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TMI Blog2023 (4) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had opted for payment of lumpsum tax as provided under Section 55A of the Gujarat Sales Tax Act, 1969. The respondent assessee deposited tax at the rate of 2% on sales involved in the execution of works contract of coating of pipes by treating the same as civil works contract as prescribed in Entry1 of the notification dated 18.10.1993 issued by the Government of Gujarat. The Assessing Officer (AO) vide order dated 30.03.2005 for assessment year (AY) 200203 held that the contract of coating of pipes is not a civil works contract and therefore, the composition amount is payable not at the rate of 2% as deposited by the respondent but it falls under Residuary Entry8 to the notification dated 18.10.1993. The AO raised the total demand as under: Particulars Amount Tax 2,36,55,529/ Interest u/s 47(4A) 1,04,56,181/ Penalty u/s 45(6) 1,41,93,312/ Total 4,83,05,013/ 2.1 The assessee preferred a first appeal before the First Appellate Authority i.e., Joint Sales Tax Commissioner. By order dated 30.07.2005, the First Appellate Authority dismissed the said appeal. The assessee approached the Gujarat Value Added Tax Tribunal by filing Second Appeal No. 820/2005. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther submitted that while deleting the penalty, the High Court has not at all considered subsection (6) of Section 45 of the Act, 1969 in its true spirit. 3.3 It is next submitted that the High Court has not properly considered the fact that the penalty leviable under Section 45(6) of the Act, 1969, is a statutory penalty and hence, is compulsorily leviable. 3.4 It is contended by Ms. Mehta, learned counsel appearing on behalf of the State that the penalty leviable under Section 45(6) of the Act, being a statutory penalty, there is no discretion vested with the Commissioner to levy or not to levy, as long as the assessee falls under Section 45(5) of the Act, 1969. 3.5 It is further contended that even the Commissioner has no discretion and/or authority to levy the penalty other than the penalty provided under Section 45(6) of the Act, 1969. 3.6 It is submitted by the learned counsel appearing on behalf of the State that the moment it is found that the amount of tax assessed or reassessed exceeds the amount of tax already paid by the dealer under Section 47 in respect of such period by more than 25% of the amount of tax so paid, the dealer can be deemed to have failed to pay t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submissions, learned counsel appearing on behalf the State has heavily relied upon the decisions of this Court in the cases of State of Gujarat Vs. Arcelor Mittal Nippon Steel India Limited; (2022) 6 SCC 459 and Chairman, SEBI Vs. Shriram Mutual Fund and Anr.; (2006) 5 SCC 361; Guljag Industries Vs. Commercial Taxes Officer (2007) 7 SCC 269; Competition Commission of India Vs. Thomas Cook (India) Limited and Anr. (2018) 6 SCC 549, as well as the decisions of the Gujarat High Court in the cases of Riddhi Siddhi Gluco Biols Ltd. Vs. State of Gujarat; (2017) 100 VST 305 (Guj) and State of Gujarat Vs. Oil and Natural Gas Corporation Limited; (2017) 97 VST 506 (Guj). 3.11 It is submitted that mens rea can only be expressly included in the law by the legislature. The Court cannot fill in the gaps and purport the requirement of an intention or guilty mind of the assessee before levying penalty and interest where the same is not prescribed by the legislature. 3.12 In so far as the decision of this Court in the case of Hindustan Steel Ltd. Vs. State of Orissa; 1969 (2) SCC 627 relied upon on behalf of the assessee is concerned, it is vehemently submitted by the learned counsel appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealing with Section 34(7) of Gujarat VAT Act, in which the language used is "If the Commissioner is satisfied that the dealer, in order to evade or avoid payment of tax..." That under the VAT Act, not only is the Commissioner vested with discretion but the said penalty provision is applicable specifically when the assessee has an intention to "evade or avoid payment of tax." That in the present case, the legislature in its wisdom imposed a liability of penalty and interest without reference to any requirement of mens rea on the part of the assessee. 3.15 Making the above submissions and relying upon the above decisions, it is prayed that the present appeal be allowed and the impugned judgment and order deleting the penalty and interest levied under Section 45(6) and Section 47(4A) of the Act, 1969 be quashed and set aside. 4. The present appeal is vehemently opposed by Shri V. Lakshmikumaran, learned counsel appearing on behalf of the respondent - assessee - dealer. It is submitted at the outset that the penalty and interest is not payable by the assessee in the facts of the present case. It is further submitted that with reference to imposition of penalty, as per statutory provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent can, in an appeal filed by the opposite party, recanvass for reversal of a finding reached against him in the judgment. Reliance is placed upon the decisions of this Court in the case of J.K. Cotton Spg. and Wvg. Mills Co. Ltd. Vs. CCE; (1998) 3 SCC 540 and BHEL Vs. Mahendra Prasad Jakhmola; (2019) 13 SCC 82. Learned counsel appearing on behalf of the assessee has also relied upon the decision of the Gujarat High Court in the case of Elecon Engineering Vs. State of Gujarat; (1994) 93 STC 397. 