TMI Blog2017 (4) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... utomatic. Therefore, when the penalty on the difference of amount tax paid and tax payable is more than 25% of the amount of tax so paid, there shall be automatic levy of penalty under Section 45(6) of the Act and therefore, no separate notice is required to show cause as to why penalty under subsection (6) of Section 45 may not be imposed. However, a notice may require to be issued while imposing penalty in other cases, more particularly, Section 45(1)(b) When the AO failed to impose the statutory penalty, it can be said that there was an omission on the part of the AO and therefore, the same was revisable by the Revisional Authority in exercise of powers u/s 67 of the Act. Even matter is required to be viewed from another angle. In the present case, even the First Appellate Authority who incidentally was also a Revisional Authority, in fact enhanced the amount of tax payable. The AO levied the purchase tax on lignite at 19.75% while passing the assessment order and the First Appellate Authority held that purchase tax was leviable at 25% and therefore, in fact enhanced demand of tax. Under the circumstances, in the present case even the original assessment order came to be modi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Tribunal has dismissed the said appeal preferred by the appellantdealer and has confirmed the order dated 29.10.2005 passed by the First Appellate Officer in First Appeal as well as Suo Motu Revision proceeding, the appellantdealer has preferred present Tax Appeal to consider the following substantial question of law: (1) Whether on facts and in the circumstances of the case the order of the Hon'ble Gujarat Value Added Tax Tribunal is proper and legal in as far as it has not considered the question of jurisdiction of the revising authority for levying penalty under section 45(6) of the The GST Act for the first time in revision? (2) Whether Whether on facts and in the circumstances of the case the order of the Hon'ble Gujarat Value Added Tax Tribunal is proper and legal in as far as in applying the ratio of the judgment of Honourable Supreme Court in the case of M/s. Shree Balaji rice Mill 140 STC 267 and not following ratio of decision of Honourable Gujarat High Court in the case of M/s. Bhavnagar Chemical Works Ltd. 83 STC 409? (3) Whether on facts and in the circumstances of the case the order of the Hon'ble Gujarat Value Added Tax Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged the order imposing penalty under Section 45(6) of the Act. That the appellantdealer challenged the order of the First Appellate Authority / Revisional Authority imposing the penalty under Section 45(6) of the Act for sum of ₹ 2,24,717./- on the following grounds: (i). The Assessing Officer has not imposed penalty in assessment order. Therefore, the learned Revising Authority cannot initiate suo motu revision proceedings and imposed penalty under Section 45(6) of the Act. (ii). Alternatively difference between the tax assessed and tax paid is less than 25% and therefore, as per Section 45(5) r/w section 45(6), no penalty can be imposed. 2.3. That relying upon the decision of the Hon ble Supreme Court in the case of Sree Balaji Rice Mill, Bellary vs. State of Karnataka reported in (2005) 4 SCC 21 ; 140 STC 267, by impugned judgment and order the learned Tribunal has dismissed the said appeal preferred by the appellantdealer and has confirmed the order of penalty imposed under Section 45(6) of the Act. That the learned Tribunal has also negatived the second alternative submission on behalf of the dealer that as the tax assessed and tax paid was less than 25% and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that in the case of Bhavnagar Chemical Works Ltd (supra), the Division Bench of this Court has specifically observed and held that the penalty proceeding are distinct from the assessment proceedings and therefore only in a case where the original authority issued the notice, but omitted to impose penalty, penalty may be imposed by the Revisional Authority in exercise of suo motu Revisional powers. 3.2.3. It is vehemently submitted by Shri Tushar Hemani, learned advocate for the assessee that decision of the Division Bench of this Court in the case of Bhavnagar Chemical Works Ltd (supra) was as such referred to by the Hon ble Supreme Court while deciding the case of Sree Balaji Rice Mill, Bellary (supra). It is submitted that even in the case of Sree Balaji Rice Mill, Bellary (supra), the Hon ble Supreme Court did consider the distinguishing features in / under other Sales Tax Act and under the Karnataka Sales Tax Act and only thereafter the Hon ble Supreme Court has confirmed the penalty imposed by the Revisional Authority, by observing that considering the provisions of the Karnataka Sales Tax Act, entire assessment proceedings were at large before the Revisional Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u revisional powers. 3.4. Shri Tushar Hemani, learned advocate for the assessee has also relied upon the decision of this Court in the case of State of Gujarat vs. Dashmesh Hydraulic Machinery rendered in Tax Appeal No. 28 of 2015. 