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2015 (4) TMI 425 - HC - VAT and Sales TaxImposition of penalty u/s 64 & 64 of RST Act - Errornoeus 100% exemption claim on purchase of raw material - assessee has submitted that it never intended to evade its tax liability and 100% exemption was claimed by it under the bonafide belief in construing the Notification dated 13th of June 1994 - Assessing officer made provisional assessment while deleting penalty - Commissioner invoked its jurisdiction to impose penalty - Held that:- Where both expressions "appeal" and "revision" are employed in a statute, obviously, the expression "revision" is meant to convey the idea of a much narrower jurisdiction than that conveyed by the expression "appeal". The use of two expressions "appeal" and "revision" when used in one statute conferring appellate power and revisional power, we think, is not without purpose and significance. Ordinarily, appellate jurisdiction involves a re-hearing while it is not so in the case of revisional jurisdiction when the same statute provides the remedy by way of an 'appeal' and so also of a 'revision'. If that were so, the revisional power would become co-extensive with that of the trial Court or the subordinate Tribunal which is never the case. The classic statement in Dattonpant that revisional power under the Rent Control Act may not be as narrow as the revisional power Under Section 115 of the Code but, at the same time, it is not wide enough to make the High Court a second Court of first appeal, commends to us and we approve the same. In view of legal position emerged out, and upon examination of the materials available on record in conjunction with Section 87 of the RST Act, learned Commissioner has over-stepped its jurisdiction in finding fault with the orders passed by the Assessing Authority for non-imposition of penalty. As a matter of fact, there is nothing on record to show that the Assessing Authority has exercised its discretion arbitrarily or capriciously and therefore interference with the discretionary orders of the Assessing Authority by the learned Commissioner is per-se a decision based on mere ipse-dixit or change in the opinion. While upholding the said order, the learned Tax Board has not at all cared to examine the nature of powers of the revisional authority under Section 87 of the RST Act rendering the said order too vulnerable. The folly, which is apparently clear from the order passed by the learned Commissioner under Section 87 of the RST Act, has been further perpetuated by the Assessing Authority after the remand order, inasmuch as the Assessing Authority has also not cared to issue any notice to the assessee before imposing penalty under Section 64 of the RST Act. It is clearly apparent that after remand order, all the assessment orders were passed by the Assessing Authority castigating the assessee for violation of declaration exposing it for the penalty envisaged therein without affording opportunity of being heard. Non-observance of principles of natural justice in the backdrop of facts and circumstances of the instant case has not been properly addressed by the first appellate authority as well as by the learned Tax Board and this vital issue has been dealt with in an absolutely casual and cavalier manner. Section 69 of the Act of 1994 also opens with non-obstante clause that no penalty under this Act shall be imposed unless a reasonable opportunity of being heard is afforded to the dealer or the person concerned. In this view of the matter, even on the touchstone of RST Act, observance of principles of natural justice is to be adhered to mandatorily before imposition of penalty against an erring assessee - use of the expression “falsely represents” is indicative of the fact that the offence under Section 10(b) of the Act comes into existence only where a dealer acts deliberately in defiance of law or is guilty of contumacious or dishonest conduct. Therefore, in proceedings for levy of penalty under Section 10-A of the Act, burden would be on the Revenue to prove the existence of circumstances constituting the said offence. Furthermore, it is evident from the heading of Section 10-A of the Act that for breach of any provision of the Act, constituting an offence under Section 10 of the Act, ordinary remedy is prosecution which may entail a sentence of imprisonment and the penalty under Section 10-A of the Act is only in lieu of prosecution. In light of the language employed in the section and the nature of penalty contemplated therein, we find it difficult to hold that all types of omissions or commissions in the use of Form C will be embraced in the expression “false representation”. In our opinion, therefore, a finding of mens rea is a condition precedent for levying penalty under Section 10(b) read with Section 10-A of the Act. The learned Tax Board, while rejecting the contention of the assessee, has simply referred to Rule 34 of the Rules of 1995 without discussing the point in issue threadbare. The rival parties have joined issue on this question and requisite material is also available to embark on this question. I have also made endeavor to examine this question de-novo on the touchstone of relevant provisions governing the said province. Insofar as Assessment Years 1997-98 and 1998-99 are concerned, the Assessing Authority has passed the order on 11th August 2000 and revision under Section 87 is admittedly laid by the Assessing Authority to the learned Commissioner prior to expiry of five years. The revision petition is decided by the learned Commissioner on 10th of August 2005. Therefore, in terms of sub-sec.(2) of Section 87 of the RST Act, revisional power has been exercised by the learned Commissioner within five years. A plain reading of sub-sec.(2) of Section 87 makes it crystal clear that learned Commissioner can exercise revisional powers under sub-sec.(1) of Section 87 within a period of five years from the date order sought to be revived was passed. The order passed by the learned Commissioner speak volumes about the fact that the same was passed on 10th August 2005 and therefore I am not persuaded to hold that it has exercised powers of revision vis-ŕ-vis two assessment year after expiry of period of limitation. - Decided partly in favour of assessee.
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