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TMI Blog2024 (3) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... that the power of assessment of the amount of tax payable by the dealer on such turnover and for determining the amount of input tax credit admissible to the dealer has been given to the assessing authority and further where the assessing authority is of the opinion that turnover of sale or purchase or both disclosed by the dealer is not worthy of credence it may determine to the best of its judgement the turnover of sale or purchase or both and assess the tax payable on such turnover. The assessment order dated 30.10.2010 would indicate that the same has been passed considering the provisions of Section 28(2) of the Act, 2008 on the basis of best of its judgement meaning thereby that it is an assessment which has been made by the assessing authority. The jurisdiction of the assessing authority while taking recourse to the best judgement assessment is well settled. Hon'ble Supreme Court in the cases of State of Kerala vs C. Velukutty [ 1965 (12) TMI 32 - SUPREME COURT] , The Commissioner of Income Tax, Calcutta v. Padamchand Ramgopal [ 1970 (4) TMI 2 - SUPREME COURT] , M/s Joharmal Murlidhar and co. v. Agricultural Income Tax Officer, Assam and others [ 1970 (8) TMI 5 - SUPREME ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evision allowed. - Hon'ble Abdul Moin, J. For the Revisionist : Mudit Agarwal For the Opposite Party : C.S.C. ORDER HON'BLE ABDUL MOIN, J. 1. Heard Shri Mudit Agarwal, learned counsel for the revisionist and Shri Sanjay Sarin, learned Additional Chief Standing Counsel appearing for the respondent. 2. Learned counsels appearing for the parties contend that the issue involved in SALES/TRADE TAX REVISION No. - 40 of 2021 and SALES/TRADE TAX REVISION No. - 39 of 2021 are the same. As such, the Court proceeds to hear and decide both the revisions together. For convenience, facts of SALES/TRADE TAX REVISION No. - 40 of 2021 are being taken. 3. This Court vide the order dated 17.08.2021 had admitted the revision. However the questions of law were not framed. 4. Both the learned counsels state that the questions of law which would be relevant for deciding the controversy involved in the instant revision would be as follows: (I) Whether the men-rea on the part of the assessee is an essential pre-requisite condition for imposition of penalty under Section 54(1)(2) of the U.P. VAT Act, 2008? (II) Whether penalty under Section 54(1)(2) of the Act can be imposed where the assessment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the judgement and order dated 22.06.2016 passed by the learned Tribunal attained finality as it was not challenged by the revisionist rather the revisionist acquiesced to the said order and has paid the aforesaid amount of Rs 2,46,250/-. 10. It is contended that during pendency of the aforesaid proceedings, a notice dated 30.01.2013 under Section 54(1)(2) of the Act, 2008, a copy of which is annexure 4 to the revision, had been issued to the revisionist. The revisionist filed his reply. Vide order dated 08.05.2013, a copy of which is annexure 5 to the revision, an order of penalty was passed whereby the revisionist has been required to pay an amount of Rs 18,65,625/- against the assessed tax of Rs 6,21,875/-. Being aggrieved the revisionist filed an appeal which was rejected vide the order dated 30.09.2016, a copy of which is annexure 7 to the petition. Still being aggrieved the revisionist filed a second appeal before the learned Tribunal which has also been dismissed vide the judgement and order dated 06.04.2021 as annexed to the revision. Being aggrieved the instant revision has been filed. 11. The argument of learned counsel for the revisionist is that a perusal of seria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e eyes of law meaning thereby that mens-rea is a necessary ingredient for imposition of penalty. 16. Reliance has also been placed on the definition of Tax Evasion as per Blacks' Law Dictionary, 8th Edition. 17. No other argument has been raised. 18. On the other hand, Shri Sanjay Sarin, learned Additional Chief Standing Counsel appearing for the respondent argues that none of the aforesaid judgements have considered the full purport of column no. 2 of the table of Section 54 (1) of the Act 2008 in as much as one of the wrong on which the penalty can be imposed, as provided in the table, is the evasion on the part of the dealer for payment of tax which he is liable to pay under the Act. 19. The argument of Shri Sarin is that when the judgement and order dated 22.06.2016 passed by learned Tribunal whereby the revisionist has been assessed for payment of tax of Rs 2,45,250/- has attained finality and the revisionist has also deposited the tax as such the said payment of tax by revisionist would fall within the ambit of being an evasion of payment of tax which the revisionist has been held liable to pay under the provisions of the Act, 2008 and consequently the penalty can validly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid proceedings, a notice under Section 54(1)(2) of the Act, 2008 was issued to the revisionist. The revisionist filed his reply. Vide the order dated 08.05.2013 an order of penalty has been passed whereby the revisionists has been required to pay an amount of Rs 18,65,625/- against the assessed tax of Rs 6,21,875/-. Being aggrieved the revisionist filed an appeal which has been rejected vide the order dated 30.09.2016. Still being aggrieved, a second appeal was filed before the learned Tribunal which has been dismissed vide judgement and order dated 06.04.2021. Being aggrieved the instant revision has been filed. 25. The argument of learned counsel for the revisionist is that a perusal of serial no. 2 of table as provided in Section 54 (1) of the Act, 2008 would indicate that in order to levy a penalty, a finding has to be specifically recorded that the dealer, in this case the revisionist, has concealed particulars of turnover or has deliberately furnished inaccurate particulars of such turnover or has submitted a false tax return or has avoided payment of tax which he is liable to pay under the Act and only when a specific finding to the said effect has been recorded by the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of such goods, (iii) if the value of goods is not described or mentioned in tax invoice, sale invoice or any such other document the estimated value prevalent at the relevant time in the local market area where the transaction has taken place, shall be deemed to be the value of such goods. . 