DIEBOLD SYSTEMS PVT LTD. Versus INTELLIGENCE OFFICER (IB) OFFICE OF THE DEPUTY COMMISSIONER (INT), DEPARTMENT OF COMMERCIAL TAXES, KOCHI AND THE ASISTANT COMMISSIONER, SPECIAL CIRCLE -II, STATE GOODS AND SERVICE TAX DEPARTMENT, ERNAKULAM
VAT and Sales Tax
2018 (12) TMI 1012 – KERALA HIGH COURT – TMI
KERALA HIGH COURT – HC
Dated:- 3-12-2018
WA. No. 2288 of 2018
CST, VAT & Sales Tax
MR K. VINOD CHANDRAN AND MR ASHOK MENON, JJ.
For The Appellant : ADVS. SRI. JOSEPH PRABAKAR AND SRI. RAJESH NAIR
For The Respondent : SRI MOHAMMED RAFIQ SR GP
JUDGMENT
Vinod Chandran, J
The short question that arises for consideration in the above appeal is whether the refusal to exercise discretion by the learned Single Judge as against penalty proceedings was proper or not, especially considering the fact that the penalty proceeding taken was under Section 67 of the Kerala Value Added Tax Act, 2003 by the Intelligence Officer when there was a provision under Section 25(3) for th
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
aled on the filing of the audited statement. We do not look at the specific discrepancies noticed, lest we preempt a consideration on the factual aspects by the appellate authorities, if we so relegate the matter. In the present appeal against the judgment in a petition under Article 226, the only question is whether the order of penalty can be interfered with as has been declared in State of H.P v. Gujarat Ambuja Cement Ltd. [2005) 6 SCC 499]. The specific grounds as available therein, are proceedings taken under provisions which are ultra vires, violation of principles of natural justice, assumption of jurisdiction when there is none, infringement of fundamental rights and clear abuse of process of law. It was also held that even if grounds on which the jurisdiction can be invoked are available, it should be used sparingly and only when there is in the case, something which goes to the root of the matter visiting the petitioner with palpable injustice if relegated to the alternate fo
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
s submitted, the mere fact that the revised return was not filed cannot be a reason to impute malafides or willful non-disclosure on the assessee. Reliance is placed on a judgment of this Court in [2018 (3) KLT 468] CTO v. C.R. Varghese wherein, in various instances, this Court had directed revision of returns to be accepted despite the same being beyond the time prescribed. Reliance is also placed on the judgment of this Court reported in 2018 (4) KHC 513 State of Kerala Vs. Joemon Rajan to contend that the Intelligence Officer ought not to have carried out the proceedings and should have merely informed the fact to the Assessing Officer so as to take appropriate proceedings under Section 25. It is the compelling argument of the learned Counsel for the assessee/appellant that Section 67 does not mandate a contumacious conduct and in such circumstances the assessee is prejudiced insofar as the proceedings initiated under Section 67. Under Section 25(3)there should be satisfaction recor
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Alukkas [2018(3) KLT 360] found substantial difference in the earlier regimes and the value added tax regime. It has been held by this Court that the provision for self assessment as found in Section 21 of the KVAT Act, creates an obligation on the assessee to file a correct return, more onerous than a regime which mandates a regular assessment carried out by the department. With respect to the submission that the proceedings ought to have been taken by the Assessing Officer under Section 25(3) the learned Senior Government Pleader relies on Intelligence Officer v. Hotel Ambassador 1980 (45 STC 425(Ker).
6. Joemon Rajan by the Division Bench of this Court and Chakkiath Brothers and Canmec Office Technologies dealt with two different issues. In Joemon Rajan, the question was as to whether the Intelligence Officer had the power to make estimation which power as per the statute has been conferred only on the Assessing Officer. This Court followed U.K Monu Timbers v. State of Kerala [20
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
a correct return, the failure of which would attract Section 67. We extract herein paragraph 10 of Alukka s Jewelr y:
“The provision for self assessment creates an obligation on the assessee to file a correct return; more onerous than in a regime which mandates a regular assessment. The submission of the learned Government Pleader that the filing of an untrue or incorrect return as available under sub-clause (d) of S.67(1) assumes more rigour in the teeth of the onerous obligation, resulting in imposition of penalty without reference to whether there has been disclosure made in the books of accounts, has to be accepted.”
8. With the above legal proposition in the background we look at the penalty order passed as per Ext.P5. We also garner support from Hotel Ambassador to hold that Section 67 is not regulated by Section 25(3). Hotel Ambassador looked at analogous provisions, Sections 19 & 45A of the Kerala General Sales Tax Act, 1963, which were respectively the provisions enabling
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
a revised return. Whatever be the reason for not availing the opportunity, it has to be observed that there was a possibility of the Assessing Officer, not noticing the discrepancies in the return filed, especially when the VAT regime contemplates a self assessment. It is not mandatory that the Assessing Officer verify and carry out re-assessment under Section 25 of the KVAT Act. We cannot also ignore the immense work load of the individual officers designated as Assessing Officers on the basis of territorial jurisdiction or on other parameters of income, nature of business and so on and so forth. It will not be humanly possible to verify each and every return and carry out reassessment wherever required. It is hence, the assessee has been given a specific opportunity to cure the defects in the return which is detected on audit, by filing a revised return and paying tax in accordance with that revised return. The assessee having not availed of such remedy we can only find that there w
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ment in March 2014. In September 2015 the assessee sought to revise the returns and the Assessing Officer declined such permission on the ground that if it is allowed there would be a claim of input tax credit raised. In the third case the assessee filed the audit report under Section 42 along with a re-conciliation statement, wherein the discrepancy noticed on return were sought to be incorporated in the returns by way of revision. The application having been slept over, the assessee was before this Court seeking consideration of the same. In the last case, the Division Bench itself noted more complicated facts insofar as the assessment and penalty were continued without reference to each other.
11. We do not think the facts in the present case commend a permission to file a revised return at this late stage. We also notice Paragraph 15 of the aforesaid decision which is as follows:
“15. The enabling provision mandates that on a revision of return being attempted to as provided the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e assessee has a contention that Ext.P3 communication seeking revised reruns was issued on 27.03.2018, a day before the proceedings had commenced. However, it is to be emphasised that the audited statement was filed long back on 16.05.2017, when the assessee definitely had the knowledge of the shortfall in the returns. There was no cause for the assessee to have, not sought for a revised return immediately thereafter. It is also to be noticed that the communication at Ext.P3 seeking permission to file revised return was received by the Assessing Officer only on 23.04.2018 by which time, the Intelligence Officer had initiated proceedings under Ext.P2 dated 28.03.2017. On the aforesaid facts we are convinced that there could be no permission granted at this distance of time to file revised returns. The assessee also waited for the proceedings under Section 67 to be concluded, to invoke the extraordinary remedy under Article 226. We hence uphold the judgment of the learned Single Judge wh
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =