In one of my cases namely M/s Shree
Ganesh Roller Flour Mills Akalpur Road, Phillaur, District Jalandhar Versus The
State of Punjab. Appeal No. 38 of 2015 decided on 10.09.2015 it has been
decided by Punjab VAT Tribunal that mere bonafide mistake in calculating
reversal of ITC does not attract penalty. The matter remanded back to DETC(A)
for passing a speaking order considering the observations of the Tribunal.
Facts: A penalty u/s 56 of the Punjab VAT Act, 2005 was imposed on the
ground that lesser reversal of input tax credit on account of manufacturing of
tax free goods was made. The appellant agreed with the reversal but contended
that the mistake in calculating the reversal was bonafide and it was a mistake
on the part of his accountant that lesser reversals were made. Despite bonafide
mistake the Designated Officer levied the penalty @ 200% of the amount of
reversal not done.
The first appellate
authority dismissed the appeal.
On further appeal to the
Tribunal it is held as under:
"Having given my
thoughtful consideration to the rival contentions, it may be observed that it
is the case of the appellant from the very beginning that the appellant had changed
the counsel who did not allow the correct ITC to be carried forward and did not
make correct calculations. on coming to know about the mistake, the appellant
voluntarily came forward for reversal of the correct ITC and to remove the
mistake. The Designated officer has reversed input tax credit of Rs.3,76,8371-
u/s 13(4) of the Act and has not allowed to carry forward the input tax credit
on the same amount.
He had also taken the plea
before the Deputy Excise and Taxation Commissioner in the grounds of appeal as
under:-,
5. "That the dealer
has voluntarily come forward and shown correct input tax to be reversed on
manufacturing of tax free goods in vat -20 submitted at the time of assessment
so no penal action is warranted under section-56.”
Having perused the grounds
of appeal, it transpires that the First Appellate Authority did not take pains
to ponder over the arguments as. Raised by the appellant before him, but
dismissed the appeal with one line order (arguments of the counsel for the
appellant against levy of penalty U/s 56 of the Act are not tenable). The First
Appellate Authority has not passed a reasoned order after taking into
consideration the contentions raised by the appellant that he does not deny the
tax liability from the very beginning and did not challenge the same before the
First Appellate Authority. Nothing has been discussed, if the mistake on the
part of the counsel was intentienal and on account of concealment of facts. As
such, the order passed by the Deputy Excise and Taxation commissioner being non
speaking needs to be given a relook in the light of the discussions made
above.
Resultantly, I accept the
appeal, set-aside the impugned order passed by the Deputy Excise and Taxation
commissioner (A) on 23.12.2014 with a direction to pass a speaking order after
taking into consideration all the contentions which may be raised by the
appellant before him."
BEFORE
JUSTICE A N JINDAL, CHAIRMAN, VALUE ADDED TAX TRIBUNAL, PUNJAB, CHANDIGARH.
Appeal No. 38 of 2015
Decided on 10.09.2015.
M/s Shree Ganesh Roller Flour Mills
Akalpur Road,
Phillaur, District Jalandhar
Versus
The State of Punjab.
Present:-
Amit Bajaj, Advocate counsel for the
appellant.
Mr. N.D.S. Mann, Addl. Advocate
General for the State.
Order:
This
appeal has arisen out of the order dated 23.12.2014 passed by Deputy Excise and
Taxation commissioner, Jalandhar Division, Jalandhar, dismissing the appeal of
the appellant against the order dated 29.1.2014 passed by the Excise and
Taxation Officer-cum-Designated Officer, Jalandhar creating additional demand
to the tune of Rs. 11,30,511/- under the Punjab Value Added Tax Act, 2005.
The
appellant firm is engaged in the business of flour mills, the appellant filed
annual statement VAT-20 for the year 2009-10. On scrutiny, it was transpired
that the assessee had made gross sale of Rs. 18,18,48,545/- and out of gross
sale, the dealer had made tax free sales of Rs. 15,64,76,871/- and made gross
purchases to the tune of Rs. 15,13,85,232/- out
of gross purchases, the apellant had made taxable purchase eligible for ITC to the
tune of Rs.8,30,82 ,991- and claimed net ITC of Rs. 21,94,935/- after reversal
of ITC on account of manufacturing tax free goods to the tune of Rs.
12,09,130/-, the dealer thus, reversed ITC of Rs. 1209130/- instead of Rs.
29,29,127/-.
After thorough examination, it was found that there
was a difference of ITC reversal of Rs. 2,58,388/- and that of ITC carried
forward to the next year is Rs. 2,58,722/-. Consequently on this amount, after
imposing the penalty, the Excise and Taxation Officer-cum-Assessing Authority
created additional demand of Rs. 11,30,511/-. On appeal the Deputy Excise and Taxation
Commissioner dismissed the same while stating that “Arguments of the counsel of
appellant against levy of penalty u/s 56 of the Act are not tenable.”