29. From perusal of Section 54 of the Act, 2008, so far as it is relevant to the facts of the instant case, it emerges that in case the assessing authority is satisfied that any dealer or other person has committed the wrong described in Column (2) of the table then it may direct such dealer or person to pay by way of penalty a sum as provided in column 3 against the same serial number. 30. Serial no. 2, with which the present controversy pertains to, describes the wrong committed by the dealer whereby where the dealer has concealed particulars of his turnover or has deliberately furnished inaccurate particulars of such turnover or submits a false tax return under the Act 2008 or evades the payment of tax which he is liable to pay under the Act, 2008 then three times of amount of tax concealed or avoided can be imposed as penalty. 31. So far as the present controversy is concerned, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) dealer who has prevented or obstructed an officer empowered to make audit, survey, inspection, search or seizure under the provisions of this Act; or (vi) [Omitted] (2) Where after examination of books, accounts, documents and other records referred to in sub-section (1), - (i) the assessing authority is satisfied about correctness of turnover of sale or purchase or both, as the case may be, disclosed by the dealer, it may assess the amount of tax payable by the dealer on such turnover and determine the amount of input tax credit admissible to the dealer or amount of reverse input tax credit payable by the dealer; and (ii) where assessing authority is of the opinion that turnover of sale or purchase or both, as the case may be, disclosed by the dealer is not worthy of credence, it may determine to the best of its judgment the turnover of sale or purchase or both, as the case may be, and assess the tax payable on such turnover and determine admissible amount of input tax credit and reverse input tax credit payable by the dealer. (3) Before making an assessment under sub-section (2), dealer shall - (i) be required to furnish annual return of turnover and tax referred to in sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order passed under any provisions of this Act. 34. A perusal of Section 28(2) of the Act 2008 would indicate that where after examination of books, accounts and other records referred to in Section 28(1) of the Act, 2008 the assessing authority is satisfied about correctness of sale or purchase or both, it may the assess the amount of tax payable by the dealer. Where the assessing authority is of the opinion that turnover of sale or purchase or both, disclosed by the dealer is not worthy of credence, it may determine to the best of its judgement the turnover of sale or purchase or both and assess the tax payable on such turnover and determine the taxable amount of input tax credit and reverse input tax credit payable by the dealer. 35. A further perusal of Section 28(2) of the Act 2008 indicates that the power of assessment of the amount of tax payable by the dealer on such turnover and for determining the amount of input tax credit admissible to the dealer has been given to the assessing authority and further where the assessing authority is of the opinion that turnover of sale or purchase or both disclosed by the dealer is not worthy of credence it may determine to the best of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as follows: tax evasion. The willful attempt to defeat or circumvent the tax law in order to illegally reduce one's tax liability. 41. From perusal of the aforesaid definition of 'tax evasion' it emerges that tax evasion has been defined as a willful attempt to defeat or circumvent the tax law in order to illegally reduce ones tax liability. The word willful would mean a deliberate attempt to circumvent the tax law. 42. As already indicated above, the order of penalty passed under Section 54(1)(2) of the Act, 2008 is based on the order of the assessing authority as passed under Section 28(2) of the Act, 2008. The assessment order under Section 28(2) of the Act, 2008 is on the basis of well grounded estimate or reasonable guess as held by Hon'ble Supreme Court meaning thereby that the said order does not indicate the willful attempt to defeat or circumvent the tax law to reduce the tax liability. Once the sine qua non to imposition of penalty is evasion of payment of tax and for evasion there has to be a willful act consequently the Court will have to examine as to whether there has been willful act on the part of the revisionist in evasion of tax. 43. For this, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the implementation of the object of the statute would otherwise be defeated. The nature of the mens rea that would be implied in a statute creating an offence depends on the object of the Act and the provisions thereof. 27. In Union of India Ors Vs Dharamendra Textile Processors ors 12 while examining the scope of Section 11- AC of the of the Central Excise Act, 1944, a three judge Bench of this Court, observed that: A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws. 30. To put it succinctly, in examining whether mens rea is an essential element of an offence created under a taxing statute, regard must be had to the following factors: (i) the object and scheme of the statute; (ii) the language of the section and; (iii) the nature of penalty. 31. It is true that the object of Section 10(b) of the Act is to prevent any misuse of the registration certificate but the legislature has, in the said Section, used the expression falsely represents in contradistinction to wrongly represents. Therefore, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has evaded payment of tax which he is liable to pay under the Act then three times the amount of tax concealed or avoided is to be imposed as a penalty. 47. From the language of the Section it is thus clear that, so far as the present controversy is concerned, the dealer would be liable to pay penalty for evasion of tax. 'Evasion of tax' is a willful attempt to defeat or circumvent tax law as defined in Blacks Law Dictionary. The penalty is based on the assessment order under Section 28(2) of the Act, 2008. In turn the assessment order is based on best judgement assessment which has been held by the Hon'ble Supreme Court to be on well grounded estimate or reasonable guess based. 48. The revisionist has already paid the tax as assessed after modification by the learned Tribunal vide the order dated 22.06.2016. At no stage is there any finding of any willful evasion of tax by the revisionist or a finding of there being any deliberate attempt on the part of the revisionist in avoiding the payment of tax. It is for the authorities to specifically prove the evasion of payment of tax on the part of the revisionist where the evasion has been defined as a willful attempt i.e. t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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