Tax Appeal No. 1908 of 2009. Case: Riddhi Siddhi Gluco Biols Ltd. Vs State of Gujarat. Gujarat High Court

Case Number:Tax Appeal No. 1908 of 2009
Party Name:Riddhi Siddhi Gluco Biols Ltd. Vs State of Gujarat
Counsel:For Appellant: Tushar Hemani and Vaibhavi K. Parikh, Advocates and For Respondents: Hardik Vora, Asst. Government Pleader
Judges:M.R. Shah and B.N. Karia, JJ.
Issue:Gujarat Sales Tax Act, 1969 - Sections 16, 27, 29, 35, 36, 38, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 41(3), 41B, 45(1)(b), 45(1)(a)(b), 45(5), 45(6), 47(4A), 47(4b), 57, 65, 66, 67; Karnataka Sales Tax Act, 1957 - Sections 18A, 22A
Judgement Date:March 16, 2017
Court:Gujarat High Court
 
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Judgment:

M.R. Shah, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Gujarat Value Added Tax Tribunal, Ahmedabad (hereinafter referred to as the "learned Tribunal") passed in Second Appeal No. 1138 of 2005, by which, the learned Tribunal has dismissed the said appeal preferred by the appellant- dealer and has confirmed the order dated 29.10.2005 passed by the First Appellate Officer in First Appeal as well as Suo Motu Revision proceeding, the appellant- dealer has preferred present Tax Appeal to consider the following substantial question of law:

(1) Whether on facts and in the circumstances of the case the order of the Hon'ble Gujarat Value Added Tax Tribunal is proper and legal in as far as it has not considered the question of jurisdiction of the revising authority for levying penalty under section 45(6) of the GST Act for the first time in revision?

(2) Whether on facts and in the circumstances of the case the order of the Hon'ble Gujarat Value Added Tax Tribunal is proper and legal in as far as in applying the ratio of the judgment of Honourable Supreme Court in the case of M/s. Shree Balaji rice Mill 140 STC 267 and not following ratio of decision of Honourable Gujarat High Court in the case of M/s. Bhavnagar Chemical Works Ltd. - 83 STC 409?

(3) Whether on facts and in the circumstances of the case the order of the Hon'ble Gujarat Value Added Tax Tribunal is proper and legal in as far as it has not wrongly interpreted the provisions of sub-sections 5 and 6 of section 45 by adjusting the amount of interest against the tax paid and then arriving at the difference of twenty five percent?

(4) Whether on facts and in the circumstances of the case the order of the Hon'ble Gujarat Value Added Tax Tribunal is proper and legal in as far as it has not considered the question of imposition of penalty in light of absence of intention to evade tax?

2. The facts leading to the present appeal in nutshell are as under:

"2.1. That the appellant/registered dealer was assessed for the year 2000-01 by the learned Deputy Commissioner, Sales Tax by order dated 31.03.2005. That at the time of return, the dealer deposited Rs. 43,89,416/- towards tax liability. That feeling aggrieved and dissatisfied with the order passed by the AO, the appellant- dealer preferred appeal before the First Appellate Authority. On perusing the record, the First Appellate Authority found that instead of purchase tax on lignite to be charged at 25%, the AO levied the purchase tax on lignite at 19.75%. The First Appellate Authority was also of the opinion that on the balance amount due and payable, the penalty under Section 45(6) of the Gujarat Sales Tax Act leviable, the adjudicating authority did not impose any penalty under Section 45(6) of the Act and therefore, the dealer was served with the notice in form Nos. 45, 49 and 38 and in exercise of suo motu powers. The First Appellate Authority who was also the Revisional Authority held that total tax payable would be Rs. 54,83,267/- against which at the time of return, the dealer made the payment of Rs. 43,89416/- and therefore, the difference of tax payable was Rs. 10,93,851/- and therefore, First Appellate Authority exercising the suo motu revisional powers also imposed penalty at 20% under Section 45(6) of the Act.

2.2. Feeling aggrieved and dissatisfied with the order passed by the First Appellate Authority, more particularly, by the Revisional Authority in exercise of suo motu revisional powers, the dealer preferred appeal before the learned Tribunal being Second Appeal No. 1138 of 2005. Before the learned Tribunal, the learned advocate for the appellant did not press the appeal charging interest under Section 47(4) (a) of the Gujarat Sales Tax Act. However, challenged the order imposing penalty under Section 45(6) of the Act. That the appellant-dealer challenged the order of the First Appellate Authority/Revisional Authority imposing the penalty under Section 45(6) of the Act for sum of Rs. 2,24,717/- on the following grounds:

'(i). The Assessing Officer has not imposed penalty in assessment order. Therefore, the learned Revising Authority cannot initiate suo motu revision proceedings and imposed penalty under Section 45(6) of the Act.

(ii). Alternatively difference between the tax assessed and tax paid is less than 25% and therefore, as per Section 45(5) r/w section 45(6), no penalty can be imposed."

