Full Judgment
Syed Shah Mohammed Quadri, J.
1. The assessee - a registered dealer under the Andhra Pradesh General Sales Tax Act, 1957 (for short, 'the Act'), is the petitioner in this T.R.C. filed under section 22(1) of the Act.
2. In the assessment year 1981-82, the petitioner claimed exemption on sales turnover of Rs. 1,05,132 on the ground that it represents second sales of the groundnut cake of the value of Rs. 95,575 purchased from Sri Venkateswara Trading Company, Karimnagar. Along with A2 return the petitioner filed form E return claiming exemption. The Commercial Tax Officer found that the said Sri Venkateswara Trading Company was a non-existent company. While rejecting the exemption and making assessment, he had also proceeded against the petitioner for levying penalty under section 7-A(2) of the Act. A show cause notice was issued to the petitioner calling upon it to explain as to why penalty should not be levied under section 7-A(2) of the Act but no reply was given by the petitioner. The assessing authority, by his order dated November 23, 1981, levied penalty of Rs. 8,673. Aggrieved by the said order of the assessing authority, the petitioner filed an appeal before the Deputy Commissioner (CT), Appeals. From a perusal of the order of the Deputy Commissioner dated December 19, 1981, dismissing the appeal, it appears that the only point urged by the petitioner was that the claim of exemption was not wilful and that the assessing authority has not proved that the petitioner wilfully claimed false exemption, which is an important ingredient for levying penalty. The Deputy Commissioner rejected that contention observing that the enquiries made by the assessing authority led to the conclusion that false claim was wilful; he observed that when the groundnut cake had not come from Karimnagar dealers, as proved by the assessing authority, and the appellant had been basing its claim of exemption on purchase vouchers from Karimnagar dealer nothing more was needed to prove the wilfulness. Challenging the correctness of that order, the petitioner filed second appeal, T.A. No. 82 of 1982, before the Sales Tax Appellate Tribunal. There the petitioner contended that it could not be penalised under section 7-A(2) on the strength of A2 returns only, filed by it, and in support of that contention it relied upon the judgment of the Division Bench of this Court in Eswara Oil Company v. State of Andhra Pradesh . The Tribunal pointed out that along with A2 return the petitioner enclosed form E declaration and a statement purporting to be in reply to column 'particulars of the dealer from whom the assessee purchased' showing a turnover of Rs. 95,575. The Tribunal, however, rejected the contention of the State representative that form E is not a declaration and held that it is a declaration as contemplated under section 7-A(2). It also noted the contention that the bills filed by the petitioner before the assessing authority, were returned after perusal and that the bills are not on record and observed that even if it was held that the appellant had not produced the bills of purchase in support of claim for exemption, it was clear that it gave a declaration in form E in support of the claim for exemption and that form E was a declaration as contemplated in section 7-A(2). The appellate Tribunal also rejected the contention that it was not established that the petitioner had knowingly produced false bills and the declaration. In this view of the matter the Tribunal dismissed the appeal of the petitioner on September 15, 1987 which is now the subject-matter of this revision.
3. Mr. P. Srinivasa Reddy, the learned counsel for the petitioner, contends that on the ground that form E return is a declaration, the Tribunal upheld the order of penalty and that in view of the above judgment in Eswara Oil Company v. State of Andhra Pradesh , form E cannot be treated as declaration.
4. It would be useful to read section 7-A(2) of the Act, as it stood in the relevant assessment year, which is in the following terms :
'7-A. Burden of proof and liability of the dealer to pay tax and penalty. - (1)....................
(2) Where a dealer knowingly issues or produces a false bill, voucher, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him or any other dealer, is not liable to be taxed or is liable to be taxed at a reduced rate, the assessing authority shall, on detecting such issue or production, direct the dealer issuing or producing such document to pay as penalty, -
(i) in the case of first such detection, three times the tax due in respect of such transaction; and
(ii) in the case of a second or subsequent detection, five times the tax due in respect of such transaction :
Provided that before issuing any direction for the payment of the penalty under this section, me assessing authority shall give to the dealer an opportunity of making representation against the levy of such penalty.