3.5. It is vehemently submitted by Shri Tushar Hemani, learned advocate for the assessee that even otherwise the imposition of penalty under Section 45(6) of the Act was erroneous and bad in law. It is submitted that considering Section 45(6) of the Act no penalty under Section 45(6) of the Act can be imposed unless difference between tax payable and tax paid with the return is more than 25%. It is submitted that in the present case the tax assessed as per the assessment order is ₹ 53,16,858/- and the tax paid by the appellant as per the assessment order is ₹ 43,89,416/- and therefore, difference comes to ₹ 9,27, 442/- . It is submitted that now the difference of 25% of the tax paid comes to ₹ 10,97,354/- . It is submitted that therefore, in the present case difference of tax paid and tax assessed would be less than 25% and therefore, the AO rightly not imposed penalty under Section 45(6) of the Act. It is further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 45(6) of the Act is mandatory in nature, Shri Vora, learned AGP has relied upon the decision of the Division Bench of this Court in the case of State of Gujarat vs. Oil and Natural Gas Corporation Ltd reported in (2016) 68 taxmann. Com 64 (Guj). In support of his submission that any omission on the part of the Assessing Authority, powers under Section 67 can be invoked, Shri Vora, learned AGP has relied upon para 10 of the decision of the Division Bench of this Court in the case of Bhavnagar Chemicals Works Limited (supra). 4.3. It is vehemently submitted by Shri Vora, learned AGP that under the Gujarat Sales Tax Act levy of tax and penalty is assessed in the single order of the assessment. It is submitted that so non levy of penalty, which is otherwise leviable in the assessment order would entitle authorities to invoke powers under Section 67 of the Act. In support of his above submission, he has heavily relied upon the decision of the Hon ble Supreme Court in the case of Sree Balaji Rice Mill, Bellary (supra), 4.4. Now, so far as the attempt on the part of the appellant to draw distinction between Kanataka and Gujarat Act namely record of proceeding visavis record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act which has been imposed upon the Revisional Authority for the first time as the same was not imposed by the AO while passing the original order of assessment ? 5.1. The another question which is posed for the consideration of this Court is whether that while calculating / considering the difference of 25% between tax paid and tax payable, while imposing penalty under Section 45(6) of the whether any amount paid by the assessee / dealer is first to be applied towards tax payable as sought to be contended on behalf of the appellant assessee or the same is required to be first applied towards interest, thereafter for penalty and thereafter for tax as contended on behalf of the Revenue ? 6.0. While considering the first question few facts which emerge from the record are required to be considered. That by order dated 31.3.2005 under Section 41(3) of the Gujarat Sales Tax Act for AY 2000-01, the Assessing Authority raised the additional demand of tax of ₹ 14,95,390/- . Feeling aggrieved and dissatisfied with the assessment order passed by the AO raising additional demand of tax of ₹ 14,95,390/- , the appellant hereinassessee dealer preferred the appeal before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was by way of interest. Considering Section 47(4A) and 47(4B) the aforesaid amount of ₹ 28234/- by way of interest was first required to be deducted from the amount paid by the assessee and after deducting the same, amount of tax paid by the assessee can be said to be ₹ 43,61,182/- . As observed herein above, tax payable was ₹ 54,83,267/- and therefore, the difference between tax paid and tax payable would be ₹ 11,22,085/- . Having found that difference is more than 25% of the total amount paid along with return, the penalty under Section 45(6) of the Act is imposed. In light of the aforesaid facts and circumstances of the case, the questions which are posed for the consideration before this Court are required to be considered. 6.1. While considering the aforesaid questions, relevant provisions of the Gujarat Sales Tax, more particularly, Sections 45, 47, 47(4A) and 47(4B) and Section 67 of the Act are required to be referred to, which are as under: SECTION 45 : Imposition of penalty in certain cases and bar to prosecution (1) Where any dealer or Commission agent becomes liable to pay purchase tax under the provisions of subsection (1) or (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 47 by the dealer in respect of such period by more than 144 [twenty five percent] of the amount of tax so paid, the dealer shall be deemed to have failed to pay the tax to the extent of the difference between the amount so assessed or reassessed as aforesaid and the amount paid. (6) 145 [where under subsection (5), a dealer is deemed to have failed to pay the tax to the extent mentioned in the said subsection, there shall be levied on such dealer a penalty not exceeding one and onehalf times the difference referred to in subsection (5.)] (7) Wherever any person fails without sufficient cause, to furnish any information required by section 38 , the Commissioner may, by an order in writing, impose upon the dealer by way of penalty a sum not exceeding two thousand rupees. (8) If any dealer contravenes the provisions of Section 57 , the Commissioner may direct him to pay by way of penalty a sum not exceeding ten percent of the amount of the bill or cash memorandum in respect of which such contravention has been made. (9) If the Commissioner has reason to believe that any person is liable to a penalty under any of the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided that the Commissioner or an appellate authority in an appeal under section 65 may, in respect of any particular dealer or person, and for reasons to be recorded in writing, extend the date of payment, or allow him to pay the tax or penalty (if any) by installments : [Provided further that notwithstanding anything contained in this Act or in the rules made thereunder but subject to such conditions as the State Government or the Commissioner may by general or