2.3. That relying upon the decision of the Hon'ble Supreme Court in the case of Sree Balaji Rice Mill, Bellary v. State of Karnataka reported in (2005) 4 SCC 21; 140 STC 267, by impugned judgment and order the learned Tribunal has dismissed the said appeal preferred by the appellant-dealer and has confirmed the order of penalty imposed under Section 45(6) of the Act. That the learned Tribunal has also negatived the second alternative submission on behalf of the dealer that as the tax assessed and tax paid was less than 25% and therefore, as per Section 45(5) r/w Section 45(6) of the Act, no penalty can be imposed. For the aforesaid, learned Tribunal relying upon and considering Section 47(4A) and 47(4B) of the Act held that if the amount paid towards interest is first deducted/adjusted and thereafter tax liability is concerned, the difference between tax paid and tax payable is more than 25%. Consequently, by impugned judgment and order, the learned Tribunal has dismissed the appeal preferred by the dealer.

2.4. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the appellant-dealer has preferred the present appeal with the aforesaid questions of law."

3. At the outset, it is required to be noted that as such question Nos. 1, 2 and 4 would be a common question and question No. 3 would be an independent question to be considered.

3.1 Shri Tushar Hemani, learned advocate for the appellant - dealer has vehemently submitted that in the facts and circumstances of the case the learned Tribunal has materially erred in confirming the penalty imposed under Section 45(6) of the Act imposed by the First Appellate Authority/Revisional Authority in exercise of suo motu revisional powers.

3.2 It is vehemently submitted by Shri Tushar Hemani, learned advocate for the assessee that as such the learned Tribunal has materially erred in applying ratio of the judgment of the Hon'ble Supreme Court in the case of Sree Balaji Rice Mill, Bellary (supra).

3.2.1 It is vehemently submitted by Shri Tushar Hemani, learned advocate for the assessee that while applying the ratio of the judgment of the Hon'ble Supreme Court in the case of Shree Balaji Rice Mill, Bellary (supra), learned Tribunal has not properly appreciated the distinguishing feature in the Karnataka Sales Tax Act and Gujarat Sales Tax Act.

3.2.2 It is vehemently submitted by Shri Tushar Hemani, learned advocate for the assessee that as such considering the relevant provisions of the Gujarat Sales Tax Act, the Division Bench of this Court in the case of Bhavnagar Chemical Works Ltd. v. Commissioner of Sales Tax, Ahmedabad reported in 83 STC 409 held that in case where AO has omitted imposing the penalty at the time of passing assessment order, the Revisional Authority in exercise of suo motu revisional power has no jurisdiction to impose penalty for the first time. It is submitted that in the case of Bhavnagar Chemical Works Ltd. (supra), the Division Bench of this Court has specifically observed and held that the penalty proceeding are distinct from the assessment proceedings and therefore only in a case where the original authority issued the notice, but omitted to impose penalty, penalty may be imposed by the Revisional Authority in exercise of suo motu Revisional powers.

3.2.3 It is vehemently submitted by Shri Tushar Hemani, learned advocate for the assessee that decision of the Division Bench of this Court in the case of Bhavnagar Chemical Works Ltd. (supra) was as such referred to by the Hon'ble Supreme Court while deciding the case of Sree Balaji Rice Mill, Bellary (supra). It is submitted that even in the case of Sree Balaji Rice Mill, Bellary (supra), the Hon'ble Supreme Court did consider the distinguishing features in/under other Sales Tax Act and under the Karnataka Sales Tax Act and only thereafter the Hon'ble Supreme Court has confirmed the penalty imposed by the Revisional Authority, by observing that considering the provisions of the Karnataka Sales Tax Act, entire assessment proceedings were at large before the Revisional Authority. It is submitted that the aforesaid has not been properly appreciated by the learned Tribunal and the learned Tribunal has materially erred in relying upon and/or applying the law laid down by the Hon'ble Supreme Court in the case of Sree Balaji Rice Mill, Bellary (supra).

3.2.4 It is vehemently submitted by Shri Tushar Hemani, learned advocate for the assessee that as such the decision of the Division Bench of this Court in the case of Bhavnagar Chemical Works Ltd. (supra) holds the field which deals with the provisions of Gujarat Sales Tax Act and therefore, the learned Tribunal ought to have applied the decision of the Division Bench of this Court in the case of Bhavnagar Chemical Works Ltd. (supra).

3.2.5 It is vehemently submitted by Shri Tushar Hemani, learned advocate for the assessee that even otherwise there is a difference between Section 18 A r/w Section 22 A of the Karnataka Sales Tax Act and Section 67 of the Gujarat Sales Tax Act. It is submitted that under the Karnataka Sales Tax Act the entire assessment proceedings shall be at large before the Revisional Authority. However, considering the language used under Section 67 of the Gujarat Sales Tax Act, before the Revisional Authority/First Appellate Authority only the record of the order and not entire record the assessment proceedings shall be before the First Appellate Authority/Revisional Authority. It is submitted that...

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