Allahabad High Court
M/S Sayeed Absar Biri Works vs The Commissioner Commercial Tax U.P. ... on 13 November, 2019
Author: Saumitra Dayal Singh
Bench: Saumitra Dayal Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD ?Court No. - 59 Case :- SALES/TRADE TAX REVISION No. - 204 of 2010 Revisionist :- M/S Sayeed Absar Biri Works Opposite Party :- The Commissioner Commercial Tax U.P. Lucknow Counsel for Revisionist :- Aloke Kumar Counsel for Opposite Party :- C.S.C. Hon'ble Saumitra Dayal Singh,J.
1. Heard Sri Aloke Kumar, learned counsel for the applicant-assessee and Sri B.K. Pandey, learned Standing Counsel for the revenue.
2. Present revision has been filed by the assessee against the order of the Commercial Tax Tribunal, Allahabad dated 28.10.2009 passed in Second Appeal No. 28 of 2009 for A.Y. 2001-02 (Central Penalty). By that order, the Tribunal has partly allowed the assessee's appeal and confirmed the demand of penalty imposed under Section 10-A of the Central Sales Tax Act, 1956 (hereinafter referred to as the 'Act'). The assessee has been found guilty of having made false declaration by making use of statutory Form-C issued under the Act to import packing material which item was first recorded in the registration certificate of the assessee on 09.07.2001.
3. Present revision has been pressed on the following questions of law:
"(i) Whether applicant is entitled to make purchase of packing material against Form-C in view of the provisions of Section 8(3)(d) of the Central Sales Tax Act?
(ii) Whether in view of the fact that the assessee had been similarly using Form-C in the earlier assessment years to import packing material which fact was in the knowledge of the assessing officer, there could ever arise a case of false declaration?"
4. Having heard learned counsel for the parties and having perused the record, insofar as the first question raised by learned counsel for the assessee is concerned, though it may not be denied that there existed an entitlement in law for the assessee to obtain registration with respect to packing material as the assessee was engaged in manufacture of 'beedi'. However, it is a fact that the assessee was granted inclusion of packing material in its registration certificate w.e.f. 09.07.2001.
5. Therefore, no penalty may have been levied for the period from 09.07.2001 to 31.03.2002 inasmuch as the assessee had been authorised to make purchase of packing material by virtue of its specific inclusion in its registration certificate.
6. However, for the period prior to 09.07.2001, merely because there existed an entitlement in law to apply for inclusion of such packing material in the registration certificate, there cannot follow any inference that therefore, there was false declaration made by the assessee. The first question of law is answered accordingly.
7. Insofar as the second question of law is concerned, learned counsel for the assessee has placed reliance on copies of the register of declaration forms maintained under Rule 8 of the Central Sales (Uttar Pradesh) Rules, 1957 to establish that the assessee had been purchasing packing material against Form-C from the year 1990. These had been regularly examined and counter signed by the assessing officer while considering the fresh applications made by the assessee for issue of blank Form-C. Besides, examining the register entries, the assessing officer had also completed assessee's assessment proceedings for the earlier years without levying any penalty on account of Form-C having been utilised to import packing material. Therefore, it has been submitted that it was an established business practice of the assessee, duly disclosed to the revenue authorities and there was a clear acknowledgement of the same by the revenue authorities. Therefore, there could never arise any case of false declaration in the subsequent A.Y. 2000-01 on account of the assessee having used Form-C by way of regular accepted business practice to import packing material.
8. In that regard, reliance has been placed on a decision of a learned Single Judge of this Court in M/s Sanjiv Fabrics, Baraut, Meerut Vs. C.S.T., (2003) UPTC 1081.
9. As a principle, it has to be accepted that any business practice which has been in the knowledge and which has found the acceptance of the revenue authorities for a long period of time, may not give rise to penalty proceeding on an allegation of false declaration in the subsequent year. It has to be so as otherwise wholly avoidable uncertain and inconsistent approach may arise in the case of the same assessee in same or exact similar facts and circumstances.
10. In the first place, allegation of false declaration involves an element of mens rea. It is wholly different from a mere wrong declaration. If the assessee uses Form-C to import packing material that were not recorded in its registration certificate, it may give rise to penalty proceedings, if that fact is noted in the first few instances of utilisation of Form-C. However, if such utilisation of Form-C is, as a fact found to be a business practice adopted over a long period of ten years, as has been claimed by the assessee, the conduct of the revenue authorities for such long period would become relevant.
11. In this case, the assessee contends, the revenue authorities had in discharge of their statutory function, acknowledged the use of Form-C (by the assessee) to import packing material, by examining the register of utilisation of Form-C and signing the same in evidence of such examination and had further completed the assessment proceedings of the assessee for different years without imposing any penalty.
12. Therefore, in that case, clearly, the revenue authorities would have to be held to have contributed to the bona fide belief that such an assessee would claim to have arisen that it was entitled to make purchase of packing material at concessional rates, by issuing Form-C.
13. The revenue authorities having thus contributed to the bona fide belief that would be found existing in such case would not be permitted to unilaterally alter their stand and impose penalty on the charge of false declaration as no element of mens rea can ever found existing in such cases.
14. However, it cannot be lost sight of that though this Court can take judicial notice of the fact that the assessment may have been completed for the earlier years and there may not exist any penalty in those years as also though the assessee must have applied for and have been issued blank Form-C disclosing utilisation of similar forms earlier issued to it, however, it would remain a matter of fact to be examined by the appropriate authority. That approach is desirable inasmuch as at present, the penalty may not be knocked of without ascertaining the correct facts.
15. Accordingly, the order dated 28.10.2009 is set aside and the matter is remitted to the Tribunal that may summon the record of assessments of the assessee for the period 1991 onwards, to examine whether the register of utilisation of Form-C had been examined by the assessing officer over different years and whether it disclosed utilisation of Form-C by the assessee in different years to import packing material. If such utilisation is found to be recorded then, the Tribunal may further examine whether any penalty had been imposed on the assessee in any of the earlier years for utilisation of Form-C to import packing material.
16. Thereafter, the Tribunal may pass appropriate orders, keeping in mind the observations made above, as expeditiously as possible, preferably within a period of six months from the date of production of a certified copy of this order.
17. Present revision is accordingly partly allowed. The second question of law is answered accordingly.
Order Date :- 13.11.2019 Abhilash