2018 (8) TMI 1773 - HC - VAT and Sales Tax

Revision of returns rejected - KVAT Act - incorrect values of inter-State purchases and stock transfer inwards shown in annual returns - Asst. Commissioner felt that the revision would alter the turnover - Held that - To put the problem in perspective to revise or not revise a return is the question. To revise the return the dealer faces a Departmental objection. It is two fold revision permitted it will alter the declared turnover ; and the company has not produced documents such as forms F and FA to prove the genuineness of the claim. On the maintainability of the writ petition too the Department objects. It presses into service the alternative remedy. The alternative remedy - Held that - True the company has a remedy under section 55 of the Act-a statutory appeal. But once the issue stands repeatedly addressed by this court and precedents with clear holding subsist driving the suitor to the rigmarole of a remedy be it an alternative one serves no purpose. After all for a Constitutional Court the alternative remedy is a self-imposed limitation. And it is self-imposed not other-imposed at that. Documents not produced - Form F and Form FA - Held that - Indeed the company admits its omission and calls it inadvertent. To prove an admitted fact documentary proof is a superfluity. Change of admitted turnover - Held that - The company submitted its audit certificate on January 31 2017 and applied the next day for revision of returns. Then the Department began no assessment or penalty proceedings as mandated in the provisos to section 42 of the Act. About the documents-Forms F and FA-the Department could have when it heard the company asked for them if it entertained any doubt about the company s claim. True burden of proof lies on the dealer but the Department s exhibit P4 notice casts no doubt on the company s claim. Instead it only said that the proposed revision will alter the turnover - the possible change of turnover alone is insufficient for the provisions have received a beneficial purposive interpretation from the Division Bench. The contingency must have been coupled with Departmental detection and consequential action-for assessment and penalty. Here neither happened. The respondents are directed to permit the petitioner to revise the returns for the assessment year 2015-16. The respondents will enable the company to revise the returns in the presence of the assessing officer within four weeks after receiving the judgment copy - petition allowed.

Issues Involved:
1. Revision of annual returns under the Kerala Value Added Tax Act (KVAT Act).
2. The validity of the Assistant Commissioner’s rejection of the revision request.
3. Applicability of Section 42(2) of the KVAT Act.
4. The bona fide nature of the petitioner’s request.
5. Availability of alternative remedies.
6. Impact of precedents on the case.

Issue-wise Detailed Analysis:

1. Revision of Annual Returns under the KVAT Act:
The petitioner, Eveready Industries India Ltd., an assessee under the KVAT Act, sought to revise its annual returns for the year 2015-2016 due to inadvertent errors in reporting inter-State purchases and stock transfers. The company filed the request for revision on February 1, 2017, immediately after submitting its audit report on January 31, 2017.

2. Validity of the Assistant Commissioner’s Rejection:
The Assistant Commissioner rejected the revision request, citing the potential alteration of the turnover. The company argued that the rejection was mechanical and lacked valid reasoning, emphasizing that the omission was inadvertent and the request for revision was timely and bona fide.

3. Applicability of Section 42(2) of the KVAT Act:
Section 42(2) allows a dealer to revise annual returns if any omission or mistake is detected in comparison with audited figures, provided the revision is accompanied by the audit certificate and proof of payment of any additional tax and interest. The proviso prohibits revisions if penal action has been initiated. The court noted that the company’s request was within the permissible time frame and no penal action had been initiated.

4. Bona Fide Nature of the Petitioner’s Request:
The petitioner contended that the errors were arithmetic in nature and not an attempt to evade tax. The court found the company’s conduct bona fide, as the request for revision was made immediately after the audit report, and there was no departmental detection of suppression or initiation of penal proceedings.

5. Availability of Alternative Remedies:
The respondents argued that the petitioner had an alternative remedy under Section 55 of the KVAT Act, which provides for an appeal. However, the court held that given the precedents and the clear legal position, driving the petitioner to an alternative remedy would serve no purpose.

6. Impact of Precedents on the Case:
The court analyzed several precedents, including Alwaye Sugar Agency and C. R. Varghese, which emphasized a pragmatic approach towards genuine errors in tax returns. These cases highlighted that unless there is willful suppression or departmental detection of an offense, the authorities should allow revisions to ensure tax compliance. The court found that the Assistant Commissioner’s rejection based solely on the potential change in turnover was insufficient, as the law permits revisions to correct bona fide mistakes.

Conclusion:
The court allowed the writ petition, set aside the Assistant Commissioner’s order, and directed the respondents to permit the petitioner to revise the returns for the assessment year 2015-16. The revision should be done in the presence of the assessing officer within four weeks of receiving the judgment. The company must comply with rule 22 of the KVAT Rules and pay any differential tax, interest, and penal interest simultaneously with the revision of the returns. No order on costs was made.

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