Case Law Details

Case Name : Pankaj Behari Saha Vs State of Tripura (Tripura High Court)
Appeal Number : WP(C) No.1106 of 2019
Date of Judgement/Order : 26/04/2021
Related Assessment Year :

Pankaj Behari Saha Vs State of Tripura (Tripura High Court)

Analysis of Section 53 of the TVAT Act would show that as per sub-section (1) thereof, for a dealer whose turnover crosses the prescribed threshold limit for any year, has to get his accounts audited within six months from the end of that year and obtained the report in the prescribed form setting forth such particulars as may be prescribed. Such report has to be furnished to the Commissioner by the end of the month after expiry of the period of six months allowed for completing the audit. It is when the dealer fails to do this, that under sub-section (3) of Section 53 he exposes himself to penalty at the prescribed rate. In order to invoke the penal provision of sub-section (3) of Section 53 thus it must be first established that the dealer failed to get his accounts audited as provided in sub-section (1) and furnish a copy thereof within prescribed time as provided in sub-section (2) of Section 53. Under sub‑section (1) of Section 53 what the dealer is required to do is to obtain a report of audit in prescribed form and which would set forth such particulars as may be prescribed. Thus for a dealer to obtain an audit report, not only the format in which such report would be obtained, the particulars which such report must contain, were also the matters to be prescribed. As provided in sub-section (19) of Section 2 such prescription has to be made under the Rules. Admittedly, in the present case, in the Rules framed by the State Legislature in exercise of rule making powers under the TVAT Act, no such form was prescribed nor obviously the particulars which such report would contain were prescribed. In absence of any such prescription, the Superintendent could not have invoked the provision of sub-section (3) of Section 53 of the TVAT Act. Since as noted, under the Rules neither the form of audit report nor the particulars which such audit report would contain having been prescribed, the question of the dealer having failed to furnish the report would not arise.

 The court held that when the Statute provides certain things to be done in a particular manner, the same must be done in that manner or not at all.The Court rejected the contention of the State that the report ought to have been submitted in the form prescribed under the Chartered Accountants Act.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

These petitions arise in common background. They have been heard together and would be disposed of by this common judgment. For convenience, we may record facts from WP(C) No.1106 of 2019.

[2] Petitioner is a dealer and was registered under the Tripura Value Added Tax Act, 2004 (TVAT Act, for short) at the relevant time. The Superintendent of Taxes, Udaipur issued a notice on 31.01.2019 to the petitioner under Section 5 3(3) of the TVAT Act conveying to the petitioner that despite requirement under the said provision the petitioner failed to furnish audited accounts for the years 2010-11, 2011- 12 & 2012-13 by the end of the month after expiry of the period of six months. This was in violation of Section 53(1) & 53(2) of the TVAT Act and would invite penalty @ 0.1% of the gross turnover as provided in sub-section (3) of Section 53 of the TVAT Act. He, therefore, called upon the petitioner to appear in person and show-cause why penalty under the said Section should not be imposed.

[3] The petitioner filed a detailed reply to the said show-cause notice under a communication dated 26.02.2019 and raised several contentions. One of the grounds taken by the petitioner to oppose the demand was that as required under Section 53 of the TVAT Act, no format for filing the audited report was prescribed by the Government. This ground raised by the petitioner in reply to the show-cause notice was as under :

“4.8 That the petitioner begs to state that the Ld. Assessing Authority has no power to issues Notices on the observation of the A.G. Audit Team which was beyond the law and exceeding their jurisdiction wherein they commented that the assessing authority has to impose penalty under Section 25(4) and 53(3) of TVAT Act, 2004 and hence, A.G. Audit report is bad in law and liable to be set aside and quashed in no time.

4.9. The Assessing Authority has the duty to read harmoniously the provisions of the Act so as to ascertain the true intention of the Legislature in its proper prospective. While the intention of the Legislature is found to be clear under Section 53 of the TVAT Act, 2004 to provide prescribed format for submission of audited balance sheet but in the instant case o prescribed format was provided by the TVAT Rules, 2005 for the same and on the basis of such non-availability of Form in the Rules the assessing authority cannot impose penalty u/s 53 of TVAT Act, 2004 at the time of assessment and therefore, the Notices under Section 27(2), 25(4) and 53(3) of TVAT Act, 2004 dated 31.01.2019 and 11.02.2019 issued by the Learned Superintendent of Taxes (Assessing Authority), Charge- Udaipur are bad in law.”

