1. These Sales Tax Revision Petitions by the petitioner-Revenue are directed against the common order dated 19/01/2010 passed by the Rajasthan Tax Board, Ajmer (for short, 'Tax Board') by which the appeals filed by the petitioner-Revenue have been dismissed.
2. Since the facts and controversy involved are almost similar, all these petitions are being disposed of by this common order. These relate to Assessment Years 2006-07 and 2007-08.
3. Brief facts are that the respondent-assessee is manufacturing Sewai (Vermicelli) macroni and pasta with other products and paying tax @ 4% on such goods. It is claimed that the respondent-assessee has Registered Office in Andhra Pradesh and a manufacturing unit in the State of Rajasthan. A survey operation was conducted on the premise of the respondent-assessee on 24/10/2007 and during the course of survey operation, the authorised officers found that the respondent-assessee is manufacturing and selling Sewai (Vermicelli) macroni and pasta, however, the tax was being paid @ 4% only as against 12.5% and therefore, the Assessing Officer (for short, 'AO'), during the course of survey, charged tax @12.5% on the sales so found declared by the respondent-assessee. Having done so, the AO also charged interest and also imposed penalty under Section 61 of the Rajasthan Value Added Tax, 2003 (for short, 'RVAT Act').
4. The matter travelled before the Deputy Commissioner (Appeals) (for short, 'DC(A)') by the respondent-assessee for the relevant years in question, however, so far as the tax @ 12.5% is concerned, the DC (A) upheld the finding of the AO but in so far as the penalty is concerned, the DC(A) was satisfied that entire turnover was recorded in the books of accounts, tax at a particular rate was paid and there was no intention of evasion of tax and thus, deleted the penalty. Both the assessee as well as Revenue preferred appeal before the Tax Board. While the assessee challenged the rate of tax @12.5%, the Revenue challenged the deletion of penalty under Section 61. The Tax Board, vide order impugned dismissed the appeals of the assessee by holding that the rate of 12.5% is applicable on the items sold by the assessee and not the rate of 4%. However, the appeals of the Revenue were dismissed on the issue of penalty under Section 61. The present petitions assail the deletion of penalty under Section 61 by the Tax Board.
5. Counsel for the petitioner-Revenue contended that it is a clear cut case of evasion of tax as during the course of survey only, it transpired that the assessee was paying tax @4% when it was liable to pay tax @12.5% and this position was settled and the respondent-assessee, being represented by eminent lawyers, was aware that it falls within the category of levy of tax @12.5% and thus there was evasion of tax of about 8.5%. She further contended that it is only on account of survey operation that this came to the notice of the Revenue otherwise had it not been the case of survey, the same thing would have continued repeatedly unnoticed. She further contended that the Revenue has been able to prove the fraudulent manner in which the tax was being paid and it is a clear cut case of concealment of records and penalty was rightly levied by the AO and has been wrongly deleted by both the appellate authorities. She further contended that under Section 65 of the old RST Act also, if the turnover or rate has been shown lower than the rate prescribed, penalty is certainly leviable in law. She further contended that classification entry was made in the year 1994 and continued and is in force till today and during all these years, the assessee being well aware, ignored the same and thus the penalty has rightly been levied. She relied upon the judgment rendered by the Hon'ble Apex Court in the case ofUnion of India v. Dharmendra Textiles Processor and others: 306 ITR 277 (SC).
6. Per-contra, counsel for the respondent-assessee contended that it is a finding of fact recorded by the Tax Board and no question of law can be said to emerge out of the order of the Tax Board when both the appellate authorities have found as a finding of fact that the goods were duly entered in the books of accounts and no irregularity was noticed in the books of accounts and whatever the turnover was shown, even after survey, was accepted by the authorised officers and according to the respondent-assessee, it fell within the rate of 4% which was being shown and paid regularly from time to time. He further contended that the respondent-assessee has a registered office in Andhra Pradesh where same rate of 4% is applicable on Sewai (Vermicelli) macroni and pasta etc.. He further contended that in other States namely; Gujrat, Uttar Pradesh etc., these items are totally exempt under the respective VAT/Sales Tax Act. He further contended that merely because a different rate was applicable, at least the penalty under Section 61 cannot be imposed as there was a bona fide belief that only rate of 4% is applicable. He relied upon the judgments rendered in the case ofShree Krishna Electricals v. State of Tamil Nadu and another: (2009) 11 SCC 687;Assistant Commissioner, Anti-Evasion v. Agarwal Aluminium & Company: (2013) 60 VST 141 (Raj.)andCommercial Taxes Officer v. Shyam Agency : (2015) 78 VST 75 (Raj.)
7. I have considered the arguments advanced by counsel for the parties and have gone through the material available on record.
8. Admittedly, the respondent-assessee was paying tax @4% on Sewai (Vermicelli) macroni and pasta with other products at the time when the survey operation came to be conducted on the respondent-assessee, it is also admitted fact that except the differential rate of tax, may be it is 12.5% or 4%, even the AO found that except rate of difference of tax, the entire turnover as stated by the respondent-assessee was found to be in order and complete set of books of accounts was found to have been maintained by the respondent-assessee and the AO has not touched upon any other issue except the rate of tax which according to the Revenue was 12.5% and which has been upheld even by the DC(A) and also the Tax Board. However, the question, which emerges in the instant case, is as to whether in there deliberate concealment or evasion of tax on the part of the assessee.