4.4 Relying upon the decision of this Court in the case of Director of Elementary Education Vs. Pramod Kumar Sahoo; (2019) 10 SCC 674, it is submitted that as held by this Court any concession in law made by either counsel would not bind the parties, as it is legally settled that advocates cannot throw away legal rights or enter into arrangements contrary to law. 4.5 It is contended that in the present case, since the penalty and interest were proposed to be waived by following the decision in case of Brooke Bond India Limited (supra), the advocate of the dealer did not press the issue of demand on merits. That in case the judgment of High Court is proposed to be reversed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection is not irrebuttable. 4.10 As regards the other preposition that for the purpose of imposition of penalty under Section 45(6), mens rea, etc., must be proved, it is vehemently submitted that it is a general principle of law, based on the maxim of "actus non facit reum mens sit rea" that an act does not make a man guilty, unless it can also be shown that he was aware that he was doing wrong. It is submitted that legislative attitude towards the concept of mens rea in tax laws and the judicial practice in emphasising its importance therefore, deserves careful consideration. Learned counsel appearing on behalf of the respondent assessee has also relied upon the decision of this Court in the cases of Hindustan Steel Ltd. (supra); Cement Marketing Co. of India Ltd. Vs. Assistant Commissioner of Sales Tax, Indore and Ors.; 1980 (6) ELT 295 (S.C.) and Commissioner of Central Excise, Chandigarh (supra) in support of his above submissions to the effect that before levy of penalty and interest mens rea has to be proved by the department. 4.11 It is further submitted by the learned counsel appearing on behalf of the respondent - assessee that Section 45(6) of the Act, 1969, provides f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or Commission agent becomes liable to pay purchase tax under the provisions of subsection (1) or (2) of section 16, then, the Commissioner may impose on him, in addition to any tax payable - (a) if he has included the purchase price of the goods in his turnover of purchase as required by subsection (1) of section 16, a sum by way of penalty not exceeding half the amount of tax, and (b) if he has not so included the purchase price as aforesaid, a sum by way of penalty not exceeding twice the amount of tax. (2) If it appears to the Commissioner that such dealer (a) has failed to apply for registration as required by section 29, or (b) has without reasonable cause, failed to comply with the notice under section [41, 44 or 67] or (c) has concealed the particulars of any transaction or deliberately furnished inaccurate particulars of any transaction liable to tax, the Commissioner may impose upon the dealer by way of penalty, in addition to any tax assessed under section 41 or reassessed under section 44 or revised under section 67 a sum not exceeding one and onehalf times the amount of the tax. (3) If a dealer fails to present his licence, recognition or as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of tax already paid by a dealer for that period, there shall be paid by such dealer, for the period commencing from the date of expiry of the time prescribed for payment of tax under subsection (1), (2) or (3) and ending on date of order of assessment, reassessment or, as the case may be, revision, simple interest at the rate of [eighteen per cent] per annum on the amount of tax not so paid or on any less amount thereof remaining unpaid during such period." 6.2 On a fair reading of Section 45 of the Act, it can be seen that as per subsection (2) of Section 45 of the Act, 1969, penalty is leviable if it appears to the Commissioner that a dealer has concealed the particulars of any transaction or deliberately furnished inaccurate particulars of any transaction liable to tax. In the present case, it cannot be said that the dealer has concealed the particulars of any transaction or deliberately furnished inaccurate particulars of any transaction liable to tax. However, in so far as penalty leviable under subsection (6) of Section 45 of the Act, 1969 is concerned, the penalty leviable under the said provision is as such, a statutory penalty and there is no discretion vested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons (5) and (6) of Section 45, it is evident that it is integral part of the assessment that the penalty be levied on the difference of amount of tax paid and amount of tax payable as per the order of assessment or reassessment as the case may and the same shall be automatic. Therefore, when the penalty on the difference of amount of tax paid and tax payable is more than 25% of the amount of tax so paid, there shall be automatic levy of penalty under Section 45(6) of the Act. 6.4 From the language of Section 45(6) of the Act, it can be seen that the penalty leviable under the said provision is a statutory penalty. The phrase used is "shall be levied." The moment it is found that a dealer is deemed to have failed to pay the tax to the extent mentioned in subsection (5) of Section 45, there shall be levied on such dealer a penalty not exceeding one and onehalf times the difference referred to in subsection (5). As per subsection (5), where in the case of a dealer the amount of tax assessed or reassessed exceeds the amount of tax already paid by the dealer in respect of such period by more than 25% of the amount of tax so paid, the dealer shall be deemed to have failed to pay the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o criminal/quasi criminal proceedings. That Section 25 of the Orissa Sales Tax Act which was in question in the said case imposed a punishment of imprisonment up to six months and fine for the offences under the Act. The said case has no application in the present case which relates to imposition of civil liabilities under the SEBI Act and the Regulations and is not a criminal/quasi criminal proceeding. 