Vinod Chandran, J.
1. Common question arises in the above Writ Appeals from separate judgments of the learned Single Judge allowing revision of returns by the assessees in various contingencies. Beyond the period enabled by the statute; is the ground of appeal. We would first notice the facts in each of the cases and the contingencies under which they sought for revision of returns, which were rejected or not acted upon by the Assessing Officer (AO).
2. W.A.No.2636/2017 is a case in which the assessee by itself had approached the AO for revision of returns for the period from April, 2015 to March, 2016. Monthly returns were filed by the assessee as stipulated under the Kerala Value Added Tax Act, 2003 ('KVAT Act', for short) and an audited statement as per Section 42 was filed on 30.12.2016. On 30.1.2017, Ext.P1 communication was addressed to the AO pointing out that there were some discrepancies in the returns which were detected in the audit report and audited statement. Ext.P1 also sought for permission to revise the returns. The communication at Ext.P1 was sent by e-mail and hard copy was submitted on 13.2.2017. Subsequently, on 9.6.2017 notice under Section 25(1) was issued threatening re-opening of the assessment for the year 2015-16, which was received by the assessee on 20.6.2017. The learned Single Judge relying on the decision of the Division Bench of this Court dated 03.07.2012 in O.T.Rev.No.22/2012 [State of Kerala v. M/s.M.M.Enterprises] allowed the claim of the assessee directing the revision to be permitted, especially since the issuance of notice under Section 25(1) cannot be treated as initiation of a penal action.
3. W.A.No.2541/2017 was a case in which the respondent/petitioner purchased a machinery as capital equipment for its business in March, 2014. The assessee failed to show the same in the return. Subsequently, in September, 2015, the assessee sought to revise the return showing the purchase of machinery as capital. The AO failed to take any action on the application filed by the assessee upon which the assessee was before this Court with the Writ Petition. The Department resisted the claim for revision on the ground that if it is permitted, the assessee would be entitled to claim input tax credit as per Rule 13 of the Kerala Value Added Tax Rules, 2005 [for brevity 'KVAT Rules']. The learned Single Judge found that the possible claim by the assessee for input tax credit cannot stand against the request for revision, especially since there is no penal action initiated against the assessee for the said period. The learned Single Judge allowed the claim of the assessee.
4. W.A.No.208/2018 was with respect to assessment year 2011-12. The assessee filed annual returns on time. After the receipt of audit report under Section 42, the assessee filed the same as evidenced at Ext.P2 series along with a reconciliation statement at Ext.P2(b), wherein the discrepancies noticed on audit were sought to be incorporated in the return by way of revision. The assessee's application for revision was kept without any action and hence the assessee was before this Court. The Department contended that since the time permitted under the statute for revising return had already expired, there could be no revision effected, especially since limitation as brought in by a statute has to be scrupulously followed and strictly construed. The learned Single Judge found that the assessee on detecting an omission in the returns originally filed had voluntarily come forward to rectify the defects and pay the differential tax as also interest, which necessarily had to be considered favorably by the Department. The learned Single Judge noticed the statutory provisions permitting revision of returns as also the procedure stipulated and specifically looked at Rule 22, which by a proviso inhibited such revision only in instances where penal action has been initiated. An honest dealer who voluntarily comes forward to pay his tax, ought not to be prevented from doing so, was the essence of the finding of the learned Single Judge based on which the learned Single Judge permitted revision of returns.
5. W.A.No.270/2018 has slightly more complicated facts, since the assessment and penalty were continued without reference to each other. The assessee concerned with the assessment year 2009-10 had filed annual return within time. The Data Mining Officers of the Intelligence Wing made a report, after examination of the annual return of the assessee and the audited statement pointing out certain discrepancies. The assessee on receipt of intimation from the AO sought to explain the discrepancies and also filed application dated 6.12.2011 (Ext.P3) seeking revision of returns. The assessee admitted the discrepancies and sought for revision incorporating the figures as available in the audited statement. The AO later issued notice under Section 25(1) not on the discrepancies in the audit report, but on the question of mis-classification of certain goods, by notice dated 19.12.2015 as is seen from the assessment order produced at Ext.P9 dated 20.2.2016.
6. In the meanwhile Intelligence Officer had already issued summons dated 20.2.2015 for production of books of accounts as also explanation for the discrepancies found by the Data Mining Team, on the purchase details of exempted sales turnover of Rs.1223.25 lakhs. The actual initiation of penal proceedings under Section 67 of the KVAT Act with respect to the discrepancies pointed out by the Data Mining Team was by Ext.P8 dated 16.1.2016. The proceedings of the Intelligence Officer and the Assessing Authority were parallel to each other. Ext.P9 order of assessment was passed for the year only modifying the returns insofar as the mis-classification alleged. The Assessing Officer had thus neither taken into account the report of the Data Mining Team, nor responded to the application of the assessee for revision of returns. The Intelligence Officer however proceeded with the penalty proceedings and concluded the same by Ext.P14 levying penalty at twice the amount of tax sought to be evaded purely based on the discrepancies noticed by the Data Mining Team.
