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TMI Blog2018 (12) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... such circumstances, there is a clear estoppel against the dealer to contend something contrary to the Form C declaration. The theory as propounded by the dealer that blank forms were handed over to the HPCL is a false statement. The documents were verified by the first appellate authority and there is a clear finding to the effect that the dealer has signed all pages of the declarations. Thus, the dealer, at the very first instance, has come out with the false statement. As mentioned above, the counterfoil has to be retained by the petitioner/dealer and therefore, they cannot feign ignorance of the details contained therein - it is too late for the dealer to contend that they are not aware of the details contained in the Form C declaration and if they still persist to contend so, even before others, their action has to be strongly deprecated, as they are perpetutately false representation. The Oil Corporation, HPCL has not only given the copy of the C-Form retained by them, which in fact, was issued by the dealer to them, but also has given the copies of the delivery details. Therefore, if the petitioner/dealer was a rightful person, the first step he should have taken is to ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that is so, then the details furnished therein should obviously tally with the return filed by the dealer. If there is discrepancy in that, the burden is on the dealer to disprove the same, more particularly, when the allegation is there is large scale suppression of taxable turnover. Mens rea is writ large on the face of the record. There is no further proof required to establish the blameworthy conduct of the dealer. Though we may not be fully justified in examining the past conduct of the dealer, especially when they had succeeded in the earlier writ petitions, which also arose out of the same type of transaction in the previous years and the Department having not filed an appeal yet, this would be a clear indicator as regards the modus operandi of the dealer. Thus, we safely conclude that there was sufficient mens rea on the part of the dealer and this can be gathered from their conduct and the Assessing Officer was justified in imposing penalty, as confirmed by the first appellate authority. There is no case for exercising any sympathy in such cases more particularly, when the transactions are all financial transactions especially dealing with the petroleum products, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, the first appellate authority and the Appellate Tribunal in its entirety. 5.In the tax case revisions filed by the dealer, the following substantial questions of law have been raised. T.C.(R) Nos.29, 31, 68, 69, 102 and 103 of 2018:- (i) Whether in the facts and circumstances of the case the Hon'ble Appellate Tribunal committed an error of law in confirming the levy of penalty imposed under Section 24(3) of the Act which is not mandatory, having given a finding that taxes on the disputed turnover were paid during the assessment proceedings. (ii) Whether in the facts and circumstances of the case the Hon'ble Appellate Tribunal erred in confirming the levy of penalty under Section 24(3) of the Act that mere non disclosure does not automatically lead to levy of penalty. (iii) Whether in the facts and circumstances of the case the Appellate Tribunal failed to consider the conduct of the petitioner in complying with the payment of the tax on the disputed turnover before the completion of assessment. (iv) Whether in the facts and circumstances of the case mere non disclosure of the disputed turnover without any deliberate intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 20.12.2013 in similar circumstances. (vi) Whether in the facts and circumstances of the case there is a justification to levy penalty under Section 13(3) of the Act when the turnover is determined as that has been reflected in the accounts. The Appellate Tribunal ought to have set aside the penalty on the very disputed turnover is available in the books of account. (vii) Whether in the facts and circumstances of the case the Appellate Tribunal is justified in confirming the levy of tax on the disputed turnover which was determined without providing details of the supply particulars received from the Oil Companies which would amount to the violation of principles of natural justice and against the assessment procedure under the Act. 6.In the tax case revisions filed by the State, the following substantial questions of law have been raised. T.C.(R) No.114 of 2018:- (i) Whether the impugned order of the first appellate authority in A.P.No.216/2014 dated 4.5.2015 is sustainable in law? (ii) Whether deletion of equal time addition and the penalty by the Appellate Deputy Commissioner (CT) is proper in law? (iii) Whether there was any error appare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of any reliable documentary evidence the Learned presiding officer was right in reducing penalty amount as the reasoning that the respondent/assessee was suffering from financial crisis. (vi) Whether the Learned presiding officer failed to consider that sympathy cannot supplant the assessee's culpable act of dishonest suppression of turnover. T.C.