2018 (8) TMI 1773 – KERALA HIGH COURT – [2018] 58 G S.T.R. 147 (Ker) – Revision of returns rejected – KVAT Act – incorrect values of inter-State purchases and stock transfer inwards shown in annual returns – Asst. Commissioner felt that the revision would alter the turnover – Held that:- To put the problem in perspective, to revise or not revise a return is the question. To revise the return, the dealer faces a Departmental objection. It is two fold : revision permitted, it will alter the declared turnover ; and the company has not produced documents, such as forms F and FA, to prove the genuineness of the claim. On the maintainability of the writ petition, too, the Department objects. It presses into service the alternative remedy.
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The alternative remedy – Held that:- True, the company has a remedy under section 55 of the Act-a statutory appeal. But once the issue stands repeatedly addressed by this court and precedents with clear holding subsist, driving the suitor to the rigm
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sed revision will alter the turnover – the possible change of turnover alone is insufficient, for the provisions have received a beneficial, purposive interpretation from the Division Bench. The contingency must have been coupled with Departmental detection and consequential action-for assessment and penalty. Here, neither happened.
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The respondents are directed to permit the petitioner to revise the returns for the assessment year 2015-16. The respondents will enable the company to revise the returns, in the presence of the assessing officer, within four weeks after receiving the judgment copy – petition allowed. – W. P. (C). No. 12478 of 2018 . Dated:- 13-8-2018 – Dama Seshadri Naidu J. For the Petitioner : Joseph Jerard Samson Rodrigues For the Respondents : V. K. Shamsudeen , Senior Government Pleader and Dr. Thushara James , Government Pleader JUDGMENT DAMA SESHADRI NAIDU J.- 1. Facts in brief : Petitioner-Eveready Industries India Ltd., is an assessee under the Kerala Value
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des an opportunity of hearing to the company. The Asst. Commissioner felt that the revision would alter the turnover. The company, then, on March 6, 2018, submitted its exhibit P5 reply, explaining that it had requested for the revision as early as on February 1, 2017, just after the company's submitting its audit report-that is on January 31, 2017. 4. Eventually, the Asst. Commissioner issued the exhibit P6 order, rejecting the company's request for revising the returns ; he reiterated his earlier assertion : the likely change of turnover. Aggrieved, eveready filed this writ petition. 4. Submissions : Petitioner's : 5. Sri Joseph Jerard Samson Rodrigues, the company's counsel, has submitted that the Assistant Commissioner has mechanically declined the company's request, but with no valid reason. According to him, the company's conduct was bona fide, yet the Asst. Commissioner failed to appreciate it. To elaborate, Sri Rodrigues has submitted that the omission w
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v. Asst. Commissioner [2018] 58 GSTR 134 (Ker) judgment, dated May 23, 2018, in W. P. (C) No. 13691 of 2018 and Commercial Tax Officer-I v. C. R. Varghese [2018] 58 GSTR 137 (Ker) ; MANU/KE/1248/2018. 7. Respondents': 8. Dr. Thushara James, the learned Government Pleader, has strenuously contended that the exhibit P6 order of rejection is unassailable. According to her, the company's case does not fall within the scope of section 42(2) of the Act. According to her, even the Circular No. 8 of 2018 bars the company's revision, for it would result in changed turnover. 9. To be specific, Dr. James has contested the company's claim of bona fide approach and the inadvertent omission. According to her, the company ought to have filed the return along with audit certificate. But the company, she maintains, requested for revision of return only after its filing the audit certificate. 10. Referring to C. R. Varghese [2018] 58 GSTR 137 (Ker) ; MANU/KE/1248/ 2018, Dr. James has su
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otal turnover for a year is at least ten lakh rupees, among others, will be liable, according to section 6, to pay tax on its sale or purchase of goods. The liability to pay tax, indeed, is on the taxable turnover. Section 8 allows the payment of tax at compounded rates. Chapter IV, covering sections 15 to 19A, deals with registration and permit. 14. Important for our purpose is Chapter V : Assessment, recovery of tax, and penalty. Section 20 mandates filing of returns. Section 21 describes how a return submitted under sub-section (1) of section 20 amounts to self-assessment. Under section 21(2), as set out succinctly in C. R. Varghese [2018] 58 GSTR 137 (Ker) ; MANU/KE/1248/2018, the dealer, on its detecting any mistake in the monthly return, can rectify a mistake and file a revised return within two months from the last day of the return period. But sub-section (9) of section 22 prohibits any such revision if the authorities have initiated any proceedings on their detecting an offenc
