The Allahabad High Court while allowing the petition held that the men-rea on the part of the assessee is an essential prerequisite condition for imposition of penalty under Section 54(1)(2) of the U.P. VAT Act, 2008.
A Single Bench of Justice Abdul Moin passed this order while hearing a Sale Tax Revision petition filed by Durga Steel Rolling Mills Through Partner Amit Arora,
Counsels appearing for the parties contend that the issue involved in two Sale Tax Revision petitions are the same.
The case set forth by the counsel for the revisionist is that a survey took place on the premises of the revisionist on 23.12.2008. The stock is alleged to have been noted by the surveyors on the basis of presumption. The stock was found to be recorded more in the books of accounts of the revisionist vis a vis the physical stock.
An assessment order dated 30.10.2010 was passed against the revisionist under the provisions of Section 28(2) of the U.P V.A.T Act, 2008. By the said assessment order the disputed demand was indicated as Rs 12,44,653/-. Being aggrieved, the revisionist filed a first appeal.
The appellate authority, vide the order dated 27.06.2012 reduced the disputed demand by Rs 6,21,875/- and thus a demand of Rs 6,22,778/- remained. Still being aggrieved, the revisionist filed an appeal before the Tribunal and at the same time the Department also filed an appeal. Both the appeals were clubbed together and were decided via common order dated 22.06.2016, whereby the appeal of the revisionist was partly allowed while the appeal of the department was dismissed. While allowing the appeal, the Tribunal gave a relief to the revisionist of Rs 3,25,625/- thus assessing the tax liable to be paid by the revisionist at Rs 2,46,250/- as stated by Mudit Agarwal, counsel for the revisionist.
Agarwal stated that the order dated 22.06.2016 passed by the Tribunal attained finality as it was not challenged by the revisionist rather the revisionist acquiesced to the said order and has paid the aforesaid amount of Rs 2,46,250/-.
It is contended that during pendency of the aforesaid proceedings, a notice dated 30.01.2013 under Section 54(1)(2) of the Act, 2008 had been issued to the revisionist. The revisionist filed his reply. Vide order dated 08.05.2013, an order of penalty was passed whereby the revisionist has been required to pay an amount of Rs 18,65,625/- against the assessed tax of Rs 6,21,875/-. Being aggrieved the revisionist filed an appeal which was rejected vide the order dated 30.09.2016. Still being aggrieved the revisionist filed a second appeal before the Tribunal which has also been dismissed vide the order dated 06.04.2021. Being aggrieved the instant revision has been filed.
The Court observed that,
From perusal of the record it emerges that a survey took place at the premises of the revisionist on 23.12.2008. An assessment order dated 30.10.2010 was passed against the revisionist under the provisions of section 28(2) of the Act, 2008 whereby disputed demand was indicated as Rs 12,44,653/-. The revisionist filed the first appeal and the appellate authority vide order dated 27.06.2012 reduced the disputed demand by Rs 6,21,875/- and thus a demand of Rs 6,22,778/- remained. The revisionist as well as the Revenue filed second appeals against the said order dated 27.06.2012. Both the appeals were clubbed together and decided vide order dated 22.06.2016 by the Tribunal whereby the appeal of the revisionist was partly allowed while the appeal of the Revenue was dismissed. While allowing the appeal, the revisionist Tribunal has given a relief of Rs 3,25,625/- thus assessing the tax liability to be paid by the revisionist at Rs 2,46,250/-. The said order has attained finality. The amount of tax has also been deposited by the revisionist.
During pendency of the aforesaid proceedings, a notice under Section 54(1)(2) of the Act, 2008 was issued to the revisionist. The revisionist filed his reply. Vide the order dated 08.05.2013 an order of penalty has been passed whereby the revisionists has been required to pay an amount of Rs 18,65,625/- against the assessed tax of Rs 6,21,875/-. Being aggrieved the revisionist filed an appeal which has been rejected vide the order dated 30.09.2016. Still being aggrieved, a second appeal was filed before the Tribunal which has been dismissed vide judgement and order dated 06.04.2021. Being aggrieved the revision has been filed.
The object of Section 54 of the Act, 2008 is to impose a penalty if any dealer or person has committed wrong described in column (2) of the table. So far as serial no 2 of the table is concerned the same reads that where a dealer has concealed the particulars of his turnover or has deliberately furnished inaccurate particulars of such turnover or has submitted a false tax return under the Act or has evaded payment of tax which he is liable to pay under the Act then three times the amount of tax concealed or avoided is to be imposed as a penalty.
From the language of the Section it is thus clear that, so far as the present controversy is concerned, the dealer would be liable to pay a penalty for evasion of tax. ‘Evasion of tax’ is a willful attempt to defeat or circumvent tax law as defined in Black’s Law Dictionary. The penalty is based on the assessment order under Section 28(2) of the Act, 2008. In turn the assessment order is based on “best judgement assessment” which has been held by the Supreme Court to be on a well grounded estimate or reasonable guess based.
“The revisionist has already paid the tax as assessed after modification by the Tribunal vide the order dated 22.06.2016. At no stage is there any finding of any willful evasion of tax by the revisionist or a finding of there being any deliberate attempt on the part of the revisionist in avoiding the payment of tax. It is for the authorities to specifically prove the evasion of payment of tax on the part of the revisionist where the evasion has been defined as a willful attempt i.e. the authorities would have to prove a willful attempt on the part of the revisionist to evade tax. In absence thereto the order imposing penalty on the revisionist based on the assessment order passed under Section 28(2) of 2008 cannot be said to fall within the ambit of any of the eventualities as provided under Section 54(1)(2) of the Act 2008 more particularly it cannot be considered to be an evasion of payment of tax by the dealer / revisionist so as to attract the penalty as has been imposed on the revisionist”, the Court further observed while allowing the revision petition.
The Court set aside the order dated 06.04.2021 passed by the Commercial Tax Tribunal, Lucknow.