Provisions For Self-Assessment Are More Onerous Than Regular Assessment Regime: Kerala High Court
The Kerala High Court has held that filing an untrue or incorrect return assumes more rigour in the teeth of the onerous obligation, resulting in the imposition of a penalty.The bench of Justice Dinesh Kumar Singh has observed that provisions for self-assessment create an obligation on the assessee to file a correct return, which is more onerous than in a regime that mandates regular...
The Kerala High Court has held that filing an untrue or incorrect return assumes more rigour in the teeth of the onerous obligation, resulting in the imposition of a penalty.
The bench of Justice Dinesh Kumar Singh has observed that provisions for self-assessment create an obligation on the assessee to file a correct return, which is more onerous than in a regime that mandates regular assessment. Filing of an untrue or incorrect return in view of sub-clause (d) of Section 67(1) assumes more rigour in the teeth of the onerous obligation, resulting in the imposition of a penalty without reference to whether there has been disclosure made in the books of account or not.
The petitioner/assessee has challenged the penalty order passed by the respondent/department under Section 67(1) of the Kerala Value Added Tax Act, 2003 (KVAT Act), imposing a penalty only equal to double the amount of tax allegedly evaded for the financial year 2013–2014 for the offences committed, viz., turn-over suppression and tax evasion. The petitioner had furnished demand drafts by way of a compounding fee of Rs. 8,00,000 and tax of Rs. 80,09,183, which have been adjusted towards the penalty and remitted into the government account. The petitioner was directed to pay a balance penalty of Rs. 5,18,07,197.
The petitioner contended that the petitioner had paid VAT at the rate of 3% on the conceded turn-over for all quarters for the year 2013–2014. The Assessing Officer had approved the compounding tax as filed by them; all the provisions of the Act should be given a go-bye, and all further actions would be governed by Section 8 of the KVAT Act. The estimation of taxable turnover as provided in Section 6 and the penalty imposed at double the amount of tax should be reversed. The Assessing Authority had not cancelled the order of compounding, and therefore, no further action for estimation of taxable turnover or penalty could be taken.
The department contended that the petitioner had paid the penalty fee and tax at a rate of 3% on its own without there being any order to that effect. The order was in respect of the financial year 2013–2014. It is not in respect of the suppression and negation of tax as discovered after inspection at the premises of the petitioner. The petitioner has tried to mislead the Court by saying that the competent authority had passed an order in favour of the petitioner to compound the offence under Section 74, which could be discovered after the inspection.
Under Rule 24B of the KVAT Rules, it is obligatory for every contractor, promoter, or developer to file a declaration in Form-49 along with the returns containing all details of ongoing projects, and transfers of apartments, flats, and villas. Form-49 requires the assessee to give the details of ongoing projects being executed by them in Part-A of the form, the details of the transfer of flats, apartments, etc. in Part-B, and the name of the projects, a description of the apartments, and name and address of the intending purchaser in Part-C of the form.
The court held that the order passed by the department was neither without jurisdiction nor in violation of the principles of natural justice as alleged, and therefore, the court would not like to exercise its jurisdiction under Article 226 of the Constitution of India.
Counsel For Petitioner: V.V.Asokan
Counsel For Respondent: Reshmita Ramachandran
Citation: 2023 LiveLaw (Ker) 718
Case Title: Artech Realtors Versus Intelligence Officer
Case No.: WP(C) NO. 2977 OF 2015