7. The learned Senior Government Pleader points out that Ext.P4 refers to a notice in Form No.17 dated 20.2.2015, which is the actual time of initiation of penal proceedings according to the learned Senior Government Pleader. The learned Single Judge found that the Intelligence Officer had mechanically proceeded to finalise the proposal for penalty without even looking at the order passed by the Assessing Authority in parallel proceedings, especially when the Assessing Authority was also intimated about the report of the Data Mining Team. The challenge against Exhibit P14 was sustained and the same was set aside. The further prayer of the respondent/petitioner for revising the returns was also taken into account by the learned Single Judge and noticing that steps have been initiated under Section 25(1) for re-opening of assessment, the assessee was directed to be given an opportunity to revise the returns in the manner sought for in Exhibit P3 application.
8. The State has challenged the above decisions on the ground that there is a clear prohibition from revising the returns, insofar as the specific time prescribed under the various provisions of the KVAT Act. Reference is made to Sections 21(2), 22(9), 22(10), 42(2) and 79B of the KVAT Act as also Rule 22 (4A) to point out that each of such contingencies wherein revision is permitted, the same has to be done within two months. There can be no further extension and the law prohibits any further revision of returns after the expiry of two months. The learned Senior Government Pleader would argue that Section 21 contemplates a concluded assessment on filing of returns and any revision to be effected will have to be within the period permitted by law as seen from the various provisions and there can be no unconditional right conferred on the assessee to revise the returns at any point of time. Referring specifically to WA No.2541/2017, it is contended that sub-Rule (1B) of Rule 13 prohibits a claim for input tax credit if not made within the time prescribed and in the prescribed form. It is also argued that the assessee if intending to revise the return can only do so on a discrepancy being seen from the audited statement and there cannot be a voluntary application made for revision of returns even if there are no penal proceedings initiated. The revised return so permitted by Section 42(2) has to be filed along with the audited report. This, according to the learned Senior Government Pleader, is the declaration made by the Division bench in M/s.M.M. Enterprises. The dictum as laid down in the aforesaid judgment cannot be extended as a permission for permitting revision at any time.
9. Before we deal with the legal contentions, we cannot but fully endorse the observations made by the learned Single Judge in the judgment in WP(C) No.22147/2017. It is high time the Officers of the Department rose up from their mediocre mind set and became facilitators of finance and commerce aiding the economic advancement of the Nation rather than reducing themselves to mere tax collectors and target achievers. The taxing statute is not an instrument of oppression and has to be treated as one enabling trade and commerce; which at the same time fetch revenue for the State to be employed in discharging its various activities and obligations to the citizen. Without enterprise, there would be no revenue and if the source is choked, it would be akin to killing the proverbial hen that lays the golden eggs. It is time the Department and its officers woke up to the economic realities and resort to a more practical and pragmatic approach in proceeding under and enforcing the tax enactment to have a complete make over from the image of oppressors to that of facilitators.
10. The learned Senior Government Pleader seeks to upset the findings of the learned Single Judge placing specific emphasis on Section 21 dealing with 'self assessment'. In the VAT regime, Section 21 speaks of self assessment on the filing of a return by the assessee, the completion of which is automatic, subject only to the provisions of Sections 22, 24 and 25. There is a more onerous responsibility cast on the assessee and hence any mistake or defect noticed cannot be merely wished away as an error and the consequences would also be more drastic. It is on the aforesaid contentions that the learned Senior Government Pleader submits that there can be no revision of returns after the time prescribed in the various provisions.
11. The learned Senior Government Pleader also produced before us, across the Bar, a Circular issued by the Commissioner [No.8/2018 dated 21.04.2018] bringing out guidelines for revision of KVAT returns for the back years. The guidelines have been issued on the understanding that 'under no circumstances the law permits the revision of returns beyond this period' (sic), the period being that referred to in various provisions under Sections 21(2), 22(9), 22(10), 42(2) and 79B of the KVAT Act.
12. Under Section 21(2), the dealer, on detecting any omission or mistake in the monthly return, can file a revised return rectifying the same within two months from the last day of the return period. Sub-section (9) of Section 22 prohibits any such revision of return if an offense has been detected or other proceedings initiated. Sub-section (10) of Section 22 permits a revised return incorporating the turnover covered in the penal proceedings after the proceedings are finalized and compounded, upon which again the assessment is deemed to be completed subject to the provisions of Sections 24 and 25. The proviso to sub-section (10) provides for a best judgment assessment in accordance with the provisions of Sections 24 and 25 when a pattern of suppression is detected. Sub-section (2) of Section 42 enables a revision of return on detection of any omission or mistake in the annual return with respect to the audited figures. The revised annual return shall be filed along with the audit certificate, accompanied with proof of payment of tax and any interest and penal interest calculated at twice the rate specified under sub-section (5) of Section 31. The proviso to the aforesaid provision also prohibits any revision by a dealer against whom penal action is initiated. Section 79B is a non obstante clause, by which also there is a prohibition in filing a revised return when instances of tax evasion has been detected and proceedings are initiated against such evasion.