(R) No.156 of 2018:- (i) Whether the Appellate Tribunal erred in not considering in proper perspective the provisions of PVAT Act 2007 before reducing the percentage of penalty amount from 100% to 75%. (ii) Whether the Appellate Tribunal failed to note that the respondent in spite of service of pre assessment notice by the Presiding Officer for suppressed turnover did not file any objections but chose to remit the arrived tax liability thereby admitting his act of suppression of turnover and hence he cannot escape the penalty amount of ₹ 20,89,613/-. (iii) Whether the Learned Presiding officer failed to consider that the penalty amount was imposed upon the respondent herein as punishment for his act of suppression of turnover and to discourage the dishonest act of tax evasion. While so, reducin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis. (vi) Whether the Learned presiding officer failed to consider that sympathy cannot supplant the assessee's culpable act of dishonest suppression of turnover. T.C.(R) No.158 of 2018:- (i) Whether the Appellate Tribunal erred in not considering in proper perspective the provisions of PVAT Act 2007 before reducing the percentage of penalty amount from 100% to 75%. (ii) Whether the Appellate Tribunal failed to note that the respondent in spite of service of pre assessment notice by the Presiding Officer for suppressed turnover did not file any objections but chose to remit the arrived tax liability thereby admitting his act of suppression of turnover and hence he cannot escape the penalty amount of ₹ 6,23,354.79. (iii) Whether the Learned Presiding officer failed to consider that the penalty amount was imposed upon the respondent herein as punishment for his act of suppression of turnover and to discourage the dishonest act of tax evasion. While so, reducing the penalty amount will result in encouragement of tax evasion and the Tax payers will indulge in similar act of evasion on the pretext that he can able to avoid penalty burden. (iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.160 of 2018:- (i) Whether the Appellate Tribunal erred in not considering in proper perspective the provisions of PVAT Act 2007 before reducing the percentage of penalty amount from 100% to 75%. (ii) Whether the Appellate Tribunal failed to note that the respondent in spite of service of pre assessment notice by the Presiding Officer for suppressed turnover did not file any objections but chose to remit the arrived tax liability thereby admitting his act of suppression of turnover and hence he cannot escape the penalty amount of ₹ 82,20,376/- (iii) Whether the Learned Presiding officer failed to consider that the penalty amount was imposed upon the respondent herein as punishment for his act of suppression of turnover and to discourage the dishonest act of tax evasion. While so, reducing the penalty amount will result in encouragement of tax evasion and the Tax payers will indulge in similar act of evasion on the pretext that he can able to avoid penalty burden. (iv) Whether the Learned presiding officer failed to consider that once the respondent/assessee herein prefers to admit the assessment amount arrived based on suppressed turnover, he cannot esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% to 75%. (ii) Whether the Appellate Tribunal failed to note that the respondent in spite of service of pre assessment notice by the Presiding Officer for suppressed turnover did not file any objections but chose to remit the arrived tax liability thereby admitting his act of suppression of turnover and hence he cannot escape the penalty amount of ₹ 82,38,750.96. (iii) Whether the Learned Presiding officer failed to consider that the penalty amount was imposed upon the respondent herein as punishment for his act of suppression of turnover and to discourage the dishonest act of tax evasion. While so, reducing the penalty amount will result in encouragement of tax evasion and the Tax payers will indulge in similar act of evasion on the pretext that he can able to avoid penalty burden. (iv) Whether the Learned presiding officer failed to consider that once the respondent/assessee herein prefers to admit the assessment amount arrived based on suppressed turnover, he cannot escape the penalty which is a penal provisions incorporated to prevent the dishonest act of tax evasion. (v) Whether in the absence of any reliable documentary evidence the Learned presi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not file any objections but chose to remit the arrived tax liability thereby admitting his act of suppression of turnover and hence he cannot escape the penalty amount of ₹ 24,40,378.25. (iii) Whether the Learned Presiding officer failed to consider that the penalty amount was imposed upon the respondent herein as punishment for his act of suppression of turnover and to discourage the dishonest act of tax evasion. While so, reducing the penalty amount will result in encouragement of tax evasion and the Tax payers will indulge in similar act of evasion on the pretext that he can able to avoid penalty burden. (iv) Whether the Learned presiding officer failed to consider that once the respondent/assessee herein prefers to admit the assessment amount arrived based on suppressed turnover, he cannot escape the penalty which is a penal provisions incorporated to prevent the dishonest act of tax evasion. (v) Whether in the absence of any reliable documentary evidence the Learned presiding officer was right in reducing penalty amount as the reasoning that the respondent/assessee was suffering from financial crisis. (vi) Whether the Learned presiding officer failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Whether the Learned Presiding