Madhya Pradesh High Court in Super Traders v Additional
Commissioner of Commercial Taxes has held that incorrect or erroneous claim not
sustainable under VAT law would not make a case of concealment of taxable item,
therefore penalty is not leviable in such case.
The High Court relied upon the landmark judgement
of Hon’ble Supreme Court under Income Tax law namely CIT vs Reliance
Petroproducts Pvt Ltd. [2010] 322 ITR 158 (SC), while deciding the issue of
penalty under VAT law, wherein it was held that The word ‘particulars’ must mean the details supplied in the return,
which are not accurate, not exact or correct, not according to truth or
erroneous. In the instant case, there was no finding that any details supplied
by the assessee in its return were found to be incorrect or erroneous or false.
Such not being the case, there would be no question of inviting the penalty
under section 271(1)(c). A mere making of the claim, which is not
sustainable in law by itself will not amount to furnishing of inaccurate
particulars regarding the income of the assessee. Such claim made in the return
cannot amount to the inaccurate particulars.
M/S Super Traders Jeevan
Vihar
vs
Additional Commissioner Of ... on 25 March, 2014
[2014] 72 VST 129 (MP)
W.P.
NO.18644/2010
25/3/2014
:
ORDER
Calling in question the
orders passed by the Assessing Authority and the Revisional Authorities in the
matter of assessment of VAT to be paid by the petitioners for the period
2004-2005, this petition has been filed.
Challenge is made to the
legality of the penalty imposed under Section 69(1) and as the amount of tax
has already been paid, it is said that challenge is only made to the penalty
imposed on VAT.
Petitioner is a registered
dealer with the Commercial Tax Department and carrying on the business of sale
and purchase of Cement at Bhopal manufactured by M/s Diamond Cements, Damoh. An
ex-parte order of assessment was passed by respondent No.2 for the assessment
year 2004-2005. This assessment order was set aside in appeal and the matter
was remanded back. The assessment was done and certain amount with regard to
transportation or the fright amount was disallowed so also certain amount with
regard to payment through credit note was disallowed. Tax was assessed on these
amount and on the ground of concealment, penalty is imposed.
As far as tax collected is
concerned, the same has been paid and the only challenge is made to imposition
of penalty on both the counts i.e. on amount of fright and transportation
charges so also on account of credit note. As far as concealment of the amount
with regard to fright charges are concerned, learned counsel invites our
attention to the orders of assessment passed and points out that while
considering the question in the backdrop of Section 9(B) of the Commercial Tax
Act, the learned Assessing Officer in his order Annexure P/1 dated 24.11.2008
has found that certain amount is claimed as the amount of price for purchase of
cement from M/s Diamond Cements. It is found that this is not the entire
purchase amount, this includes certain amount paid towards transportation and
fright charges and as these amounts cannot be deducted, penalty is imposed on
this amount on the ground of concealment. It is the case of the petitioner that
the amount is disclosed in the return, there is no concealment and therefore,
in the light of law laid down by the Supreme Court in the case of Commissioner
of Income Tax Vs. Reliance Petroproducts Pvt. Ltd. - [2010] 322 ITR 158 (SC),
the amount of penalty cannot be imposed on the ground of concealment of fright
charges. It is said that it is nothing but an amount claimed as purchase price
which has been disallowed and therefore, it does not fall within the category
of concealment.
As far as adjustment
through payment of credit note is concerned, learned counsel indicates that
Supreme Court in the case of IFB Industries Ltd. Vs. State of Kerala - (2012)
20 STJ 485 has approved the mode of claiming benefit through credit note and as
this is held to be a known system of business and trade practise, it is argued
that enforcement of penalty on this transaction is also unsustainable. Even
though petitioner is not claiming refund of this amount, it is said that
imposition of penalty be quashed.
Shri Rahul Jain, learned
Dy. Advocate General appearing for Revenue tried to justify the Revenue by
contending that the amount has been recovered in the light of concealment
established in the matter and therefore, there is no illegality.
We have heard learned
counsel for the parties and considered the rival contentions. From the
documents and material available on record, it is clear that in the matter of
concealment of fright or transportation charges infact the amount was included
in the Bill for purchase of Cement and the Assessing Officer has bifurcated the
amount and did not permit addition of the transportation or fright charges in
the cost price of product purchased i.e. cement. Therefore, it is not a case
where the petitioner has concealed any item, which is taxable but has only
include it to be a amount in a particular head i.e. purchase price which is not
permissible. It is a case where in the particulars and details supplied by the petitioner
certain incorrect and erroneous claim is made which is not sustainable under
law. According to the Supreme Court in the law laid down in the case of
Reliance Petroproducts Pvt. Ltd. (supra) this will not amount to concealment of
income but would come in the category of an erroneous or incorrect deduction or
adjustment made. It is held that it does not fall in the category of furnishing
inaccurate particulars or concealment of income and is not taxable.
Keeping in view the
aforesaid and applying the same in the facts and circumstances of the present
case, we are of the considered view that imposition of penalty on concealment
of fright charges is not correct. It is a case where the petitioner erroneously
included the amount as it was included in the bill by the Manufacturer of
Cement. That being so, to that extent the imposition of penalty under Section 29
has to be quashed.
As far as claiming benefit
of transaction made through credit note are concerned, the Supreme Court in the
case of IFB Industries Ltd. (supra) has held that discount through credit note
issued even subsequent to sale without there mention in sale vouchers is
permissible. This is held to be an established trade practice and if the
petitioner had also claimed rebate or discount on credit note, in view of the
law laid down by the Supreme Court in the case of IFB Industries Ltd. (supra),
this will also not amount to concealment or suppression of income subjected to
penalty. Taking note of all these factors and law as discussed herein above
based on the judgment of the Supreme Court, we are of the considered view that
the order of authorities in the matter of imposition of penalty in the facts
and circumstances of the case is unsustainable. Accordingly, penalty imposed in
the matter are set aside and the amount is directed to be refunded to the
petitioner.
In view of the aforesaid,
this petition stands allowed and disposed of.
( Rajendra Menon) ( A. K.
Sharma ) Judge Judge mrs.mishra
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