Shekhar P. Vernekar vs. Commissioner Of State Tax

Held

The Court held that the petitioner's grievance regarding the penalty of Rs. 1,00,000/- being imposed by the impugned order is ex-facie contrary to the provisions of the Act and must be accepted. Even accepting the revenue's submission that the maximum penalty under Section 44(b) is Rs. 25,000/-, or the petitioner's contention that the maximum penalty is Rs. 10,000/- as per a notification dated February 2, 2012, the order imposing Rs. 1,00,000/- cannot be sustained. The Court also found the petitioner's grievance with regards to the wording of the operative part of the order to be correct. Although the observation may be clarificatory, it has consequences, particularly when a substantive appeal assailing the Assessment Order is pending before the Appellate Authority. Therefore, in the interest of justice, the impugned order dated July 30, 2021, was set aside. The Commissioner of State Tax was directed to hear the petitioner afresh on the issue of penalty and pass a fresh order in accordance with law. The parties were directed to appear before the Commissioner on December 5, 2022, who was to pass appropriate orders on or before December 23, 2022. No issue was expressly left undecided.

Facts

The petitioner, Shekhar P. Vernekar, assails an order dated July 30, 2021, passed by the Commissioner of State Tax under Section 53 of the Goa Value Added Tax Act, 2005, read with Rule 55 of the Rules. The order accepted the petitioner's request to compound the offence of delay in intimating a change in business, imposing a penalty of Rs. 1,00,000/-. A condition was attached stating this compounding would not grant the right to be treated as a registered dealer eligible for input tax credit or to collect tax on sales. The petitioner's grievance is twofold: the penalty amount and the restrictive condition. The petitioner argues the maximum penalty for compounding under Section 53 is Rs. 10,000/-. The revenue contends the maximum penalty for an offence under Section 22(1) is Rs. 25,000/- under Section 44(b). The petitioner also argues the condition prejudices their pending appeal against an Assessment Order dated March 13, 2013.

Key Issues

1. Whether the penalty of Rs. 1,00,000/- imposed for compounding the offence of delay in intimation of change in business, under Section 53 of the Goa Value Added Tax Act, 2005, is contrary to the maximum penalty prescribed by law? 2. Whether the condition in the compounding order, stating that it will not grant the right to be treated as a registered dealer eligible to claim input tax credit and/or collect tax on sales, is prejudicial to the petitioner's pending appeal against the Assessment Order? Petitioner's arguments: The petitioner contends that the maximum penalty for compounding under Section 53 of the Act is Rs. 10,000/-. They also argue that the restrictive condition in the operative part of the order would prejudice their pending appeal before the Appellate Authority. Revenue's arguments: The revenue submits that in the facts of the present case, considering it was an offence under Section 22(1) of the Act, the maximum penalty would be Rs. 25,000/- under Section 44(b) of the Act. Regarding the restrictive condition, the revenue states it appears to be clarificatory in nature.