9. Though it is claimed on the part of the assessee that it was paying tax in accordance with the rate where the registered office of the Limited Company is situated i.e. Andhra Pradesh but certainly it was the duty of the assessee to have known the exact rate of tax being applicable in the State of Rajasthan when admittedly the case falls under the Rajasthan Value Added Tax Act-2003. Nevertheless, in my view, it is not a case where the Revenue claims that the assessee did not pay any tax or concealed the particulars of sales, rather there could be a bona fide error about classification of entry as to in which entry the goods do fall. In my view, merely because the rate of 12.5% may have been applicable on the items which were being manufactured/sold by the assessee and the assessee having shown 4%, in my view, at least penalty under Section 61 may not be leviable in the instant case and on the facts noticed.
10. Even the authorities i.e. DC(A) as well as the Tax Board have found as a finding of fact that the issue about the rate of tax was certainly debatable as claimed by the respondent-assessee before both the authorities. Even the DC (A) has found that even in other States the rate of tax lower than 4% is there or even in some of the States, the said items are exempt from tax and both the appellate authorities have gone on the analogy of common parlance test and in holding that Sewai (Vermicelli) macroni and pasta with other products cannot be said to be Maida and thus rejected the contention of the assessee on merits. However, in so far as the penalty is concerned, both the appellate authorities have found that on such facts when the assessee was paying same rate of tax as applicable on Maida, therefore, the penalty ought not to have been imposed and I concur with the finding of fact recorded by the Tax Board.
11. The Hon'ble Apex Court in the case ofShree Krishna Electricals v. State of Tamil Nadu and another(supra) had also an occasion to consider identical issue and held that if entries have been incorporated in the books of accounts where certain items are not included in the turnover, are disclosed in the dealers' own account and the AO includes such items in the dealers' turnover disallowing exemption, penalty cannot be imposed. The relevant Para 7 of this judgment reads as under:-
'7. So far as the question of penalty is concerned the items which were not included in the turnover were found incorporated in the appellant's accounts books. Where certain items which are not included in the turnover are disclosed in the dealers' own account books and the assessing authorities includes these items in the dealers' turnover disallowing the exemption penalty cannot be imposed. The penalty levied stands set aside.'
12. In the case ofCommercial Taxes Officer v. Shyam Agency, this Court following the analogy drawn in the case ofShree Krishna Electricals v. State of Tamil Nadu and another(supra), held in Para 12 as under:-
'12. Reverting to the facts of the present case, the Tax Board has held that during the period relevant to assessment of tax as against the assessee under the 2003 Act, it was an admitted fact that all sale transactions conducted by the assessee in the year relevant to levy of tax in the State of Rajasthan were indicated in its books of accounts and also duly invoiced. There was no attempt to defraud the revenue by any concealment or misinformation. No finding of reckless/malafide classification sought with regard to the goods sold has been arrived at. The dispute between the assessee and the revenue was bona fide and related merely to the issue of classification and consequent rate of tax under the 2003 Act leviable on the sale of goods by the assessee i.e. 'Priyagold TM Toffito Mengo Cream Toffee'. The dispute was therefore a bona fide one as to the interpretation/classification of the products sold by the assessee for the purpose of levy of tax. Such a dispute did not supply any of the pre conditions for levy of penalty under Section 61 of the 2003 Act. The Tax Board has, for the principle on which penalty can be levied, relied upon the judgment of the Hon'ble Supreme Court in the case of Shree Krishna Electricals (supra). Oddly the revision petition does not even have a whisper of a reason for the purported inapplicability of the aforesaid judgment to the matter in issue before the Tax Board. Quite apparently, the petitioning revenue department seeks to overlook the facts of the case and the clear enunciation of law by the Hon'ble Supreme Court in the case of Shree Krishna Electricals (supra) as also elsewhere and mechanically agitate this misdirected revision petition. The question of law as sought to be agitated stands already settled by the judgment of the Hon'ble Supreme Court in the cases of Bharjatiya Steel Industries (supra) and Shree Krishna Electricals (supra).'
13. This Court again, in the case ofAssistant Commissioner, Anti-Evasion v. Agarwal Aluminium & Company(supra), dealing a case where there was dispute about classification of entries observed in Para 29 as under:-
'29. So far as question of penalty under section 61 is concerned, the appellate authorities below appear to be justified in holding that the penalty under section 61 of the Act could not be imposed upon the assessee since the assessee had disclosed all the relevant particulars in its returns and relevant documents, vouchers and books of accounts and has not withheld any vital information from the Department nor any inaccurate particular to the assessing authority, which is sine qua non for imposition of penalty under section 61 of the Act. Mere raising of contention by the assessee that it was liable to pay lesser rate of tax of four per cent treating the commodity as 'metal mesh', which contention has not found favour at all with the Departmental authorities or even this court, it does not
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necessarily mean that the assessee was guilty of concealing any material information or furnishing inaccurate particulars in its returns. Therefore, the deletion of penalty by the appellate authorities under section 61 of the Act deserves to be upheld and for this reason the revision petitions filed by the Revenue are also liable to be dismissed.' 14. As noticed earlier, admittedly, it is not a case where the assessee was not paying any tax. The claim was that it falls in the category where rate of tax is applicable @ 4% only whereas the claim of the Revenue was that it is taxable on account of falling in different entry @ 12.5% but admittedly all the transactions stood recorded, disclosed and the respondent-assessee paid due tax @4% on the entire goods. Payment of 4% on the entire turnover has been accepted and admitted by the AO himself, not only that the AO has accepted the entire turnover also. 15. Taking note of the facts, noticed earlier and the judgments referred to herein before, in my view, merely because a higher rate of tax has been made applicable, does not call for imposition of penalty under Section 61 of the Act. Accordingly, I do not find any perversity or ambiguity in the order impugned so as to call for interference. 16. Consequently, all the Revision Petitions, being devoid of merit, are hereby dismissed.