officer failed to consider that the penalty amount was imposed upon the respondent herein as punishment for his act of suppression of turnover and to discourage the dishonest act of tax evasion. While so, reducing the penalty amount will result in encouragement of tax evasion and the Tax payers will indulge in similar act of evasion on the pretext that he can able to avoid penalty burden. (iv) Whether the Learned presiding officer failed to consider that once the respondent/assessee herein prefers to admit the assessment amount arrived based on suppressed turnover, he cannot escape the penalty which is a penal provisions incorporated to prevent the dishonest act of tax evasion. (v) Whether in the absence of any reliable documentary evidence the Learned presiding officer was right in reducing penalty amount as the reasoning that the respondent/assessee was suffering from financial crisis. (vi) Whether the Learned presiding officer failed to consider that sympathy cannot supplant the assessee's culpable act of dishonest suppression of turnover. 7.With the consent of the learned counsel on either side, we take up T.C.(R) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rry. The grounds, which were urged before the Assessing Officer, were reiterated before the appellate authority but, in a more legal manner, in the sense that, they stated that, when evidence is collected by the Assessing Officer by way of third party evidence, this evidence has to be sustained, the Assessing Officer should have furnished all documents to the dealer, he should have summoned the officers of the Oil Corporation, permitted cross examination of the parties. Further, they stated that the burden of proof is on the Assessing Officer to plead and prove that there was an act of escaped turnover. They cannot shift the burden on the dealer. 13.Further, there is no statutory presumption attached to the evidence collected by the Assessing Officer, who is only a quasi-judicial authority in the matter of assessment or re-assessment. Before accepting the materials as evidence, the Assessing Officer is bound to prove the veracity of the materials and the evidentiary value of the same, and for such purposes, it is necessary to examine the person, who produced such evidence and the assessee should be given an opportunity to cross examine such person. Further, that order imposing p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oached the Tribunal, once again such request was made by the dealer, which was brushed aside by the Tribunal and not considered and the Tribunal also failed to exercise its jurisdiction under Section 58 of the PGST Act. 16.Further, it is submitted that the Tribunal having come to the conclusion that the findings of the Assessing Officer and the first appellate authority are without reasons, ought to have allowed the appeal filed by the assessee and vacated the entire penalty imposed on the dealer. It is further submitted that the request for cross examination ought to have been given and the officers of the HPCL should have been summoned invoking the power under Section 58 of the PGST Act or under Section 72 of the PVAT Act, and the authorities below and the Tribunal failed to exercise power, which is erroneous. 17.Further, it is submitted that the finding of the authorities that penalty is automatic is incorrect, as mens rea has to be established. In this regard, the learned counsel referred to the decision of the Hon'ble Full Bench of this Court in the case of The State of Tamil Nadu vs. Tvl. Nu-Tread Tyres and Ors., 2006 (4) CTC 450. 18.With regard to the need f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be applied to the facts and circumstances and not vice versa and the settled principle is that law will follow the facts. 22.Further, by referring to the factual situation, it is submitted that documents relied on, namely, the C-Forms and the supply details, etc., were furnished along with the pre-assessment notice to the dealer and the C-Form being a document to be generated by the dealer, the question of providing cross examination of the officials by the Assessing Officer does not arise. Thus, the burden of proof is on the dealer to show that the returns filed by them were correct and reflected the true sales turnover and if the dealer fails to prove the same by producing necessary evidence, then the dealer has to fail and the burden of proof is not on the Assessing Officer. 23.Further, by referring to the dates, it is submitted that sufficient opportunity was granted except in three cases, where assessments were completed within 1 months of the pre-assessment notice, in all other cases, the assessment was completed only after one year after the pre-assessment notice, affording sufficient and reasonable opportunity to the dealer. Further, it is submitted that exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er etc., (supra) would support the case of the Department in the sense that there can be no straight jacket principles of natural justice and each case has to be considered on its own merits. On the above submissions, the learned counsel sought to sustain the orders passed by the Assessing Officer. 27.By way of reply, Mr.R.Natarajan would submit that the entire re-assessment process was initiated by the Investigation Department and if that is so, then there can be no presumption especially while imposing penalty, as penalty cannot be presumed, it has to be established, mens rea has to be established and without establishing mens rea as held by the Hon'ble Full Bench in the case of Tvl. Nu-Tread Tyres and Ors., (supra), no penalty could have been imposed. 