No penalty leviable on the basis of provisional assessment-PVAT Tribunal

Punjab VAT Tribunal in a very important case namely Surya Batteries V State of Punjab(2011) 39 PHT 333(PVT) has held that the tax liability of a person whose provisional assessment u/s 30(1) of PVAT Act, 2005 is made, is to be determined after he has filed the annual returns in the prescribed form. In such case no penalty is leviable on the assessee till then.

Brief Facts: In this case, the business premises of the assessee were surprised inspected on 06-05-2010 and apart from stock inventory, a small diary and five loose papers were seized and on the basis of entries therein a figure of Rs. 805954/-, STO(Suppressed turnover) was worked out besides difference of Rs. 122511/- on account of stock variation. On it tax and penalty of total Rs. 303869/- was created a demand. The order was made "subject to final assessment"

On appeal to the Tribunal it was urged that the demand had been created without confronting the assessee with these loose papers and the diary and no copy of those documents were supplied u/s 46(3). The stock verification was also made in haphazard way. The legal point urged was that penalty could not be levied untill the final demand after annual assessement was made and penalty justified on that basis.

Held:   The Tribunal Held that in the factual scenario it would be in the fitness of things to issue directions to the designated officer to make the assessment of the appellant in the year 2010-11(1-04-2010 to 06-05-2010) after filing of the annual return by taking into consideration the small diary as well as loose papers, if need be. The copies of small diary with loose papers be supplied to the appellant before 20/11/2011 which the due date for filing the return by the appellant.

This is very important order of PVAT Tribunal as it implies that no penalty can be levied on the basis of additions/tax imposed in provisional assessment and penalty can be levied only after the suppression is finally established after the final assessment.


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