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TMI Blog2019 (4) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... of the those documents - as to the intention or mens rea, as an ingredient for imposition of penalty on a registered purchasing dealer, for not obtaining a Tax Invoice [under sub-clause (ii) of Table entry 5, of section 54(1) of the Act], that act or omission must be deliberate. It is apparent from a plain reading of that provision inasmuch as the word 'deliberately' used therein clearly burdens the revenue to establish ill intent on part of the purchasing dealer, in not obtaining a Tax Invoice. However, for imposition of penalty for infringements contemplated under sub-clause (i), such intention or mens rea may not be mandatory. Both, a simple failure and also deliberate non-issuance of Tax Invoice or Sale Invoice appear to invite penalty on a registered selling dealer. Thus, mens rea may or may not be an ingredient for imposition of penalty under sub-clause (i). It is in such statutory context, the statute invites a construction, to locate and define the circumstance/s when a registered selling dealer may stand exposed to penalty for nonissuance of a Tax/Sale Invoice - As noted above, the legislature does appear to have treated differently, similar or comparable infringements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... never be said that the appellant had either failed to or had deliberately not issued a Tax Invoice to such dealers or that there was any collusion between the parties. The assessee rightly assumed those purchasing dealers to be unregistered dealers. The appellant did issue Sale Invoice against each of the four disputed transactions. Absence of any statement of the purchasing dealer to establish, they had informed the applicant of the facts specified under sections 22(1)(i) to (v) and 22(7) of the Act, clearly absolved the appellant - a selling dealer from any liability under subclause (i) of Table entry 5 of Section 54(1) of the Act. Thus, facts found by the Tribunal clearly make this case fall in category (b) considered in paragraph 38 of this order. Revision allowed - decided in favor of assessee. - Sales/Trade Tax Revision No. - 433 of 2013 - - - Dated:- 22-2-2019 - Saumitra Dayal Singh, J. For the Applicant : Piyush Agrawal For the Opposite Party : C.S.C. ORDER SAUMITRA DAYAL SINGH, J. 1. Heard Sri Piyush Agrawal, learned counsel for the assessee/applicant and Sri B.K. Pandey, learned Standing Counsel for the revenue. 2. The present revisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice; or (ii) deliberately not obtained tax invoice in spite of being a registered dealer while purchasing the goods liable to tax under this Act from a registered dealer; or (iii) not issued purchase invoice; in accordance with the provisions of this Act Tax payable on the value of goods or 40% of the value of goods whichever is higher 6. Chiefly, the allegation made against the assessee was, it had performed each of the aforesaid 68 transactions against Sale Invoice, though it was obliged to perform those transactions only against Tax Invoice. The revenue claimed to be aggrieved thus: by issuing Sale Invoice, the assessee/appellant deprived the revenue of opportunity to tax the subsequent sale on value addition base. 7. The assessee resisted the penalty proceedings and submitted :- the aforesaid 68 transactions had been performed with unregistered dealers and therefore no Tax Invoice could be issued. That explanation did not find favour with the assessing authority, who by his order dated 18.11.2009 imposed penalty @ 40% of the disputed turnover ₹ 3,98,96,675/-. Thus, penalty ₹ 1,59,58,670/- was imposed. 8. The assessee carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry (5), it has been submitted, for imposition of penalty, under that provision, the failure to issue a Tax Invoice or Sale Invoice should have been a 'deliberate' act and not an unintentional act on part of the selling dealer. Second, it has been submitted, on a co-joint reading of clauses (i) and (ii) of Table entry 5 to Section 54(1) of the Act, and in face of Sale Invoice issued by the assessee, it is clear, the penal consequences may have followed against the purchasing dealer but not the selling dealer. Also, in absence of such evidence existing, the finding of collusion recorded against the assessee/selling dealer, is perverse. 13. Sri B.K. Pandey, learned Standing Counsel on the other hand submits, the assessee is a known manufacturer of Pan Masala and other items. It had an enormous turnover as is reflected from the value of the disputed transactions, itself. Then, it has been submitted, looking into the nature of the commodity, the fact that the appellant chose to enter into a sale transaction without first issuing a Tax Invoice, was evidence of its complicity in the commission of the offence. He therefore submits, the Tribunal had not erred in rejecting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of penalty on a registered purchasing dealer, for not obtaining a Tax Invoice [under sub-clause (ii) of Table entry 5, of section 54(1) of the Act], that act or omission must be deliberate. It is apparent from a plain reading of that provision inasmuch as the word 'deliberately' used therein clearly burdens the revenue to establish ill intent on part of the purchasing dealer, in not obtaining a Tax Invoice. 17. In contrast, for the purpose of sub-clause (iii) a simple failure by a registered purchasing dealer (to issue the Purchase Invoice), to the unregistered selling dealer, would, in itself, constitute and complete the necessary ingredient for levy of penalty, on such a purchasing dealer. Omission of the word 'deliberately' in that sub-clause and absence of any other word to suggest existence of intention or mens rea, clearly excludes it's requirement as an ingredient of penalty under that subclause. 18. However, for imposition of penalty for infringements contemplated under sub-clause (i), such intention or mens rea may not be mandatory. Both, a simple failure and also deliberate non-issuance of Tax Invoice or Sale Invoice appear to invite penal ..... 