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TMI Blog2016 (10) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... sed - decided against petitioner. - Writ Petition No.25437 of 2016 - - - Dated:- 6-9-2016 - RAMESH RANGANATHAN AND SRI U.DURGA PRASAD RAO, JJ For The Petitioner : Sri P.Balaji Varma For The Respondent : Sri S.Suri Babu, Spl. Standing Counsel ORDER: (Per the Honble The Acting Chief Justice Ramesh Ranganathan) The proceedings under challenge in this writ petition is the order passed by the Appellate Deputy Commissioner dated07.06.2016, for the tax period April, 2013 to August, 2015, confirming the order passed by the 2nd respondent dated 26.03.2016 levying penalty on the petitioner under Section 53(3) of the A.P. Value Added Tax Act, 2005 (for short the Act). The petitioner herein is a registered dealer on the rolls of the 2nd respondent, and is engaged in the business of milling of paddy and sale of rice. An assessment order was passed by the 1st respondent dated 30.11.2015 holding that there was a huge variation, between the turnover reported in the returns and in the audited books of accounts, for the tax period 2013-14 and 2014- 15. The petitioner invoked the jurisdiction of this Court by way of W.P.No.1858 of 2016 which was dismissed by order dated25.01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, whereby penalty was imposed, the 1st respondent observed that, as per the Act, the audit officer was not required to wait, till receipt of consideration, to assess the dealer to tax; even on the deferred consideration, by way of credit invoices, the dealer was liable for payment of tax; the demand was raised, in the assessment, on the strength of the recorded evidence like invoices, waybill utilization and the audited trading and P L account; the objection of the dealer in this regard was untenable; the dealer had, themselves, stated that the figures adopted in their books of accounts were inflated, and hence tax should be levied on the actual sales as per Section 4 of the Act; it was clear from the waybill utilisation statement that the dealer had effected sales only to VAT dealers, and the sales turnover tallied with their audited trading and P L account; in the instant case the petitioner had raised invoices, and had issued waybills; sales were brought into the account books, and were reflected in their audited trading and P L account; the used waybills record was also uploaded into the VATIS package; however this sales turnover was not reported in the monthly returns, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he under-declared tax is established to be on account of commission of fraud or wilful neglect, would Section 53(3) of the Act be attracted, enabling the respondents to impose penalty of 100% of the under-declared tax; the onus is on the Revenue to establish that the dealer had under-declared tax committing fraud or because of wilful neglect; this burden cannot be shifted to the dealer; the Revenue has not made out a case of fraud or wilful neglect having been committed by the dealer; the very fact that the books of accounts of the dealer discloses the correct turnover, and the variation is only in the returns submitted by them, would show that there was neither fraud nor wilful neglect; accepting the construction, placed on Section 53 of the Act, by the revenue would result in every error, in the return filed by the dealer, attracting Section 53(3) of the Act; such an interpretation would render Section 53(1) of the Act redundant; and it is only in cases where the Revenue is able to establish the mala fide conduct of a dealer, in wilfully and deliberately under-declaring tax in the returns filed by them, can they levy penalty under Section 53(3) of the Act. Learned counsel would r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence in proceedings under Article 226 of the Constitution of India. Before examining the rival submissions it is useful to take note of the relevant provisions both under the Act and the Rules. Section 2(36) of the Act defines tax period to mean a calendar month or any other period as may be prescribed. The rule making authority has not prescribed any other period and, consequently, the tax period continues to remain a calendar month. Section 20 of the Act relates to returns and self-assessments and, under sub- section (1) thereof, every dealer, registered under Section 17 of the Act, shall submit such return or returns along with proof of payment of tax in such manner, within such time, and to such authority as may be prescribed. Section 20(2) stipulates that, if a return has been filed within the prescribed time and the return so filed is found to be in order, it shall be accepted as self-assessment subject to adjustment of any arithmetical error apparent on the face of the said return. Under Section 20(3)(a) of the Act, without prejudice to the powers of the authority prescribed under sub- section (3) of Section 21, every return shall be subject to scrutiny to verify the cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able, or on any other basis. In the absence of an assessment being made, under Section 21(3) (4) of the Act, the monthly return filed by the dealer is deemed to be an assessment under the Act. Section 53 of the Act prescribes the penalty for failure to declare the tax. Under Section 53(1), where any dealer has under- declared tax and where it has not been established that fraud or wilful neglect has been committed, and where the under-declared tax is (i) less than ten percent of the tax, a penalty shall be