The counsel for the appellant has vehemently contended
that the order passed by the Deputy Excise and Taxation Commissioner is non speaking.
He had raised the contentions regarding the bonafide mistake of the reversal of
the ITC at the time of calculation due to the change of the counsel, yet the First
Appellate Authority did not make note of the contentions and commented over the
same before passing the impugned order. The appellant was actually under a bonafide
belief that the reversal calculations made
by his accountant at the time of filing his return were correct. The appellant was
never aware of the mis-calculations in calculating reversals, but as soon as he
came to know about the mistake, he himself came forward to accept the reversal.
In such circumstances it was unjust for the Designated Officer to levy the
penalty. The appellant being a layman was completely dependent on the person said
to be expert in law and accounts The appellant should not suffer for the fault on
the part of his counsel. He has also placed reliance on the judgment delivered in
the case of M/s CIT Ahmedabad vs Reiiance Petroproducts (P) Ltd (2010) 189
TAXMAN 322 (SC) wherein the Apex Court observed as under:-
“The revenue
contended that since the assessee had claimed excessive deductions knowing that
they were incorrect, it amounted to concealment of income. It was argued that
the falsehood in accounts can take either of the two forms: (i)
an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or
in an exaggerated amount) claimed, and both types attempt to reduce the taxable
income and, therefore, both types amount to concealment of particulars of one’s
income as well as furnishing of inaccurate particulars of income. Such
contention could not be accepted as the assessee had furnished all the details
of its expenditure as well as income in its return, which details, in
themselves, were not found to be inaccurate nor could be viewed as the
concealment of income on its part. It was up to the authorities to accept its claim
in the return or not. Merely because the assessee had claimed the expenditure,
which claim was not accepted or was not acceptable to the revenue, that, by
itself, would not attract the penalty under section 271(1)(c). If the contention of the revenue was
accepted, then in case of every return where the claim made was not accepted by
the Assessing Officer for any reason, the assessee would invite penalty under
section 271(1)(c). That is
clearly not the intendment of the Legislature. [Para 10].
Therefore,
the appeal filed by the revenue had no merits and was to be dismissed.”
The counsel for the appellant has urged that the law
settled by supreme court in the above noted case equally applies to the facts of
the present case. He has also urged that penalty should not be attracted as the
appellant has not concealed any sale or purchase or suppressed any material
facts from the returns filed by it. The only error was as to wrong calculation of
the reversal. Hence the penalty imposed on the appellant deserves to be quashed.
Lastly, it has been contended that the mistake in itc reversal was due to bonafide
mistake, thus does not attract penarty as it does not fall in any of the parameters
set out by Section 56 of the Act.
To the contrary, Mr. N.D.S.Mann, AAG has urged that
the Act of the appellant amounts to concealment and suppression of facts resultlng
into higher claim of the ITC.. therefore, the penalty imposed on the appellant is
correct.
Having given my thoughtful consideration to the rival
contentions, it may be observed that it is the case of the appellant from the
very beginning that the appellant had changed the counsel who did not allow the
correct ITC to be carried forward and did not make correct calculations. on coming
to know about the mistake, the appellant voluntarily came forward for reversal of
the correct ITC and to remove the mistake. The Designated officer has reversed input
tax credit of Rs.3,76,8371- u/s 13(4) of the Act and has not allowed to carry
forward the input tax credit on the same amount.
He had also taken the plea before the Deputy Excise
and Taxation Commissioner in the grounds of appeal as under:-,
5. "That the dealer has voluntarily come forward
and shown correct input tax to be reversed on manufacturing of tax free goods
in vat -20 submitted at the time of assessment so no penal action is warranted
under section-56.”
Having perused the grounds of appeal, it transpires
that the First Appellate Authority did not take pains to ponder over the
arguments as. Raised by the appellant before him, but dismissed the appeal with
one line order (arguments of the counsel for the appellant against levy of penalty
U/s 56 of the Act are not tenable). The First Appellate Authority has not passed
a reasoned order after taking into consideration the contentions raised by the appellant
that he does not deny the tax liability from the very beginning and did not challenge
the same before the First Appellate Authority. Nothing has been discussed, if the
mistake on the part of the counsel was intentienal and on account of concealment
of facts. As such, the order passed by the Deputy Excise and Taxation commissioner
being non speaking needs to be given a relook in the light of the discussions
made above.
Resultantly, I accept the appeal, set-aside the impugned
order passed by the Deputy Excise and Taxation commissioner (A) on 23.12.2014 with
a direction to pass a speaking order after taking into consideration all the contentions
which may be raised by the appellant before him.
Chandigarh (Justice A.N. Jindal)
Dated:10.11.2015
Chairman, VAT Tribunal,
Punjab
Note: Whether fit for
reporting: Yes.
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