Inflating Contract Figures & Complaining That Tax Authorities Based Decision On Such Figures Amounts To Defrauding State In Two Ways: Karnataka HC
Mehak Dhiman
1 April 2025 5:05 AM
The Karnataka High Court stated that inflating contract figures and complaining that tax authorities have premised their decision on such figures, amounts to defrauding state. “Claiming higher contract amount by inflated figures and thereafter complaining that the Tax authorities have premised their decision on such figures, virtually amounts to defrauding the State, in two-ways....
The Karnataka High Court stated that inflating contract figures and complaining that tax authorities have premised their decision on such figures, amounts to defrauding state.
“Claiming higher contract amount by inflated figures and thereafter complaining that the Tax authorities have premised their decision on such figures, virtually amounts to defrauding the State, in two-ways. Such an assessee does not deserve any relief at the hands of this Court,” stated the Division Bench of Justices Krishna S Dixit and Ramachandra D. Huddar.
In this case, according to the assessee his Tax Consultant had declared the inflated turn overs with intent to claim refund by submitting fake Form VAT 156. He had lodged a police complaint against the said Tax Consultant who is now no more.
The assessee submitted that for the fraud committed by the Tax Consultant, the assessee should not be made to suffer is too broad a proposition to accept. The impugned order has been passed in gross violation of principles of natural justice inasmuch as he had no opportunity to put forth his version effectively.
The Revenue submitted that despite giving opportunity, the assessee did not produce his books of accounts or any relevant evidentiary material at all. The Tax Consultant is and acts as an Agent of the assessee and if he had put forth the inflated figures, that is no ground for granting relief in the appeal.
The bench agreed with the revenue that Tax Consultant is an Agent of the assessee, notwithstanding the professional elements involved in the Act. It is not that the assessee had not put his signatures to the Returns and Records filed before the Revenue, in a normative way. It is also not that the Tax Consultant would have been benefited by the inflated figures stated in the Return; obviously, it was the assessee who was the beneficiary.
The contention of the assessee that the revenue had approached the matter with prejudicial mind is too farfetched a submission, stated the bench.
The bench further stated that why a high functionary of the State who acts quasi-judicially in deciding the tax liability of the assessee should be presumed to be prejudicial, remains unanswered. Such a contention cannot be countenanced without laying foundational basis.
The revenue has judiciously considered all contentions of the assessee as reflected in the impugned order, observed the bench.
In view of the above, the bench dismissed the appeal.
Case Title: M/s Yellalinga Electricals v. The Additional Commissioner of Commercial Taxes
Citation No: 2025 LiveLaw (Kar) 126
Case Number: SALES TAX APPEAL NO. 1 OF 2024
Counsel for Appellant/ Assessee: Sathyanarayana T. R.
Counsel for Respondent/ Department: Aditya Vikram Bhat