In a recent case, the High Court (HC)of Jharkhand has held that penalty under section 40 (2) of the Jharkhand Value Added Tax Act,2005 (JVAT) can’t be invoked in absence of deliberate filing of an Incorrect return.
Shiv Jyoti Enterprises JV Binod Kumar Lal, the petitioner is engaged in the business of works contracts on behalf of various entities including Government Entities. Petitioner purchased pipes from outside the State of Jharkhand for an amount of Rs.1,55,69,332/- towards execution of the works contract, where the said interstate purchases were made through valid road permits duly generated from the official website of the State of Jharkhand.
“Before assessment” proceeding under Section 40(2) of the JVAT Act was initiated against the Petitioner by Respondents on the sole ground that it filed quarterly returns by reflecting therein inter-state purchases as ‘Nil’, but, as per data available in the Department’s software, it was evident that petitioner utilized SUGAM-G for an amount of Rs.1,55,69,332/- for inter-state movement of goods.
Before assessment proceeding under Section 40(2) of the JVAT Act and regular assessment proceedings under Section 35 of the JVAT Act are mutually exclusive to each other.
Torectify the mistake, the petitioner prayed for one month to file the revised quarterly return and revised it. The Respondent department passed an order under Section 40(2) of the JVAT Act and imposed a penalty of Rs.25,68,940/-,. The Appellate Court dismissed the Appeal of the petitioner.
During the pendency of the remand appellate proceeding, original assessment order under Section 35(6) of the JVAT Act was passed against the petitioner. The petitioner challenged the said assessment order before the Commissioner of Commercial Taxes in the Revision Case and was remanded to the assessing officer. Underthe remand order passed by the Commissioner Court, a revised assessment order was passed and a revised GTO of Rs.6,17,61,159/- was duly accepted by the assessing officer. Tax liability of Rs.24,70,658/- was determined against the petitioner.
It was evident that the respondent on one hand, by accepting the return and turnover of the petitioner, the have determined tax liability in the original assessment proceeding and on the other hand disputed the revised quarterly return and levied a penalty under Section 40(2) of the JVAT Act.
A two-member bench comprising Justice Aparesh Kumar Singh and Justice Deepak Roshan observed that there is no deliberate act of evasion of tax which would be the warranting imposition of penalty on the petitioner given the language used in Section 40(2) containing the penal provision. The court held that the penalty imposed by the revenue u/s 40(2) of the JVAT Act is not sustainable andpenalty under Section 30(4)(d) of the JVAT Act could have been imposed upon Petitioner.
The Court quashed and set aside the order passed by Commercial Taxes Tribunal, Jharkhand. Further, held that the amount of the alleged penalty of Rs.17,35,000/- already realized from the bank accounts of Petitioner is to be refunded to the Petitioner after deducting Rs.25000/- taking resort of Section 30 (4) of the JVAT Act which prescribes a maximum penalty of Rs.25000/-.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
