Nowadays it has become a common practice for tax regulating authorities or anti-evasion department to charge every assesse with “evasion of tax by way of willful suppression of facts” without properly assessing the books of accounts or any investigation at the time of findings of any short payment of tax.
And here the question arises naturally that “whether every short payment of tax by any assesse is an act of “evasion of tax by way of willful suppression of facts” ………. “And the answer should be ‘No’ not at all” Because every short payment of tax can not necessarily be a case of tax evasion. Thus the effort which is required to find out the basic difference between tax evasion and short payment of tax by mistake, is not less challenging than a trail for fine tuning of the angular momentum of two satellites on separate orbits.
The very term “tax evasion” needs to be understood keeping the “Doctrine of mens-rea” in mind as because “tax evasion” is itself an act with specific intent and that requires intent to violate the law as an element of the offense, and in absence of that “intent” one should not be charged for tax evasion by the way of wilful suppression of facts.
Whereas in most of the case the proliferation of statutes and regulations has sometimes made it difficult for the average citizen to know and comprehend the extent of the duties and obligations imposed by the tax laws. . . . the Courts years ago already interpreted the statutory term “willfully” as used in tax statutes as carving out an exception to the traditional rule.”
And in our country with such an intricate taxation policy it is necessary that the revenue officers must be an expert of the domain but to the contrary executives of tax departments have no knowledge of basic accounting system There are general exceptions but numbers are not sufficient to the requirement. And in such circumstances, no lay person is expected to know all the complexities of the tax laws. It is accepted that people will act on the advice of professionals and that the advice will often turn on the meanings to be given to provisions in the Act that are open to various interpretations. Furthermore, it is accepted that one may legitimately structure one’s affairs so as to minimize tax liability. Considered in this legislative context, I have no difficulty in holding that a mistake or ignorance as to one’s liability to pay tax under the Act may negate the fault requirement in the provision, regardless of whether it is a factual mistake, a legal mistake, or a combination of both.
Here it is also true that mere belief that a law is unjust or unconstitutional is no excuse, but “reasonable compliance upon an official statement of law, afterward determined to be invalid or erroneous” does not constitute an act of tax evasion.
However, a law must be reasonably clear; it must be worded so that a reasonable layman can comprehend the specific prohibited acts. Otherwise, the law may seem to be an ‘Inspector Raj’ only because of the sense of confidence as well as the sense of absoluteness within the revenue inspectors towards their own opinion while imposing or interpreting the law in utmost hurriedness without extending an opportunity to the assesse of being heard under the settled principle of natural justice which needs no emphatic explanation and hence should be avoided.