M/S Ansal Landmark Township Private Limited vs The Commissioner, Commercial Tax

Ashwani Kumar Mishra, J.—Revisionist is a registered dealer under the Act. For the purposes of raising construction of a colony, it purchases various construction materials like cement etc. from a registered dealer. Such purchases were made by way of a sale invoice and not against tax invoice. The authorities and the Tribunal have penalized the revisionist for having done so by exercising its jurisdiction under Section 54(1)(5) (ii) of the Act. The order of Tribunal records that revisionist had not claimed any benefit of input tax credit for the tax paid in that regard. According to the assessee, it had duly informed the fact to the purchasing dealer about it being a registered dealer and it also disclosed its Tin Number, but it was due to inadvertent error on part of the selling dealer that instead of tax invoice only sale invoice was issued. Revisionist contended that it has not taken any advantage of amount of tax paid and there was no intent on its part to have misrepresented facts, nor there was any deliberate act on its part is not complying with the requirement of obtaining a tax invoice, as against the sale invoice.

Learned counsel for the revisionist submits that imposition of penalty cannot be as a matter of course, and since no advantage had been taken by it, no deliberate act can be attributed to it, and therefore penalty imposed is bad in law.

Learned Standing Counsel submits that the assessee was required to disclose the Tin Number and other details to the selling dealer and to purchase such materials only by way of tax invoice, and once that has not been done, the authorities have correctly imposed penalty upon the revisionist.

Before proceeding further it would be appropriate to notice the provisions contained under Section 54(1)(5) of the Act, which reads as under:-

"54. Penalties in certain cases. (1) The assessing authority, if he is satisfied that any dealer or other person, as the case may, has committed the wrong described in column 2 of the table below, it may, after such inquiry, if any, as it may deem necessary and after giving dealer or person reasonable opportunity of being heard, direct that such dealer or person shall, in addition to the tax, if any, payable by him, pay by way of penalty, a sum as provided in column 3 against the same serial no. of the said table:

Sl. No.

Wrong

Amount of Penalty

5

Where the dealer has,-

40% of the value goods

(i)

Failed to issue or has deliberately not issued a tax invoice or sale invoice; or

(ii)

Deliberately not obtained tax invoice in spite of being a registered dealer while purchasing the goods liable to tax under this Act from a registered dealer; or

(iii)

Not issued purchase invoice; in accordance with the provisions of this Act.

Sub-section (ii) of clause (5) has been invoked in the facts of the present case. Section 22 of the Act deals with issuance of tax invoice and sale invoice to be issued by a dealer. Although primarily the responsibility of issuing the tax invoice is upon the selling dealer, but responsibility is also imposed upon the purchasing dealer to disclose facts with regard to its registration and Tin Number etc. Sub-section (1) of section 22 mandates every registered dealer to issue a tax invoice. By virtue of sub-section (3) all dealers except as provided in sub-section (1) shall have to issue a sale invoice as is contemplated under rule 44. Subsection (7) of section 22 mandates every purchasing dealer to furnish details of its registration and Tin Number to the selling dealer. It is only if the obligation imposed under sub-section (7) of section 22 is not discharged that an occasion would arise for the authorities to proceed under section 54(1)(5) of the Act for imposition of penalty. The use of expression under section 54(1)(5) in this context assumes significance. The provision begins with the expression "deliberately". The expression "deliberately" means an act done intentionally and purposely. The object behind the provision is to penalize the purchasing dealer if it deliberately omits to comply with the requirement of section 22(7) of the Act. In the very scheme of the Act, it would be implicit that this deliberate act of non furnishing of details would be with an intent to gain some undue advantage. In case the purchasing dealer has not taken any benefit out of such lapse, the imposition of penalty would not be as a matter of routine. This view stands verified from the observations of the Apex Court in M/s Hindustan Steel Ltd. v. State of Orrisa, (1969) 2 SCC 627, wherein following observations have been made in para 8:-

"Under the Act penalty may be imposed for failure to register as a dealer: section 9(1) read with section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasicriminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out."

The authority, before it proceeds to levy penalty, must examine the facts and circumstances of a given case. If it is found that the lapse on part of the dealer is not with an intent to secure undue gain, then ordinarily penalty ought not to be imposed.

In the facts and circumstances of the present case, the Tribunal has clearly noticed the fact that there was no undue benefit gained by the assessee on account of issuance of sale invoice instead of tax invoice. In such circumstances, the act of purchasing dealer cannot be construed as a deliberate act so as to bring it within the clutches of section 54(1)(5). The imposition of penalty, therefore, is not liable to be sustained. The question of law posed for consideration is answered accordingly.

Revision stands disposed of.