35. In our considered opinion, penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act and the Regulations is established and hence the intention of the parties committing such violation becomes wholly irrelevant. A breach of civil obligation which attracts penalty in the nature of fine under the provisions of the Act and the Regulations would immediately attract the levy of penalty irrespective of the fact whether contravention must be made by the defaulter with guilty intention or not. We also further held that unless the language of the statute indicates the need to establish the presence of mens rea, it is wholly unnecessary to ascertain whether such a violation was intentional or not. On a careful perusal of Section 15D( b) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... travention of the provisions of a civil act. The breach of a civil obligation which attracts penalty under the Act would immediately attract the levy of penalty irrespective of the fact whether the contravention was made by the defaulter with any guilty intention. It was further held that unless the language of the provision intends the need to establish mens rea, it is generally sufficient to prove the default/contravention in complying with the statute. In the present case also the statute provides for a hearing. However, that hearing is only to find out whether the assessee has contravened Section 78(2) and not to find out evasion of tax which function is assigned not to the officer at the checkpost but to the AO in assessment proceedings. In the circumstances, we are of the view that mens rea is not an essential element in the matter of imposition of penalty under Section 78(5)." 6.8 In the case of Competition Commission of India (supra) while considering Section 43A of the Competition Act, 2002 which provides for a penalty, it is observed in paragraphs 34 to 37 as under: " 34. If the ultimate objective test is applied, it is apparent that market purchases were within view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligation as contemplated by the Act and the Regulations is established and hence intention of the parties committing such violation becomes wholly irrelevant. ... We also further hold that unless the language of the statute indicates the need to establish the presence of mens rea, it is wholly unnecessary to ascertain whether such a violation was intentional or not. On a careful perusal of Section 15D( b) and Section 15E of the Act, there is nothing which requires that mens rea must be proved before a penalty can be imposed under these provisions. Hence once the contravention is established then the penalty is to follow." 37. The imposition of penalty under Section 43A is on account of breach of a civil obligation, and the proceedings are neither criminal nor quasicriminal; the penalty has to follow. Only discretion in the provision under Section 43A is with respect to quantum of penalty." 6.9 The Gujarat High Court while considering the very provision and penalty and interest imposed under Section 45(6) and Section 47(4A) of the Act, 1969, has taken a consistent view in the cases of Riddhi Siddhi Gluco Biols Ltd. (supra) and Oil and Natural Gas Corporation Limited (supra) tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used it for manufacture of its own goods generating the electricity, which again came to be sold to ESL under the power purchase agreement." 6.11 Even otherwise, the word used in Section 45(6) is "shall be levied". The dealer shall be liable to pay the penalty not exceeding one and onehalf times of the difference of the tax as mentioned in subsection (5) of Section 45 of the Act, 1969. The language used in Section 45 is precise, plain and unambiguous. The intention of the legislature is very clear and unambiguous that the moment any eventuality as mentioned in Section 45(5) occurs, the penalty shall be leviable as mentioned in subsection (6) of Section 45. No other word like mens rea and/or satisfaction of the assessing officer and/or other language is used like in Section 11AC of the Central Excise Act. It is a well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. As per the settled position of law, the intention of the legislature is primarily to be gathered from the language used, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - assessee - dealer before the High Court are concerned, at the outset, it is required to be noted that a conscious decision was taken by the learned Senior Advocate appearing on behalf of the dealer, who appeared before the High Court and therefore, he did not press the issue/question on the liability to pay the tax at the rate of 12% was wrongly given. It is to be noted that the respondent - dealer was represented through a very senior advocate before the High Court. Therefore, it cannot be said that the concession was wrongly given. While referring the submissions made by the learned Senior Advocate, appearing on behalf of the respondent - assessee - dealer, the High Court has recorded as under: " 4. Learned Senior Counsel Mr. S N Shel at, appearing with Mr.H A Dave, learned Advocate for the appellant has fairly conceded that looking to the fact that the respondent has passed the assessment order on the basis of material available with it, they were required to pay the tax on the basis of 12% and that has been paid by the appellant since the opinion of the expert was turned out." It is not true that the learned Senior Advocate, appearing on behalf of the respondent - assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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