[4] The Superintendent of Taxes, Udaipur passed the impugned order dated 10th June, 2019 under Section 53 of the TVAT Act and levied penalty of Rs.2. 17 lakhs (rounded off) of Rs.4 lakh (rounded off) and Rs.5.36 lakhs (rounded off) for the years 2010-11, 2011-12 & 2012-

13. This common order for three years the petitioner has challenged by filing three separate petitions. These petitions are pressed on a simple ground, namely, that the State Legislature has not prescribed any format in which the audited report as required under sub-section (1) of Section 53 of the TVAT Act was to be filed. Failure on part of the petitioner to file such audited report within the time prescribed, therefore, cannot lead to any penalty proceedings.

[5] Learned counsel for the petitioner drew our attention to the statutory provisions applicable and contended that in absence of prescription of the form in which the audited report had to be filed, the penal action against the petitioner could not have been taken. He submitted that when a statute requires a certain thing to be done, the same must be done in the manner so prescribed or not at all. For this well known legal principle, he relied on following decisions :

(i) In case of Nazir Ahmad versus King Emperor, reported in AIR 1936 PC 253 (2);

(ii) In case of State of Uttar Pradesh versus Singhara Singh and others, reported in (1964) 4 SCR 485;

(iii) In case of Commissioner of Income Tax, Mumbai versus Anjum M.H Ghaswala and others, reported in (2002) 1 SCC 633;

(iv) In case of Captain Sube Singh and others versus LT. Governor of Delhi and others, reported in (2004) 6 SCC 440.

[6] On the other hand, learned special counsel Shri Nandi opposed the petitions contending that the intention of the Legislature was that a registered dealer whose turnover exceeded certain threshold limit must file the audited report within the prescribed time. The expression “as prescribed” would mean as prescribed under the Chartered Accountants Act. Counsel submitted that for the year 2018- 2019 the petitioner had voluntarily filed such audited report. The defence raised by the petitioner therefore that in absence of the format for filing the report being prescribed the petitioner could not do so earlier, therefore, is an afterthought and is not a valid defence.

[7] Section 53 of the TVAT Act pertains to Audit of accounts and reads as under :

”53 Audit of accounts – (1) Where in any particular year, the gross turnover of a dealer exceeds forty lacs rupees or such other amount as the Commissioner, may, by notification in the official Gazette specify, then such dealer shall get his accounts, in respect of that year audited by an accountant within six months from the end of that year and obtain a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.

(2) A true copy of such report shall be furnished by such dealer to the Commissioner by the end of the month after expiry of the period of six months during which the audit would have been completed.

(3) If any dealer liable to get his accounts audited under sub­section (1) fails to get his accounts audited and furnish a true copy of the audit report within the time specified in sub-section (2), the Commissioner shall, after giving the dealer a reasonable opportunity of being heard, impose on him, in addition to any tax payable, a sum by way of penalty equal to 0.1% of the turnover as he may determine to the best of his judgement in his case in respect of the said period.

Explanation. – For the purpose of this section, “Accountant” means (i) a Chartered Accountant within the meaning of the Chartered Accountant Act, 1949 and includes a person who by virtue of the provisions of sub-section (2) of section 226 of the Companies Act, 1956 is entitled to be appointed to act as an auditor of Companies registered under the said Act or (ii) a Cost Accountant within the meaning of the Cost and Works Accountant Act, 1959.”

[8] As per sub-section (1) of Section 53 thus where in any particular year, the gross turnover of a dealer exceeds forty lacs of rupees or such amount as may be specified, the dealer has to get his accounts audited by an accountant within six months from the end of the year and obtain a report of such audit in prescribed form duly singed and verified by the accountant and providing such particulars as may be prescribed. As per the explanation an accountant means a Chartered Accountant or a Cost Accountant. Sub-section (2) of Section 53 provides that a true copy of such report shall be furnished by the dealer to the Commissioner by the end of the month after expiry of period of six months during which the audit would have been completed. As per sub-section (3) of Section 53 if any dealer liable to get his accounts audited under sub-section (1) fails to get the same audited and furnish a true copy of the audit report within the time specified under sub-section (2) the Commissioner would levy a penalty at the prescribed rates after giving the dealer a reasonable opportunity of being heard.

[9] As per sub-section (19) of Section 2 the term “prescribed” would mean prescribed by the Rules under the TVAT Act.

