Om Laminate Agencies vs Commercial Tax Officer, Krishna Lanka Circle and Others

Ramesh Ranganathan, J.—The relief sought for in this Writ Petition is to declare the order of the first respondent dated 07.04.2014 levying penalty under Section 53(3) of the Andhra Pradesh Value Added Tax Act, 2005 ("the VAT Act" for brevity) read with Section 9(2A) of the Central Sales Tax Act, 1956 ("the CST Act" for brevity), without establishing mens rea on the part of the petitioner, as ultra vires Section 10 of the CST Act, illegal, arbitrary and without jurisdiction. By the impugned proceedings dated 07.04.2014, penalty of Rs. 9,47,319/- was imposed on the petitioner under Section 53(3) of the VAT Act read with Section 9(2A) of the CST Act for furnishing a false declaration under Section 8(4) of the CST Act. Section 8(4) of the CST Act stipulates that the provisions of Section 8(1) of the CST Act shall not apply to any sale, in the course of inter-State trade or commerce, unless the dealer selling the goods furnishes, to the prescribed authority in the prescribed manner, a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority. Under the proviso thereto, the declaration is required to be furnished within the prescribed time or within such further time as the authority may, for sufficient cause, permit.

Section 10 of the CST Act relates to penalties and, under Sub-section (a) thereof, if a person furnishes a declaration under Section 8(4) which he knows, or has reason to believe, to be false, he shall be punishable with simple imprisonment which may extend to six months or with fine or with both; and, when the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues. Section 53 of the A.P. VAT Act relates to penalties for failure to declare the tax due and under Sub-section (3) thereof, any dealer who has under declared tax, and where it is established that fraud or willful neglect has been committed, shall be liable to pay penalty equal to the tax under declared; besides being liable for prosecution. Under the proviso thereto, the dealer is required to be given a reasonable opportunity of being heard before levying penalty under the said Section.

Sri M.V.J.K. Kumar, learned counsel for the petitioner, would submit that, for furnishing a declaration contrary to Section 8(4) of the CST Act, the competent authority can take action only under Section 10(a) of the CST Act, and not under Section 53(3) of the VAT Act, in view of the specific embargo under Section 9(2A) of the CST Act.

Section 9(2A) of the CST Act stipulates that all the provisions relating to offences, interest and penalties, including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence, but excluding the provisions relating to matters provided for in Sections 10 and 10A, in the general tax law of each State shall, with necessary modifications, apply in relation to the assessment, reassessment, collection and the enforcement of payment of any tax required to be collected under the CST Act in such State or in relation to any process connected with such assessment, re-assessment, collection or enforcement of payment, as if the tax under the CST Act were a tax under such sales tax law (VAT Act). While the provisions of the A.P. VAT Act would be applicable for all provisions relating to offences, interest and penalty under the CST Act, Section 9(2A) of the CST Act specifically excludes application of the A.P. VAT Act to Section 10 of the CST Act.

The petitioner herein is sought to be penalized for furnishing a false declaration under Section 8(4) of the CST Act. As Section 10(a) specifically provides for imposition of penalty as stipulated thereunder, the impugned order, levying penalty under Section 53(3) of the A.P. VAT Act is without jurisdiction and is, accordingly, set aside. It is made clear that this order shall not preclude the respondents from taking action against the petitioner under Section 10(a) of the CST Act. The Writ Petition is, accordingly, disposed of. There shall be no order as to costs. Miscellaneous petitions, if any, pending shall stand dismissed.