Apurva N. Mehta, Advocate
No penalty for concealment or furnishing inaccurate particulars merely for the reason that claims made under bonafide belief are found unsustainable in law – Gujarat VAT Tribunal
The Gujarat Value Added Tax Tribunal in the case of Star Industries v/s The State of Gujarat (Second Appeal No. 347 of 2013 decided on 02.09.2014) has, in the context of penalty u/s 45(2)(c) of the Gujarat Sales Tax Act, 1969, held that where only under bonafide belief the appellant had failed to pay purchase tax u/s 15B on the transactions of branch transfer, it cannot be said that the appellant has concealed the particulars or deliberately furnished inaccurate particulars of any transaction liable to tax as the transactions were duly recorded in the books of accounts and the same were duly reflected in the returns filed by the appellant and nothing contained therein was found to be incorrect, erroneous or false. Consequently, the penalty imposed by the ld. assessing authority and partly retained by the ld. appellate authority was completed deleted by the Tribunal holding as under :
“ 6. So far as the issue relating to levy of penalty u/s 45 (2) (c) of the Act is concerned, we are of the view that the appellant has not concealed any particulars of no transactions or deliberately furnished inaccurate particulars of any transaction liable to tax. The transactions were duly recorded in the books of accounts and the same were duly reflected in the returns filed by the appellant. Because of the bonafide belief of the appellant, the appellant has not paid purchase tax u/s 15B on the transaction of branch transfer. However, as soon as this fact was brought to the notice of the appellant, the tax was immediately paid along with the interest. The appellant has neither agitated this issue in the assessment nor in the appeal proceedings. Despite this fact the assessing officer has levied penalty at 150% of the tax u/s 45 (2) (c) of the Act which was reduced by the learned Deputy Commissioner by 50% of the tax. This is also not justified in view of the settled legal position. In the case of Commissioner of Income-tax vs Reliance Petroproducts Pvt. Ltd. (supra) it is held by the Hon ’ble Apex Court that where there is no findings that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty u/s 271 (1) (c) of the Income-tax Act, 1961. A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. In the case of Shree Krishna Electricals vs State of Tamil Nadu (Supra) it is held by the Hon ’ble Supreme Court that since the items were found incorporated in the appellant’s account books though it had not included them in its turnover, penalty could not be imposed merely because the exemption claimed by the appellant was disallowed. In the case of Hindustan Steel Ltd. vs the State of Orissa (Supra) it is held that the penalty will not be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of provisions of the Act or where the breach flow from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute. In the case of Banu Hasim vs State of Gujarat (Supra), the Hon ’ble Gujarat High court has held that the appellant was litigating under the bonafide belief that the goods exported were exempted from payment of sales tax and for the first time, the goods become taxable after the decision of Hon ’ble Apex court in the case of Yasha Overseas vs Commissioner of Sales Tax and others (2008) 8 SCC 681 and thereafter the appellant deposited the tax, interest and penalty. It was, therefore, held that the penalty could not have been imposed on the appellant and that there was no intention of the appellant to evade the payment of sales tax. The penalty imposed by the authorities was therefore held as not justified and hence the amount of penalty paid was liable to be refunded to the appellant. In the case of Amulakh & Company vs State of Guiarat (Supra), the Hon ’ble Gujarat High court has held that in the absence mens rea, to evade payment of sales tax, all the authorities below were not justified in levying penalty.
7. In view of the above decisions, as well as the facts of the case, we hold that the learned Deputy Commissioner is not justified in retaining penalty of 50 % levied u/s 45 (2) (c) of the Act. The entire penalty is required to be deleted and it is accordingly deleted. ”