5. From a reading of the abovenoted section it is clear that where the dealer knowingly issues or produces a false bill, voucher, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him or any other dealer, is not liable to be taxed or is liable to be taxed at a reduced rate, on detecting such issuing of bill or voucher or its production, the assessing authority has to direct the dealer issuing or producing such document to pay as penalty three times the tax due in respect of such transaction if it was a first such detection and five times the tax due in the case of second or subsequent detection. There is an obligation on the assessing authority to provide an opportunity of making representation to the assessee against the levy of such penalty to the dealer before passing an order imposing penalty.
6. In the abovementioned case, the dealer filed A-2 return disclosing the turnover and claiming exemption of the entire turnover. Exemption was claimed on the ground that it related to second sales in the hands of the dealer. The assessing authority found that the claim was bogus. Proceedings were initiated against the dealer under section 7-A(2) of the Act in respect of the false claim made and penalty equal to three times the tax due, was levied. It was contended before the Division Bench that neither form E, as prescribed by the Rules, nor any bill was filed by the dealer therein, therefore the penalty could not have been levied. In that case the Tribunal had taken the view that actual production of the bill in the literal sense was 'not necessary. Referring to that view the Bench observed as follows :
'............ Indeed, the Tribunal seems to be of the view that 'though the section contemplates production of a false bill to claim exemption, we are inclined to hold that actual production in the literal sense of bringing forward for inspection or consideration may not be necessary. It is enough if on the basis of a false bill a dealer claims exemption in respect of a transaction covered by such false bill....'. We find it difficult to accept this view......'.
7. Thus it is clear that for purposes of the abovesaid provision actual filing of the bill or voucher is necessary.
8. Construing section 7-A(2), the Division bench has observed that it punishes a dealer who knowingly issues or produces a false bill, voucher, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him, or any other dealer, is not liable to be taxed or is liable to be taxed at a reduced rate. It opined that the expression 'false declaration' used in section 7-A(2), among other things, refers to a declaration as such which is prescribed either by the Rules or can otherwise be called a declaration and that the declaration appended at the end of the return could not be treated as a declaration within the meaning of section 7-A(2) and that a return would not fall within the expression 'other document' in sub-section (2) of section 7-A. Noticing the finding recorded by the Tribunal that the dealer had not actually produced the bill said to have been falsely obtained by it from the vendor Kotha Venkateswara Rao of Rajahmundry nor did it file the declaration in form E, the Bench held that no penalty could have been levied upon it under sub-section (2) of section 7-A. There is nothing in that judgment to hold that form 'E' is not a declaration or document.
9. Sub-rule (1) of rule 19-A of the A.P. General Sales Tax Rules, 1957 (for short, 'the Rules') directs that every dealer dealing in any of the goods specified in the First, Second and Third Schedules and every other dealer whose total turnover for a year is not less than Rs. 25,000 shall submit a return in form E showing the details of the purchases or sales in which exemption is claimed. Clause (b) of sub-rule (2) of rule 19-A says that in the case of dealers paying taxes following the method of assessment described in rule 17, the return in form E shall be submitted every month showing the details or purchases or sales for preceding month along with the return in form A-2. Thus, it is clear that under the rules form E filed along with the return A-2, is a prescribed statement or document which forms the basis of any claim for refund of sales tax by the dealer-assessee that a transaction of sale or purchase effected by him, is not liable to be taxed. Therefore, in our view, whatever statement of facts is made therein (form E) or in a separate statement duly signed as a supplement or part thereof, would amount to a 'declaration' within the meaning of section 7-A(2). In this view of the matter we cannot accept the contention that form E is only a form of return and that the separate statement filed duly signed by the dealer forms part of form E and cannot be treated as a declaration or statement.
10. Even assuming that form E is merely a form of return which does not fall under 'declaration or document', the petitioner cannot escape the penalty as a finding is recorded by the first appellate authority that the petitioner filed false voucher in support of the claim for refund.
11. For the above reasons, we hold that the penalty was rightly levied on the petitioner. We, therefore, confirm the order of the Tribunal under revision but for different reasons. There is no merit in the T.R.C. It is accordingly dismissed. No costs.
12. Petition dismissed.