13. From the above provisions, it is clear that the sole prohibition as available in the various Sections is only against revision of returns when the dealer has been proceeded against for a defalcation or offense. This is specifically to not enable a dealer who had by his contumacious conduct attempted evasion, to wriggle out of the consequences of penalty. When there is a penal proceeding initiated, permission of revision of return, incorporating such figures in the return, which would efface the offense thus absolving the dealer from the liability of penalty, is alone prohibited. The other provisions above referred, which permits revision of returns, are enabling provisions facilitating such revision on specified contingencies within a time limit. Merely based on the said enabling provision, there cannot be inferred an interdiction or prohibition from filing a revised return in circumstances where a mistake is detected after the period specified. If such a prohibition is inferred, then it will lead to even an honest dealer being inhibited from pointing out a bona fide mistake; thus depriving the State of the tax actually due and keeping himself on tender-hooks as to when and if the Assessing Officer detects such mistake. Again on such detection, there would be necessary penal consequences, which, if the dealer had been given a free play, permitting a voluntary disclosure of the mistake and revision of returns, in which event the dealer would not be visited with penalty.
14. O.T.Rev.No.22 of 2012 specifically dealt with the question as to whether a dealer can file revised return under Section 42(2) of the Act after proceedings have been initiated under Section 25. The Division Bench found that notice under Section 25 would not amount to penal action, but noticed that the revised return under Section 42(2) is only with respect to an omission or mistake in the returns with respect to the audited figures. On facts of the said case, it was found that the Assessing Authority, on verification of the books of accounts with respect to the annual returns, found specific instances of suppression of purchases. This occasioned initiation of proceedings under Section 25 for assessment of escaped turnover. The assessee having received notice; the proceedings concluded with an order of assessment bringing in the turnover sought to be evaded. There was no revised return filed before the finalization of proceedings. Noticing Section 25, it was held that revision of return in the teeth of a proceeding under Section 25 can only be as provided therein; ie: in the event of application of incorrect rate of tax. It was in this context that the revision of return attempted to by the assessee after the finalization of assessment proceedings was not permitted. The Court never found that the revision of return is not permissible unless there is a mistake or omission with respect to the audited statement. There can also be no such finding, since there are other provisions, which we noticed above, permitting or enabling revision of returns.
15. The enabling provision mandates that on a revision of return being attempted to as provided therein, the Assessing Authority is obliged to accept it. At the risk of repetition, it has to be stated that there is no prohibition in attempting a revision of return after the time specified, if no penal proceeding is initiated. What would be required in such circumstances, as was earlier noticed, is a practical and pragmatic approach, wherein the Assessing Authority looks into the bona fides of the claim and decides whether a permission can be granted or not. The Assessing Officer definitely would have the authority to examine such claims even beyond the period and decide the question in accordance with well established principles of law and ensure that the attempt is not to cover up or get over a penal provision or avoid the penal consequences of detection.
16. Taking up the individual matters, we see that in W.A.No.2636 of 2017 an application for revision of return was made along with the filing of audited statement; on which the Assessing Authority took no action and then proceedings under Section 25(1) was initiated. Similar are the facts in W.A.No.208 of 2018, wherein no action was taken on the application of the assessee; upon which the assessee was before this Court. W.A.No.2541 of 2017 was a case in which the respondent/writ petitioner purchased a machinery as capital equipment in March, 2014 and failed to disclose it in the return. In September, 2015, the assessee applied for revision, which was resisted by the Department on the ground that this would lead to a claim of input tax credit.
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270 of 2018 has peculiar facts insofar as after initiation of penalty proceedings, the assessment was re-opened and completed without taking into account the alleged offense. The Intelligence Officer proceeded independently and finalised the penalty, on which again a re-opening was attempted, by the Assessing Authority. All this while, an application for revision of return, on the basis of the discrepancies noticed in the Data Mining Report, was pending with the Assessing Authority. The penalty proceedings were only on the basis of the Data Mining Report, which proceedings were initiated after the assessee requested for revision. There is definite lack of coordination between the Officers and we are afraid this results from the anxiety to meet individual targets. We are of the opinion that all these cases bring forth bona fide claims for revision of returns, wherein no penal proceedings were pending at the time when the applications were made; the existence of which alone is the sole prohibition available under the KVAT Act. 18. We, for the aforesaid reasons, do not find anything to interfere with, in the judgments of the learned Single Judge and we confirm the same. However, we notice that even on such revision of returns, the same would be subject to Sections 22, 24 and 25; the limitation for which commences in the instant cases from the time when the revised return is filed by the assessee(s). We direct that the assessees file revised returns within a period of one month from today. On the question of input tax credit; the possible claim by the assessee of a benefit available in the statute cannot be a reason to deny revision of return; if it is a bona fide claim. However we make it clear that the time prescribed by the statute, if has elapsed, no such claim is permissible on acceptance of revised return. The Writ Appeals are dismissed, leaving the parties to suffer their respective costs.