Gokul Institute of Technology and Sciences and Gokul College of Pharmacy vs Deputy Commercial Tax Officer and Ex-Officio Professional Tax Officer and Others

M.S. Ramachandra Rao, J.—Since the issue raised in all these writ petitions is one and the same, they are being disposed of by this common order. The petitioner in all these cases is M/s. Gokul Institute of Technology and Sciences and Gokul College of Pharmacy, Piridi (v), Bobbili (M), Vizianagaram District. For imparting education in engineering and pharmacy courses, the petitioner employs many professors, academicians, other administrative staff.

The Andhra Pradesh State Legislature enacted the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act, 1987 (for short, "the Act") for the levy and collection of tax on professions, trades, callings and employments. u/s 5 of the Act, every employer is under an obligation to deduct from the salary of its employees, before such salary is paid to him. Section 6 provides for registration of assessees before the concerned assessing authority, section 7 provides for filing of returns and section 8 provides for assessment of profession tax and levy of penalties.

The petitioner did not register itself u/s 6 of the Act nor did it file returns as provided u/s 7 of the Act. It did not pay profession tax collected from its employees nor the profession tax of Rs. 2,500 payable by it as per Schedule-I of the Act since inception.

After an inspection on February 21, 2012, on April 3, 2012, the first respondent assessed the profession tax dues payable by the petitioner for financial years 2007-08 to 2011-12.

By the impugned order dated July 24, 2012, the first respondent levied a penalty u/s 8(5) of the Act on the petitioner for the above financial years as mentioned below on the ground that they wilfully evaded tax and had not disclosed the information in time.

The counsel for the petitioner contends, inter alia, that best judgment assessment can be made by the assessing authority u/s 8(1) of the Act, in a situation where a return submitted by the assessee is found to be incorrect and incomplete or where an assessee registered or unregistered has not filed returns; that the penalty u/s 8(5) of the Act can be levied only where assessments are made u/s 8(1) of the Act; that the petitioner was neither registered nor had filed returns and it was assessed u/s 8(3) of the Act; therefore levy of penalty u/s 8(5) of the Act is without jurisdiction; consequently the impugned orders levying penalty on the petitioner by the first respondent are liable to be quashed.

Heard Sri S. R. R. Viswanath, learned counsel for the petitioners in all these writ petitions and Sri P. Balaji Varma, learned Special Government Pleader for Commercial Taxes, for the respondents.

Section 8 of the Act states as follows:

Assessment of an assessee.--(1) If the assessing authority is satisfied that the return submitted by an assessee is correct and complete, it may accept the return. If the return appears to it to be incorrect or incomplete it shall, after giving the assessee a reasonable opportunity of proving the correctness or completeness of the return submitted by him and making such enquiry as it deemed necessary, assess to the best of its judgment, the amount of tax due from the assessee.

(2) The amount of tax due from any assessee shall be assessed separately for each year within a period of four years from the expiry of the year to which the assessment relates.

(3) If any assessee has failed to get himself registered or having been registered, has failed to submit any return, the assessing authority shall, after giving the assessee a reasonable opportunity of making representation and after making such inquiry as he deems necessary pass an order assessing the amount of tax due, to the best of its judgment.

(4) The amount of tax so assessed shall be paid within fifteen days of receipt of the notice of demand from the assessing authority.

(5) In making an assessment under sub-section (1), the assessing authority if it is satisfied that the escaped assessment was due to wilful non-disclosure of information or attempt to evade the tax by the assessee, the assessing authority may also direct to pay in addition to the tax assessed, a penalty which shall not be less than one and half times the tax so assessed but which shall not exceed three times the tax so assessed:

Provided that no penalty under this sub-section shall be imposed unless the assessee affected has had a reasonable opportunity of showing cause against the imposition of such penalty.

A reading of the above section indicates that a penalty u/s 8(5) of the Act can be levied by an assessing authority only if in making an assessment under sub-section (1) of section 8, he is satisfied that escaped assessment was due to wilful non-disclosure of information or attempt to evade the tax by the assessee. Sub-section (1) of section 8 of the Act deals with a situation where a return is filed by the assessee. It provides that where such return is correct and complete, the assessing authority may accept it. But if it is incomplete or incorrect, the assessing authority may, after giving a reasonable opportunity to the assessee and after making such enquiry as he deems necessary, assess to the best of his judgment, the amount of tax due from the assessee. Thus, it is clear that only where the return filed by the assessee is found to be defective, i.e., incomplete or incorrect, there would be an occasion to the assessing authority to levy penalty provided in sub-section (5) of section 8 of the Act.

Admittedly, the petitioner was neither registered u/s 6 of the Act nor had it filed returns u/s 7 of the Act. In this situation, sub-section (3) of section 8 enables the assessing authority to make a best judgment assessment. But in this situation, the Legislature has not provided for levy of any penalty on the assessee.

The above legal position was not disputed by the learned Special Government Pleader for Commercial Taxes.

In our view, in the absence of any provision enacted by the Legislature for levy of penalty on the assessees who do not register themselves or file returns under the Act, there cannot be any levy of penalty. It is settled law that courts cannot supply a casus omissus (Ashok Lanka v. Rishi Dixit [2005] 5 SCC 598 and UCO Bank and Another Vs. Rajinder Lal Capoor, and only the Legislature can supply any lacuna in the Act. Therefore, we are of the view that the impugned orders passed by the first respondent levying penalty on the petitioner as mentioned supra cannot be sustained. The first respondent had no jurisdiction under the Act to levy penalty on the petitioner which had not registered itself under the Act nor filed returns as mandated by the Act. In view of the above, the writ petitions are allowed and the impugned proceedings of the first respondent levying penalty on the petitioner are quashed. No costs.