The Honourable Madras High Court has quashed the order that confirmed the imposing of penalty at the sum of 1.5 times of the tax demanded. The respondent party is Harish Agencies. It is a dealer in high-speed diesel and petrol in Puducherry. The petitioner-Department of Tax sent a”“pre-assessment notice” in supersession of the earlier notice that proposed to reject the return that has been filed by the respondent and consequently assessed it on best-of judgment that was passed as per Section 13(2) of the Pondicherry General Sales Tax Act, 1967 that is read along with Section 81 as per PVAT Act.
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The cause of action that arose for the issue of the pre-assessment notice was grounded on a cross-verification that has been undertaken by the department with regard to “details of supply from the Hindustan Petroleum Corporation Limited (HPCL)” with a sale mentioned by the respondent in A2 returns and after undertaking cross verification, it appeared to the petitioner-department that the respondent had filed false returns for the year 2006-07.
Consequently, The petitioner then made a proposal to reject outrightly the returns filed by the dealer and again calculate the correct rate of tax. The respondent department after receiving the pre-assessment notice sought a time period of 30 days for submitting their reply. However, the respondent did not submit their reply but rather gave another representation that requested further time to submit their objections.
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Thereafter through another letter, the respondent mentioned that some invoices had been wrongly mentioned and further made a request to delete the same. After some time, the department acquired an authenticated copy of the C-Form that was issued by HPCL. The aforesaid document disclosed that the respondent-dealer had affected the purchase of 230 kl of MS, 746 kl of MSD, and Lubricants for the financial year 2006-07 that is valued at Rs.3,10,12,739/-. However, they had mentioned a turnover of Rs.1,06,72,148.87/- in their A2 returns, which proved that the respondent had filed false returns with an intent to avoid payment of tax. Hence, The respondent was given an opportunity to submit their objections. However, despite repeated notices, the respondent did not come forward and did not give any justification.
Finding of Tribunal
There was the absence of willful suppression is incorrect. The reason being the respondent did not have anything in defense against the proposal that was made in the pre-revision notices. Rather, they had silently accepted the stand taken by the Department and also paid the tax. However, the tax was not paid in one lump sum, but in installments
The Coram of Justices R.N.Manjula and T.S.Sivagnanam held that the revision of tax case filed by the Revenue department is allowed and the questions of law are in favour of the petitioner-department and the findings of the Tribunal that confirm the levying of penalty at 1.5 times is set aside. And the matter is again remanded back to the Assessing Officer of revenue department for a fresh reconsideration by considering the observations that were made in aforesaid order.
