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TMI Blog2024 (5) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... le transaction, then each invoice will constitute default as envisaged by clause (k) of sub-section 1 of section 69. When section 69 itself does not hint to any angle of time duration, SSTAT was in error in pressing the time duration into play and reckon that the default envisaged under clause (k) of sub-section 1 of section 69 was referable to the time duration and not to the tax invoice - The penalty envisaged under section 69 (1) (xi), relatable to the default identified in clause (k) of sub-section 1 of section 69 was meant to be a deterrent so that any VAT dealer or a casual trader would not venture and resort to acts of omission or commission which would have the effect of under assessment or evasion of the tax liability resting upon the said VAT dealer or a casual trader. Clause (xi) of sub-section 1 of section 69 itself decodes that a particular tax invoice may have a tax liability which multiplied by ten times may still fall short of a deterrent effect to a VAT duty evading trader and, therefore, even a penalty of ten times the tax payable may be on a lesser side and, therefore, the other option of penalizing a given defaulting VAT trader on a higher side has been provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty of Rs. 3,50,000/- against the respondent. 06. Against this appellate authority order, the respondent approached SSTAT with an appeal on file no. 298/ST/T/J on 10.01.2007 thereby posing challenge to the original order of imposition of penalty confirmed by the appellate authority order. 07. The SSTAT in terms of its adjudication vide order dated 23.03.2007 came to set aside the original order of the Commercial Tax Officer which was of imposition of penalty and the matter was remanded back to the Commercial Tax Officer for determining the tax payable for each improper sale invoice/estimate and then to decide the quantum of penalty required to be levied in the case. 08. After this remand order by the SSTAT, an application came to be preferred on behalf of the Commissioner of Commercial Taxes, J K by recourse to section 75 of the J K Value Added Tax Act, 2005 for seeking reference to this Court on the question of law as proposed by the Commissioner of Sales Tax (Commissioner, Commercial Taxes) J K, Jammu. 09. In response to this application, the SSTAT felt persuaded to reckon that the case involved question of law and, therefore, warranted a reference. 10. The source of referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being higher liability as against the ten times value of the tax payable per invoice. Since, the Commercial Tax Officer was found to have defaulted in computing the tax payable as against the respective invoice adding upto 35 invoices, as such, the SSTAT required the said deficiency in the order of the Commercial Tax Officer to be rectified firstly before levy of penalty. 13. The SSTAT on its own reckoned that imposition of penalty of an amount of Rs. 3,50,000/- was not born out of correct application of law because the Commercial Tax Officer had reckoned every questionable invoice, totaling 35 in number, to be an individual default warranting higher default of Rs. 10,000/- but as per the SSTAT the inspection being done on a same day was to be the basis to reckon default on the part of the respondent to be a single default for which single notice had been issued to the respondent by the Commercial Tax Officer. Thus, the SSTAT held the discovery of 35 objectionable invoices found from the respondent as a single event itself to be read as a single default and, therefore, a cumulative tax penalty against 35 questionable invoices was to be worked out to choose the option of imposing pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable or not? Section 13 provides Tax on Sales. Section 20 defines Tax Payable and section 25 defines Turnover Tax . Chapter-IV (section 27 to section 30) provides for Registration of Dealers, Amendment and Cancellation of Registration Certificates . Chapter-V (section 31 to section 56) deals with Returns, Assessment, Recovery and Refund of Tax . Chapter-VII (section 58 to section 61) deals with Accounts and Records wherein section 59 provides for tax invoice. Section 59 provides that any dealer liable to pay tax under the Act shall in respect of goods sold by him or on his behalf issue to the purchaser, at the time of sale, a VAT invoice or a Retail invoice as the case may be, containing such particulars and subject to such conditions as may be prescribed. 16. Under the VAT Act, 2005 the then State of Jammu Kashmir came to frame the Jammu Kashmir Value Added Tax Rules, 2005. Rule 63 lays provisions for Tax Invoice. The tax invoice is classified into a VAT invoice and a retail invoice. 17. In the context of the present case, we are concerned with the retail invoice, which is to be issued by a VAT dealer or a casual trader when making sale of good in the State to non-VAT dealers, un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al tax invoice which is meant to be penalized and, therefore, it is not by reference to the transaction of the day that default is to be clubbed and recognized but transaction of a particular tax invoice that it is to be recognized. 21. Therefore, the SSTAT is not correct in drawing a reference that the 35 improper invoices on the same day constitute a single default. We do not see from where this understanding came to be gathered by the SSTAT to generate a question of law when there was no scope for any such question of law coming forth when the VAT Act, 2005 and the Rules, read and understood in proper perspective clearly meant that a tax invoice, if ridden with the defect/default as spelt out in clause (k) of sub-section 1 of section 69, is found out then the liability as envisaged under section 69 (1) (xi) is to be attracted. When section 69 itself does not hint to any angle of time duration, SSTAT was in error in pressing the time duration into play and reckon that the default envisaged under clause (k) of sub-section 1 of section 69 was referable to the time duration and not to the tax invoice. 22. The penalty envisaged under section 69 (1) (xi), relatable to the default iden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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