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2015 DIGILAW 174 (GUJ)

State of Gujarat v. Kin Tech Synergy Pvt. Ltd.

2015-02-11

JAYANT M.PATEL, S.H.VORA

body2015
ORDER Jayant M. Patel, J. 1. The Revenue has preferred the present appeal on the following questions of law : "Whether honourable Tribunal erred in deleting liability of penalty by permitting such adjustment of carried forward input-tax credit ?" We have heard Mr. Dave, learned Additional Government Pleader for the appellant-Revenue and Mr. Kaji, learned counsel appeared for the respondent upon advance copy. 2. The facts are that tax assessment of outstanding demand of Rs. 16,24,298 including tax and the penalty was made by the assessing officer. In the appeal before the first appellate authority, ultimately, the appeal was dismissed. In the second appeal before the Tribunal, it was found by the Tribunal that the demand of tax and the interest deserves to be maintained, but the amount of penalty is removed. It is under these circumstances, the appeal before this court. 3. In our view, the question is already covered by the earlier decision of this court dated January 19, 2015 in Tax Appeal No. 28 of 2015 (State of Gujarat v. Dashmesh Hydraulic Machinery [2015] 80 VST 532 (Guj)), wherein this court had, by relying upon its earlier decision in Tax Appeal No. 1284 of 2014 decided on November 25, 2014 {State of Gujarat v. jay Steel and Tubes Traders [2015] 80 VST 530 (Guj)), found that no substantial question of law would arise for consideration. We may record that in the aforesaid decision of this court in Tax Appeal No. 28 of 2015, this court observed thus : "2. The Revenue has preferred the present appeal and has formulated various questions, which we find that all do not arise but the only substantial question of law, considering the facts and circumstances, may arise in the present matter as under : 'Whether honourable Tribunal erred in deleting the liability of penalty and interest by permitting such adjustment of carried forward input-tax credit ?' 3. On facts, it appears that the assessing authority made reassessment and made the demand of Rs. 34,802, but additionally charged interest as well as penalty. The matter was carried in appeal and the Deputy Commercial Tax Commissioner dismissed the appeal. The matter was further carried in appeal before the Tribunal and the Tribunal confirmed the demand of reassessment, but deleted the interest and penalty imposed upon the assessee. Under these circumstances, the present appeal by the Revenue. 4. We have heard Mr. The matter was carried in appeal and the Deputy Commercial Tax Commissioner dismissed the appeal. The matter was further carried in appeal before the Tribunal and the Tribunal confirmed the demand of reassessment, but deleted the interest and penalty imposed upon the assessee. Under these circumstances, the present appeal by the Revenue. 4. We have heard Mr. Dave, learned Additional Government Pleader for the Revenue. 5. Our attention is drawn by Mr. Sudhir Mehta, learned counsel appearing for the assessee on advance copy, that the issue is already earlier decided by this court in Tax Appeal No. 1284 of 2014 vide decision dated November 25, 2014 (State of Gujarat v. Jay Steel and Tubes Traders [2015] 80 VST 530 (Guj)), wherein it was held that if there is no attempt to evade or avoid payment of tax, the interest or the penalty could not have been imposed. 6. We may record that this court in the above referred Tax Appeal No. 1284 of 2014 vide its decision dated November 25, 2014 (State of Gujarat v. Jay Steel and Tubes Traders [2015] 80 VST 530 (Guj)) had observed thus : '1. State is in appeal against the judgment of the Gujarat Value Added Tax Tribunal ("the Tribunal", for short) proposing following questions for our consideration : "(1) Whether the Tribunal erred in deleting levy of interest and penalty merely because the assessee had excess input credit adjustable against tax demand ? (2) Any other substantial questions of law as may be deemed fit by the honourable High Court may kindly be framed ?" 2. From the record, it emerges that the Revenue contests the deletion of interest and penalty by the Tribunal in case of the respondent-assessee. The Tribunal in the impugned judgment also held as under: "The appellant has paid the amount of tax fully therefore, we are not disturbing the amount of carried forward ITC. The appellant is entitled to claim the said ETC for next tax period. As stated above, the appellant is not liable to pay interest on tax demand as the ITC was first required to adjust against the current year liability as per the provision of rule 18 of the Rules. The appellant had sufficient balance of ITC to adjust against the additional tax liability, which arised due to disallowance of ITC. We therefore, remove the entire interest and penalty. The appellant had sufficient balance of ITC to adjust against the additional tax liability, which arised due to disallowance of ITC. We therefore, remove the entire interest and penalty. We pass the following order." 3. From the observation of the Tribunal, it appears that though the assessing officer had raised additional tax demand of Rs. 76,010 and imposed interest and penalty on such basis, the Tribunal was of the opinion that the assessee had sufficient input-tax credit and those tax credits could have been adjusted against the assessee's additional assessed tax liability. That being the position, the Tribunal correctly held that the interest could not be charged. Further, we notice section 34(7) of the Gujarat Value Added Tax Act, which pertains to the power of the Commissioner to impose penalty, begins with the expression "if a Commissioner is satisfied that the dealer, in order to evade or avoid payment of tax...". Under the circumstances, the basic intention of attempting to evade or avoid payment of taxes would be necessary for imposing penalty. 4. When the Tribunal found on facts that in view of availability of input-tax credit as against the assessed additional tax, there was no intention on the part of the assessee to avoid payment of taxes, no question of law arises. Tax appeal is dismissed. Civil application also dismissed.' 7. Same situation arises in the present matter inasmuch as the demand is confirmed and the adjustment is permitted but the interest and penalty imposed are deleted. 8. It is not in dispute that the assessee had no surplus balance of input credit, which has been adjusted against the demand of tax upon reassessment. Under these circumstances, the element of avoidance of tax could be said as lacking. Consequently, the deletion of interest and penalty on the part of the Tribunal could not be said as unjustifiable. In the event, when the issue is already covered by the above-referred decision, we do not find that any substantial question of law would arise as sought to be canvassed." 4. Same fact situation arises in the present matter. Under the circumstances, when the question is already covered by the decision of this court, it cannot be said that any substantial questions of law would arise for consideration in the present appeal. Hence, present tax appeal is dismissed. Same fact situation arises in the present matter. Under the circumstances, when the question is already covered by the decision of this court, it cannot be said that any substantial questions of law would arise for consideration in the present appeal. Hence, present tax appeal is dismissed. In view of dismissal of main tax appeal, civil application would not survive and shall stand disposed of accordingly.