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kh rupees must get its accounts audited annually and must submit a copy of the audited statement of accounts and certificate to the Department. Sub-section (2) of section 42, on the other hand, enables a revision of return on detection of any omission or mistake in the annual return, compared with the audited figures. The revised annual return will be filed along with the audit certificate, accompanied by proof of payment of tax, any interest, and penal interest calculated at twice the rate specified under sub-section (5) of section 31. The proviso to section 42(2) also prohibits any revision by a dealer against whom penal action is started. The provision, pivotal for our purpose, reads : "42.(2) Where any dealer detects any omission or mistake in the annual return submitted by him with reference to the audited figures, he shall file revise annual return rectifying the mistake or omission along with the audit certificate. Where, as a result of such revision, the tax liability incr
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also that this facility shall not be available to dealers against whom assessment proceedings have already been initiated based on such defects : Provided also that such revision shall be allowed on the basis of the instructions issued by the Commissioner from time to time." (Italics1 added) 18. In fact, in tune with this amendment brought about through Act 5 of 2018 (The Kerala Finance Act, 2018), the Government issued Circular No. 8 of 2018, dated April 21, 2018. Granted, sections 21(2), 22(9), 22(10), 42(2) and 79B of the Act deal with the revision of returns, but they are subjected to a few conditions. 19. Section 79B, too, contains a non-obstante clause and prohibits revised return when the Department detects tax evasion and begins proceedings against that evasion. 19. The company's concern : 20. Inv. No. Date TIN Party Location Uploaded Value Correct -Value 26122253 11.6.2015 9150000006 Eveready Lucknow 1,619,109 169,109 271187320 4.3.2016 33310640024 -do Chennai 84,106
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ed statement ; (3) there will be no change in the turnover already conceded ; (4) no revision will be allowed to dealers against whom assessment proceedings have already begun ; and (5) the revision must be based on the instructions the Commissioner issues from time to time. Precedential analyses : 23. I may, however, note that this court, on earlier occasions, has examined this issue threadbare. In Syed Ali Rajba Judgment, dated November 16, 2017, in W. P. (C) No. 34709 of 2017, the assessee showed the total invoice amount as ₹ 81,600, but while giving the details of turnover of inter-State purchase in a separate part of the return, he showed it as ₹ 8,01,600. The court found it to be a clerical error. HDFC Bank Ltd. [2018] 58 GSTR 134 (Ker) judgment, dated May 23, 2018, in W. P. (C) No. 13691 of 2018, however, noticed the problem of change in turnover if revision was allowed. The court remanded the matter to be decided under section 42(2). No decision rendered on merits,
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ss it is established, Alwaye Sugar Agency [2017] 5 KHC 638 continues, that the assessee wilfully fudged the accounts to evade tax, the tax authorities, in a civilized society, should give due regard to the dignity of the members of the trading community. That is, they should be more accommodative to the reasonable requests for regularising the technical omissions to ensure tax compliance. 26. The mechanical application of procedural provisions, Alwaye Sugar Agency [2017] 5 KHC 638 cautions, in a taxing statute, without regard to the statutory purpose, does not augur well for the reputation of the taxman, whose attitude must change with the times, so citizens see him more as a facilitator for tax compliance rather than a legally empowered money snatcher. 27. If we note the facts of Alwaye Sugar Agency [2017] 5 KHC 638, an assessee under the KVAT Act filed annual returns for the year 2011-2012 and paid the tax. Later, when its accounts audited, it noticed some mistakes. The assessee, the
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Nani A. Palkhivala (Kindle Edn.). approach will only augment the state coffers and lessons the consumer burden, too. 29. C. R. Varghese : 30. As we shall see, Alwaye Sugar Agency [2017] 5 KHC 638 was appealed against. A learned Division Bench in the Commercial Tax Officer-I v. C. R. Varghese [2018] 58 GSTR 137 (Ker) ; MANU/KE/1248/2018, has affirmed Alwaye Sugar Agency [2017] 5 KHC 638. In yet another well articulated judgment, the Division Bench has treated the issue exhaustively. In fact, it is a common judgment in appeals arising out of four writ petitions. In all the cases, a few common features were found : (1) The time granted for the revising the returns was over ; (2) the request for revision was not simultaneous with the filing of the audit report ; (3) the Department began no assessment proceedings before it received the assessee's request for revision ; (4) the defects sought to be rectified cannot be strictly labelled technical or clerical ; and (5) the revised returns,