special order specify, where a dealer to whom incentives by way of deferment of sales tax or purchase tax or both have been granted by virtue of an Eligibility certificate. granted by the Commissioner of Industries, Gujarat State or any officer authorized by him in this behalf and where a loan liability equal to the amount of any such tax payable by such dealer has been raised by the Gujarat Industrial Investment Corporation Limited or the Gujarat State Financial Corporation limited, then such tax shall be deemed, in the public interest, to have been paid.] -[(4AA) Where provisional assessment is made in respect of any period under subsection( 1) of section 41B and thereafter assessment is made in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, in respect of the period for which the assessment is kept pending; (iv) in the case where on account of an order passed under section 67 an additional amount of tax becomes payable by a dealer on such additional amount of tax for the period commencing on the date of order of assessment and ending on the date of the order so passed. (v) in the case where on account of a judgement of the Gujarat High Court or the Supreme Court an additional amount of tax becomes payable by a dealer, on such additional amount of tax for the period ending on the date of such judgement. (vi) in the case where in assessing the amount of tax from any dealer under this Act in respect of any period, the time taken for making an order of assessment exceeds thirtysix months from the date of expiry of the time prescribed for payment of tax under subsection (1), (2), or (3) of section 47 , in respect of the period exceeding thirtysix months] [4B] Where a dealer is liable to pay interest under subsection (4A) and he makes payment of an amount which is less than the aggregate of the amount of tax, penalty and interest, the amount so paid shall be first applied towards the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, as the case may be, the Tribunal shall record the reasons for such rejection.] 6.2. Section 45 confers power to levy / impose penalty in certain cases. In certain cases, enumerated in Section 45 of the Act, the penalty imposable is distinct with the assessment such as Section 45(1)(a)(b) . However, so far as penalty imposable under Section 45(5) and 45(6) of the Act is concerned, it is a direct bearing or connection with the order of assessment and the determination of the tax liability. Subsection (5) of Section 45 provides that where in the case of a dealer the amount of tax assessed for any period under Section 41 or 50; or reassessed for any period under Section 44; exceeds the amount of tax already paid under subsection (1), (2 )or (3) of Section 47 of the Act by the dealer in respect of such period by more than 25% of the amount of tax so paid, the dealer shall be deemed to have failed to pay the tax to the extent of the difference between the amount so assessed or reassessed as aforesaid and the amount paid. Subsection (6) of Section 45 provides that where under subsection (5), a dealer is deemed to have failed to pay the tax to the extent mentioned in the said subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der subsection (6) of section 45. 6.3. Under the circumstances, when the AO failed to impose the statutory penalty, it can be said that there was an omission on the part of the AO and therefore, the same was revisable by the Revisional Authority in exercise of powers under Section 67 of the Act. Even matter is required to be viewed from another angle. In the present case, even the First Appellate Authority who incidentally was also a Revisional Authority, in fact enhanced the amount of tax payable. The AO levied the purchase tax on lignite at 19.75% while passing the assessment order and the First Appellate Authority held that purchase tax was leviable at 25% and therefore, in fact enhanced demand of tax. Under the circumstances, in the present case even the original assessment order came to be modified by the First Appellate Authority and the tax liability came to be enhanced and therefore, it can be said that the original assessment order merged into order passed by the First Appellate Authority and therefore, also the penalty under Section 45(6) of the Act was leviable / imposable on the difference of tax paid at the time of filing of return and tax payable as determined by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her hand, the penalty under Section 45(6) of the Act is integral part of the assessment proceedings and on determining the tax liability while passing the order of assessment and reassessment as the case may be, on the difference of amount of tax paid with the return and amount of tax payable on assessment and / or reassessment order and if the difference if more than 25%, the Assessing Authority shall levy the penalty under Section 45(6) of the Act. No discretion is vested with the AO not to impose the penalty under Section 45(6) of the Act. Therefore, when the penalty is imposable under Section 45(1)(b) of the Act can be said to be independent and distinct from the assessment proceedings, a separate notice is required to be issued upon the dealer / assessee calling upon him to show cause as to why the penalty under Section 45(1)(b) may not be imposed. Such is not the requirement while imposing the penalty under Section 45(6) of the Act as the same is a statutory penalty and on the difference of amount of tax paid and the tax payable, the Assessing Authority shall impose the penalty. Under the circumstances, the decision of the Division Bench of this Court in the case of Bhavnagar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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