[10] Analysis of Section 53 of the TVAT Act would show that as per sub-section (1) thereof, for a dealer whose turnover crosses the prescribed threshold limit for any year, has to get his accounts audited within six months from the end of that year and obtained the report in the prescribed form setting forth such particulars as may be prescribed. Such report has to be furnished to the Commissioner by the end of the month after expiry of the period of six months allowed for completing the audit. It is when the dealer fails to do this, that under sub-section (3) of Section 53 he exposes himself to penalty at the prescribed rate. In order to invoke the penal provision of sub-section (3) of Section 53 thus it must be first established that the dealer failed to get his accounts audited as provided in sub-section (1) and furnish a copy thereof within prescribed time as provided in sub-section (2) of Section 53. Under sub‑section (1) of Section 53 what the dealer is required to do is to obtain a report of audit in prescribed form and which would set forth such particulars as may be prescribed. Thus for a dealer to obtain an audit report, not only the format in which such report would be obtained, the particulars which such report must contain, were also the matters to be prescribed. As provided in sub-section (19) of Section 2 such prescription has to be made under the Rules. Admittedly, in the present case, in the Rules framed by the State Legislature in exercise of rule making powers under the TVAT Act, no such form was prescribed nor obviously the particulars which such report would contain were prescribed. In absence of any such prescription, the Superintendent could not have invoked the provision of sub-section (3) of Section 53 of the TVAT Act. Since as noted, under the Rules neither the form of audit report nor the particulars which such audit report would contain having been prescribed, the question of the dealer having failed to furnish the report would not arise.

[11] Sub-section (3) of Section 53 of TVAT Act in clear terms is a penal provision and must be strictly construed. The defence put forth by the respondents that in absence of any such prescription under the Rules the prescribed form under the Chartered Accountants Act must be adopted for the purpose of obtaining audit report is simply not acceptable. The State Legislature did not prescribe such format by incorporation by reference in the Rules. It is not the case of the respondents that any notification was issued by the State Government clarifying that the audit report as referred to in Section 53 of the TVAT Act would be in the form prescribed under the Chartered Accountants Act. Learned counsel for the petitioner was correct in pointing out that when the Legislature required the prescription of the report under the Rules, the same must be done as provided.

[12] The contention of learned counsel Shri A. Nandi to the petitioner having filed such audit report for the year 2018-19, cannot raise the lack of prescription for the period in question, cannot be accepted for multiple reasons. Firstly, in the present group of petitions, we are concerned with the period of the years 2010-11, 2011-12, 2012- 13. If the petitioner has filed audit report as prescribed under the Chartered Accountants Act for the year 2018-19, it is not stopped from taking a defence in these petitions of the State Legislature not having prescribed the format under the Rules. Further, this is only an oral contention made by the counsel for the department before us. Neither in the order imposing penalty nor in the affidavits filed in response to these petitions, the department has taken such a stand. As noted, the petitioner had taken the contention of lack of prescription of the audit report in reply to the show-cause notice. While passing the final order of penalty the Superintendent of Taxes has made no reference to the petitioner filing such reports for the subsequent years. Lastly, even if the petitioner has filed such reports for any years subsequent or even previous, its legal contention that in absence of the prescription of the audit report under the Rules, there can be no breach of the condition of sub-section of Section 53, cannot be taken away. Being a pure legal contention, the conduct of the petitioner for a particular period or year, would not estop the petitioner from raising such contention for any other period.

[13] Lastly, learned counsel for the petitioner fairly brought to our notice a decision of Division Bench of this Court in case of Ruchi Soya Industries Ltd. versus the State of Tripura in CRP No.28 of 2017 decided on 09.09.2020 in which a somewhat similar contention was raised by the petitioner to oppose the penalty imposed under sub-section of Section 53 of the TVAT Act. However, after referring to the stand of the petitioner before the authorities, this ground was rejected making following observations :

“33. It would appear from the above pleadings that it is no case of the petitioner that he could not submit the audit report within time in terms of Section 53(2) of the TVAT Act due to non availability of such Form.”

[14] Thus the Division Bench proceeded on the basis that the petitioner therein had not raised this ground of non-availability of prescribed form for the report for its failure to file the same within the prescribed time as required under sub-section (2) of Section 53 of the TVAT Act. In this decision the Court thus did not examine the legal contention which has been raised before us by the petitioner in these

[15] In the result, impugned common order dated 10.06.2019 is quashed. All petitions are allowed and disposed of accordingly. Pending application(s), if any, also stands disposed of.

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