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there cannot be inferred an interdiction or prohibition from filing a revised return in circumstances where a mistake is detected after the period specified. If such a prohibition is inferred, then it will lead to even an honest dealer being inhibited from pointing out a bona fide mistake ; thus depriving the State of the tax actually due and keeping himself on tender-hooks as to when and if the assessing officer detects such mistake . . . ." 33. The court never found, C. R. Varghese [2018] 58 GSTR 137 (Ker) ; MANU/KE/1248/2018 also notes, that the revision of return is not permissible unless there is a mistake or omission as reflected in the audited statement. The assessing officer does have the authority to examine the claims for revision, according to C. R. Varghese [2018] 58 GSTR 137 (Ker) ; MANU/KE/1248/2018, even beyond the period and decide the question under well-established principles of law and ensure that the attempt is not to cover up or get over a penal provision or a
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dentally, came from the same learned judge who authored both. There the issue was this : Whether a dealer can file revised returns under section 42(2) of the Act, after the authorities' initiating the proceedings under section 25 of the KVAT Act and after assessment of escaped turnover ? 36. The respondent-assessee claimed that whatever was notified as escaped turnover under section 25 of the Act was returned as tax suffered. It found favour with the Tribunal. On appeal, the Division Bench reversed it. M. M. Enterprises [2013] 63 VST 323 (Ker) ; [2012] (0) SCJ Online (Ker) 3193 (DB) accepts that the notice under section 25 will not amount to penal action. So the proviso to section 42, as it stood then, would not apply. But the revised return, under section 42, must confine itself to any omission or mistake in the returns as the audited figures expose. 37. On facts, M. M. Enterprises [2013] 63 VST 323 (Ker) ; [2012] (0) SCJ Online (Ker) 3193 (DB) reveals that the omission detected w
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ms F and FA, to prove the genuineness of the claim. On the maintainability of the writ petition, too, the Department objects. It presses into service the alternative remedy. 40. First, I may take up the last : the alternative remedy. True, the company has a remedy under section 55 of the Act-a statutory appeal. But once the issue stands repeatedly addressed by this court and precedents with clear holding subsist, driving the suitor to the rigmarole of a remedy, be it an alternative one, serves no purpose. After all, for a Constitutional Court, the alternative remedy is a self-imposed limitation. And it is "self-imposed", not "other-imposed", at that. 41. Next, about the documents not produced : Form F and Form FA. Indeed, the company admits its omission and calls it inadvertent. To prove an admitted fact, documentary proof is a superfluity. 42. And, finally, about the core objection-change of admitted turnover. First, to be fair to the Department, this issue did not
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e a reckless one, mindless of the probable impact that it could have on the tax payer. (2) Unless the dealer wilfully fudged the accounts to evade tax, the tax authorities, in a civilized society, should give due regard to the dignity of the members of the trading community. (3) The mechanical application of procedural provisions, in a taxing statute, without regard to the statutory purpose, does not augur well for the reputation of the taxman. (4) The Department cannot adopt a hyper-technical approach if the dealer volunteers to rectify the omissions and pay the differential tax- especially if there is no departmental detection of any suppression. (5) If an honest dealer volunteers to pay his taxes, the Department should not come in the way ; on the contrary, it should reward him. (6) The sole prohibition is only against the revision of returns when the dealer has been proceeded against for a defalcation or other offense. (7) Barring section 42(2), all other provisions-Sections 21(2),
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2017] 5 KHC 638), I reckon the possible change of turnover alone is insufficient, for the provisions have received a beneficial, purposive interpretation from the Division Bench. The contingency must have been coupled with Departmental detection and consequential action-for assessment and penalty. Here, neither happened. M. M. Enterprises [2013] 63 VST 323 (Ker) ; [2012] (0) SCJ Online (Ker) 3193 (DB), on the other hand, contemplated twin conditions : suppression and Departmental action. Here, rather than suppression, I find omission, an inadvertent one, at that. And there is no Departmental detection or action, to repeat. Conclusion : 47. So, I allow this writ petition, setting aside the exhibit P6, and also by directing the respondents to permit the petitioner to revise the returns for the assessment year 2015-16. The respondents will enable the company to revise the returns, in the presence of the assessing officer, within four weeks after receiving the judgment copy. I also clarify
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