imposed at ten percent of such under-declared tax; and (ii) where the under declared tax is more than ten percent of the tax due, a penalty shall be imposed at twenty five percent of such under- declared tax. It is not in dispute that, in the present case, the under-declaration of tax by the petitioner is far more than 10% of the tax due and therefore, even if the respondent had invoked Section 53(1) of the Act, the petitioner would have been liable to be imposed a penalty of 25% of the under-declared tax. Section 53(2) of the Act stipulates that where any dealer, prior to the detection by any prescribed authority, voluntarily declares that the tax due for a tax period is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates examination, in this writ petition, is whether, in the present case, it is established that under-declaration of tax by the petitioner is because of wilful neglect; and whether the respondents were justified in invoking Section 53(3) of the Act, and imposing 100% penalty on the petitioner herein. Section 53(3) of the Act requires the intent of the dealer, to under-declare tax, to be wilful i.e the dealer must have knowingly, deliberately and intentionally under-declared tax. The findings recorded by both the assessing authority and the appellate authority are that the petitioner had knowingly under-declared tax in the returns filed by them. As noted by the 1st respondent, in the order of penalty, the petitioner had themselves admitted that they had inflated the figures by another 25% only to supply the entire rice milled under the levy. The huge variation, in excess of ₹ 4.97 crores, between the actual turnover and the turnover declared by the petitioner in their monthly returns, came to light only on an audit of their books of accounts, and on verification of the turnover disclosed in the way bills utilised by them. It only after the petitioners accounts were audited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is settled law that the conclusion of the statutory authority should be so plainly inconsistent with the relevant statutory provision that no difficulty is experienced by the High Court in holding that the said error of law is apparent on the face of the record. What can be corrected, in proceedings under Article 226, is an error of law and the said error must, on the whole, be of such a character as would satisfy the test that it is an error of law apparent on the face of the record. If a statutory provision is reasonably capable of two constructions, and one construction has been adopted by the inferior Court or Tribunal, its conclusion may not always be open to correction in Writ proceedings. Whether or not the impugned error is an error of law, and an error of law which is apparent on the face of the record, must always depend upon the facts and circumstances of each case, and upon the nature and scope of the legal provision which is alleged to have been misconstrued or contravened. It is within these limits that the jurisdiction conferred on the High Courts under Article 226 can be legitimately exercised. (Syed Yakoob 1964 (5) SCR 64 = AIR 1964 SC 447). It is not even the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations of Courts should not be taken out of context, and must be read in the setting in which they appear to have been stated. Judges interpret the words of statutes. Their words are not to be interpreted as statutes. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. (Bharat Petroleum Corporation Ltd v. N.R. Vairamani 2004(8) SCC 579 ; The State of A.P. v. M/s Seven Hills Constructions Full Bench Judgment in TRC Nos.274 of 2001 and batch dated 25.11.2011). A few lines in the judgment of the Supreme Court, in Sree Krishna Electricals (2009) 11 SCC 687, should not be read out of context to hold that it is the declaration of law, notwithstanding the statutory provisions to the contrary. Both Section 53(1) (3) of the Act confer jurisdiction on the assessing authority to impose penalty for under-declaration of tax. As the assessee is required to declare their sales turnover, and the tax payable thereon, in their monthly returns, and as the Act does not mandate that, in each and every case, an assessment order should be passed, accepting the contention that no penalty can be levied if the turnover is disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of wilful default; the ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to any fraud, collusion or wilful mis- statement or suppression of fact or contravention of any provision, is not sufficient to attract the extended period of limitation; the emphasis of the proviso was the intention to evade payment of duty; in each of the cases it would have to be seen as a fact whether there had been a non-levy or short-levy, and whether that has been by reason of collusion or any wilful mis-statement or suppression of facts by the importer or his agent or employee; for the operation of the proviso, the intention to deliberately default is a mandatory pre-requisite; the word wilful, preceding the words mis-statement or suppression of facts, clearly spelt out that there had to be an intention on the part of the assessee to evade payment of duty; Blacks Law Dictionary defined wilful to mean proceeding from a conscious motion of the will; voluntary; knowingly; deliberate; intending the result which actually comes to pass; an act or omission is wilfully done, if done voluntarily and intentionally and with the specific intent to do something the ..... 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