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(1) In respect of all taxable goods, except non-vat goods, in the circumstances mentioned below, every registered dealer except a dealer who opts for payment of composition money under section 6, where such dealer is liable for payment of tax on sale of any such goods, shall, while making sale of the goods, issue to the purchaser, tax invoice containing such particulars as may be prescribed including name and complete address and Taxpayer's Identification Number, if any, of the person purchasing the goods, and shall charge separately on such tax invoice the amount of tax payable by him, where such goods are sold to (i) a registered dealer; or (ii) an official or personnel of any foreign diplomatic mission or consulate in India; or (iii) the United Nations or any other similar International body, entitled to privileges under any convention to which India is a party or under any other law for the time being in force; or (iv) any consulate or diplomatic agent of any mission, the United Nations or other body referred to in clause (ii) or clause (iii); or (v) any developer or co-developer of any Special Economic Zone, for use or consumption in the autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not issue cash memo or bill, the purchasing dealer shall issue to the person selling the goods a purchase invoice in respect of such purchase in the prescribed manner containing such particulars as may be prescribed and shall obtain signature or thumb impression of the person selling the goods. (10) The purchasing dealer referred to in sub-section (9) shall prepare purchase invoice in two copies marked as original copy and office copy. The purchasing dealer shall deliver original copy of such purchase invoice to the person selling the goods and shall preserve office copy of such purchase invoice for the period prescribed under sub-section (3) of section 21. 23. Thus, in the first place, it is not the scheme of the Act to provide for issuance of a Tax Invoice by a registered dealer in the case of every sale made by such dealer. That obligation is, in the first place, governed by the facts whether the goods sold are (i) taxable and (ii) vat-able. If the goods sold are not taxable and/or non vat-able, the selling dealer may not issue a Tax Invoice with respect to the same. Then, the person who may issue a Tax Invoice must be a registered selling dealer who may not have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered dealer or by a registered dealer (admitted to compounding), to another registered or unregistered dealer. 29. Correspondingly, no unregistered dealer may issue a Tax Invoice. Also, the first proviso to sub-Rule 2 of Rule 44 places a further restriction on the sales performed by a registered dealer to an unregistered purchasing dealer, by requiring proof of identity to be maintained, in certain circumstances - involving issue of a Sale Invoice. On the other hand, in the case of purchase made by a registered dealer from an unregistered dealer, the purchasing dealer is necessarily obliged to issue a Purchase Invoice. 30. Keeping in mind such clear prescriptions made by law - for issuance of a Tax Invoice and/or Sale Invoice, in mutually exclusive circumstances, the obligation cast on the purchasing dealer under section 22(7) of the Act is crucial and in fact decisive and mandatory as to the conduct he must offer, to test the allegation of breach/infringement of law, levelled against a selling dealer in not issuing a Tax Invoice. The selling dealer may only react to the action taken or representation made by the purchasing dealer. Only after the purchasing dealer volun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to be an unregistered dealer. 35. Therefore, no legal obligation or penal action may automatically arise or visit the selling dealer upon non issuance of a Tax Invoice. In fact he would be at no fault to presume the general fact/status-of the purchasing dealer being unregistered and consequently, in issuing a Sale Invoice, unless the special fact is first made known or disclosed to him. That has to be the plain effect of Section 22 of the Act. 36. By way of corollary, a purchasing dealer who approaches a selling dealer for purchase of goods for his business needs, cannot compel such selling dealer to issue a Tax Invoice, though the Act may mandate its issuance, in given facts. The Act does not forbid a purchasing dealer from making purchase of those goods. It only compels the purchasing dealer to make known to the selling dealer of facts specified in sections 22(1)(i) to (v) and section 22(7) of the Act. 37. Once, the purchasing dealer has discharged that obligation, the Act does not require him to make any other or further compliance. Thereafter, the obligation arises on the selling dealer to make further compliance of law by issuing the Tax Invoice. The Act does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the registered selling dealer had colluded with the purchasing dealer and the Tax Invoice was not issued as a result of such collusion, both dealers may be equally exposed to penal consequences - for the breach of not issuing and not obtaining the Tax Invoice [under clauses (i) and (ii) of section 54(1)(5) of the Act]. (f) if a registered purchasing dealer fails to issue a Purchase Invoice to an unregistered dealer, while making purchase from the latter, he may be penalised for breach of not issuing a Purchase Invoice [under clause (iii) of section 54(1)(5) of the Act]. 39. Therefore, the difference between the words 'failure' and 'deliberately' appearing in sub-clause(i) of section 54(1)(5) of the Act is not relevant to the consequence that may visit the registered selling dealer but, it may, in case of collusion be relevant as to the consequence that may follow on the purchasing dealer. Also, all penalties under section 54(1)(5) of the Act are discretionary and not mandatory. Such discretion has to be exercised on accepted and established norms. 40. Turning to the facts found by the Tribunal in the present case, the assessee/appellant had from the very ..... X X X X Extracts X X X X X X X X Extracts X X X X
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