoided or evaded. Therefore, in terms of the application submitted by the Assessing Authority, the learned Commissioner ought to have examined the assessment orders for all these assessment years for imposition of penalty against assessee on the touc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of being heard is afforded to the dealer or the person concerned. In this view of the matter, even on the touchstone of RST Act, observance of principles of natural justice is to be adhered to mandatorily before imposition of penalty against an erring assessee. There cannot be two opinions that observance of principles of natural justice is pre-requisite even in the matter of imposition of tax and penalty against the erring assessee. Therefore, in totality, in my view, violation of principles of natural justice by the Commissioner as well as Assessing Authority after the remand order is apparent in the instant case, which was completely lost sight by the learned Tax Board, to make it fallible. Therefore, in conclusion, Question No.2 & 6 deserves answer against the revenue and in favour of assessee. The threadbare discussion on Question No.2 & 6 and its affirmative answer favouring the cause of the assessee has persuaded me to base my conclusions on Question No.3 & 7 also. Therefore, these two questions also deserve answer against the revenue and in favour of assessee. Now, I propose to deal with Question No.4. Chapter VI of the RST Act deals with interest, penalties, compositio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty was made out." This Court, in case of Sojat Lime Company (supra), while construing Section 16(1)(a) of the Rajasthan Sales Tax Act 1954, observed that it is obvious that the penalty is attracted when the act of the dealer is conscious act of concealment of any particulars, or of deliberate furnishing of inaccurate particulars in his return. In Gaurav Steels Ltd. (supra), learned Single Judge of this Court, while dealing with the penalty provision under Section 78 (2) of the RST Act, has reiterated the same principle that existence of mens-rea is sine-qua-non for imposition of penalty. In Guljag Industries (supra), on which the learned counsel for the revenue has placed reliance, Hon'ble Apex Court, while dealing with Section 78(5) of the RST Act, has viewed that imposition of penalty for a tax delinquency is a civil obligation, which is remedial and coercive in nature, and therefore different from penalty for a crime. The Court held: "Existence of mens rea is an essential ingredient of an offence. However, it is a rule of construction. If there is a conflict between the common law and the statute law, one has to construe a statute in conformity with the common law. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is ultimately found by the Court to be not acceptable. That surely could never have been the intention of the legislature. 36. In view of the above, we are of the considered opinion that the use of the expression "falsely represents" is indicative of the fact that the offence under Section 10(b) of the Act comes into existence only where a dealer acts deliberately in defiance of law or is guilty of contumacious or dishonest conduct. Therefore, in proceedings for levy of penalty under Section 10-A of the Act, burden would be on the Revenue to prove the existence of circumstances constituting the said offence. 37. Furthermore, it is evident from the heading of Section 10-A of the Act that for breach of any provision of the Act, constituting an offence under Section 10 of the Act, ordinary remedy is prosecution which may entail a sentence of imprisonment and the penalty under Section 10-A of the Act is only in lieu of prosecution. In light of the language employed in the section and the nature of penalty contemplated therein, we find it difficult to hold that all types of omissions or commissions in the use of Form C will be embraced in the expression "false representation". In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnorance of law is no excuse. Hon'ble Apex Court, in M/s. Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh & Ors. (AIR 1979 SC 621), while dealing with the doctrine of promissory estoppel has seriously disputed the legal position regarding presumption that every person knows the law. The Court held: "…. Moreover, it must be remembered that there is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not a correct statement: there is no such maxim known to the law. Over a hundred and thirty years ago, Maule, J., pointed out in Martindala v. Faulkner [1846] 2 C.B. 786: "There is no presumption in this country that every person knows the law: it would be contrary to common sense and reason if it were so". Scrutton, L.J., also once said: "It is impossible to know all the statutory law, and not very possible to know all the common law." But it was Lord Atkin who, as in so many other spheres, put the point in its proper context when he said in Evans v. Bartlem [1937] AC 473" . . . the fact is that there is not and never has been a presumption that every one knows the law. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to Rule 34 of the Rules of 1995 without discussing the point in issue threadbare. The rival parties have joined issue on this question and requisite material is also available to embark on this question. I have also made endeavor to examine this question de-novo on the touchstone of relevant provisions governing the said province. Insofar as Assessment Years 1997-98 and 1998-99 are concerned, the Assessing Authority has passed the order on 11th August 2000 and revision under Section 87 is admittedly laid by the Assessing Authority to the learned Commissioner prior to expiry of five years. The revision petition is decided by the learned Commissioner on 10th of August 2005. Therefore, in terms of sub-sec.(2) of Section 87 of the RST Act, revisional power has been exercised by the learned Commissioner within five years. The contention of the learned counsel that order though passed by the learned Commissioner on 10th August 2005 was conveyed to the assessee on 26th of August 2005, i.e. after expiry of five years, appears to be quite attractive, but I am afraid that this contention is prima facie an ambitious plea which lacks merit. A plain reading of sub-sec.(2) of Section 87 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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