Intention to Evade Tax necessary for Imposition of Penalty u/s 54(1)(2) of UPVAT Act: Allahabad HC [Read Order]

The Allahabad High Court recently ruled that the intention to evade tax necessary for imposition of penalty under Section 54(1)(2) of the Uttar Pradesh Value Added Tax Act, 2008 (UPVAT Act).

The case set forth by the counsel for the revisionist is that a survey took place on the premises of the revisionist on 23.12.2008. The stock is alleged to have been noted by the surveyors on the basis of presumption. The stock was found to be recorded more in the books of accounts of the revisionist vis a vis the physical stock. An assessment order, was passed against the revisionist under the provisions of Section 28(2) of the U.P. V.A.T. Act.

By the said assessment order, the disputed demand was indicated as Rs 12,44,653/-. Being aggrieved, the revisionist filed a first appeal. The appellate authority, reduced the disputed demand by Rs 6,21,875/- and thus a demand of Rs 6,22,778/- remained.

The argument of the counsel for the revisionist would indicate that in order to attract the penalty, a finding has to be specifically recorded that the dealer has concealed the particulars of his turnover or has deliberately furnished inaccurate particulars of such turnover or has submitted a false tax return or has evaded payment of tax which he is liable to pay under the UPVAT Act and only after such a finding has been recorded by the competent authority can the penalty be imposed.

A Single Bench of Justice Abdul Moin observed that “In absence thereto the order imposing penalty on the revisionist based on the assessment order passed under Section 28(2) of 2008 cannot be said to fall within the ambit of any of the eventualities as provided under Section 54(1)(2) of the Act 2008 more particularly it cannot be considered to be an evasion of payment of tax by the dealer / revisionist so as to attract the penalty as has been imposed on the revisionist.”

“At no stage is there any finding of any wilful evasion of tax by the revisionist or a finding of there being any deliberate attempt on the part of the revisionist in avoiding the payment of tax. It is for the authorities to specifically prove the evasion of payment of tax on the part of the revisionist where the evasion has been defined as a wilful attempt i.e. the authorities would have to prove a wilful attempt on the part of the revisionist to evade tax” the Court concluded.

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