28.We have heard the learned counsels for the parties and carefully perused the materials placed on record. 29.The sum and substance of the challenge to the orders of the Tribunal by the dealer in these revisions is on the following grounds: (i) The dealer was not afforded an opportunity of cross examination of the officials of the HPCL; (ii) The Assessing Officer, without establishing mens rea, could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer and the name of the State have to be mentioned. The particulars of the bill, cash memo, delivery date, number and amount have to be given and more particularly, the counterfoil has to be retained by the purchasing dealer. In the instant case, the petitioner's/dealer's duplicate to be retained by the selling dealer, i.e., HPCL and original to be furnished to the prescribed authority in accordance with the rules framed under Section 13(4)(e) by the appropriate State Government. Thus, the documents, namely, the form of declaration in Form C is a document generated by the petitioners/dealers. Therefore, whatever statement made in such declaration will fully bind the dealer. In such circumstances, there is a clear estoppel against the dealer to contend something contrary to the Form C declaration. The theory as propounded by the dealer that blank forms were handed over to the HPCL is a false statement. The documents were verified by the first appellate authority and there is a clear finding to the effect that the dealer has signed all pages of the declarations. Thus, the dealer, at the very first instance, has come out with the false statement. As mentioned above, the coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST Act and taking note of the submission of the dealer that they had given blank C-forms to the Oil Corporation, the Court proceeded to analyse the case and held that Section 101 of the Evidence Act would stand attracted and the burden of proof is on the assessing authority and therefore, the assessing authority was not correct in denying the request made by the petitioner for cross examination. We do not subscribe to the view taken in the said order for more than one reason. 34.Firstly, the effect of the Form C declaration was not analysed in the said decision. More importantly, it was not placed before the Court and that the Form C declaration, which is a document generated by the dealer, contains seal and signature, certified by his Assessing Officer. The declaration is in a statutory form. Therefore, what was said in that is presumed to be correct and valid. The person, who contends otherwise, has to establish the same. Therefore, at no point of time, the burden of proof was on the Department. Therefore, the Court proceeded on a wrong premise, with regard to cross verification etc. Furthermore, the problem had escalated, because the petitioner had directly approached the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en. Such a contingency does not arise in the case on hand. Therefore, the decisions are clearly distinguishable. Equally, is the decision of the Hon'ble Supreme Court in Andaman Timber Industries (supra) and in the said case also, it was a third party unlike the case on hand where it is a document or a solemn declaration furnished by the dealer. 37.Next, we move on to the contention that no reasons were given by the authorities as well as the Tribunal. We wholly disagree with such a contention after going through the orders passed by the Assessing Officer. Admittedly, an Assessing Officer cannot be expected to write a judgment or a judicial order. We find that the Assessing Officer has analysed the objections given by the dealer and assigned reasons in paragraph 4 of his order. Therefore, we do not agree with the submission that the order is devoid of merits. 38.Examining the order passed by the first appellate authority, we find that the first appellate authority has also assigned reasons, though not very cogent but, yet in his understanding, he has assigned reasons, with regard to why the penalty should be sustained. In fact, the first appellate authority has point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t mentioned in the certificate and the representation made by the dealer was false. The Court noted this decision and held that it is sufficient to indicate that mens rea has application in tax default cases. 42.Admittedly, in the instant case also, the issue revolves around a Form C declaration and if according to the dealer, he had submitted the blank forms, it would amount to an offence. However, the first appellate authority found that there was no blank forms but, signed by them in all pages including annexure along with invoice bills. If that is so, then the details furnished therein should obviously tally with the return filed by the dealer. If there is discrepancy in that, the burden is on the dealer to disprove the same, more particularly, when the allegation is there is large scale suppression of taxable turnover. Thus, mens rea is writ large on the face of the record. There is no further proof required to establish the blameworthy conduct of the dealer. Though we may not be fully justified in examining the past conduct of the dealer, especially when they had succeeded in the earlier writ petitions in W.P.Nos.4385 to 4392 of 2009, which also arose out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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