Madhya Pradesh High Court
M/S Avs Sales Corporations vs Commercial Taxes Department on 8 August, 2025
Author: Vivek Rusia
Bench: Vivek Rusia
NEUTRAL CITATION NO. 2025:MPHC-IND:22093
-1- VATA-2-2022
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI
ON THE 8th OF AUGUST, 2025
VALUE ADDED TAX APPEAL No. 2 of 2022
M/S AVS SALES CORPORATIONS
Versus
COMMERCIAL TAXES DEPARTMENT
Appearance:
Shri P.M.Choudhary - Learned senior counsel alongwith Shri
Anand Prabhawalkar - Learned counsel for the appellant.
Shri Anand Soni - Learned Additional Advocate General for the
respondent / State.
ORDER
Per: Justice Vivek Rusia
Appellant has filed this appeal under Section 53(2)(b) of the
M.P. Value Added Tax Act, 2002, against the order dated 24.09.2021,
whereby the M.P. Commercial Tax Appellate Board has dismissed the
Appeal No.A/232/CTAB/IND/17 (Entry Tax) for the period 01.04.2012
to 31.03.2013.
02. Appellant is an HUF and is engaged in trading of spare parts,
nuts, bolts and bearing of two wheeler vehicles. Till 31.03.2012 the rate
of Entry Tax on the parts of two wheeler vehicles was 1% and w.e.f.
01.04.2012, the same has been enhanced to 2%. The appellant was
required to submit the return for the period 01.04.2012 to 31.03.2013
and pay the tax @ 2%. According to the appellant, there was a confusion
in respect of rate of tax, therefore, on 22.01.2013 an application under
Section 70 of the M.P. VAT Act, 2002 was filed before the
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Commissioner, Commercial Tax for determination of rate of tax on two
wheeler vehicle parts even prior to the end of relevant financial period.
The learned Commissioner passed an order on 09.12.2013 clarifying the
rate of tax to be 2%. According to the appellant, as per the provision of
Section 70 of M.P. VAT Act, 2002, the order passed by the
Commissioner has a prospective application; therefore, the appellant is
liable to pay tax on the goods in question @ 2% from financial year
2013-14.
03. For the financial year 2012-13, the Assistant Commissioner of
Commercial Tax vide order dated 16.12.2014 levied the tax @ 1% on
the parts of two wheelers. Later on, the assessment was reopened by
Assistant Commissioner of Commercial Tax, Division-3 and levied the
tax at the enhanced rate of 2% in place of 1% vide reassessment order
dated 30.12.2015 and calculated the difference of demand of
Rs.39,28,642/- alongwith penalty of Rs.1,17,85,926/- under Section
21(2) of the M.P. VAT Act, 2002 equal to 3 times of the tax so levied.
Being aggrieved by the aforesaid order, the appellant preferred an
appeal before the Deputy Commissioner of Commercial Tax, Khandwa
Division, Camp Indore which came to be dismissed vide order dated
23.02.2017. Thereafter, the appellant approached the Appellate Board by
way of second appeal which has also been dismissed vide order dated
08.08.2017. Hence, there is a concurrent finding recorded by the
Assessing Officer, First Appellate Authority and Appellate Board.
04. Shri P.M. Choudhary, learned senior counsel appearing for the
appellant submits that the appellant is not disputing to pay the tax @ 2%
even for the financial year 2012-13, but the appellant is not liable to be
subjected to the penalty at the rate of 3 times because the mistake in
payment of tax @ 1% was not attributable to the dealer. There was some
confusion about the applicability of the enhanced rate, the appellant
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approached to the Commissioner of Commercial Tax under Section 70
of M.P. VAT Act, 2002. The Commissioner examined the applicability
of the notification and decided that for the financial year 2012-13 also,
the interest rate would be 2%. The appellant has paid the enhanced tax,
but penalty is on a higher side for the mistake which the appellant did
not commit deliberately.
05. In support of his contention, Shri Choudhary, learned senior
counsel has placed reliance on a judgment passed by the Division Bench
of this Court in case of Vikash Rexine House V/s State of Madhya
Pradesh and another, [2014] 72 VST 420 (MP), in which the Division
Bench has held that the penalty could be imposed when 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. Learned senior counsel has also placed reliance on a
judgment passed by the Division Bench of this Court in the case of Ind
Exports Limited V/s Assistant Commissioner of Commercial Tax &
others, (2011) 18 STJ 289 (MP), in which the Division Bench has held
that there is no allegation or findings that the petitioner has concealed
his turnover or has furnished false particulars of sale or purchases in the
return. The mistake about the rate of tax was a bona fide mistake on its
part and it had occurred due to lack of knowledge to the petitioner about
the increase in the rate of tax from 2% to 4% w.e.f. 01.05.1999. The
petitioner is only aggrieved by the imposition of penalty 3 times of the
tax assessed or reassessed under Section 20(2) of the M.P. VAT Act,
2002.
Heard.
06. It is correct that before imposing the penalty between 3.5 to 3
times of the tax assessed, the Commissioner shall examine whether the
omission leading to assessment or reassessment is attributable to the
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dealer. The appellant was subjected to assessment for the financial year
2012-13 by the Assistant Commissioner, Commercial Tax, Division -3,
Indore and order dated 16.12.2014 was passed for payment of tax @
1%. Before such order, the appellant had already moved before the
Commissioner by way of application under Section 70 of M.P. VAT Act,
2002 on 22.01.2013 i.e. prior to 31.03.2013. The Commissioner decided
the application vide order dated 09.12.2013 i.e. one year before
16.12.2014 when the Assistant Commissioner passed a first assessment
order, therefore, it was the duty of the appellant to inform the Assistant
Commissioner about the order dated 09.12.2013 by which the rate of tax
@ 2% had been clarified, had the appellant been disclosed, the Assistant
Commissioner would have levied the tax @ 2% without imposing any
penalty. The appellant concealed the order dated 09.12.2013. When it
came to the knowledge of the department, the assessment of 09.12.2013
was reopened under Section 13 of Entry Tax r/w Section 21(1) of M.P.
VAT Act, 2002 on 07.09.2015.
07. Shri Choudhary, learned senior counsel for the appellant
submits that once the order has been passed by the Commissioner and
the same was reported in Reliable Dairy Products & Biotech Pvt. Ltd.
V/s Commissioner of Commercial Tax, M.P., (2014) 24 STJ 70 (CCT,
MP). The Assistant Commissioner must have a knowledge about the
said order and ought to have passed an assessment order for payment of
tax @ 2%.
08. The appellant is a person in whose case the order under Section
70 of M.P. VAT Act, 2002 was passed on 09.12.2013 in (2014) 24 STJ
70 (CCT, MP) (supra). Under Section 21(1) of M.P. VAT Act, 2002 the
omission on the part of assessee is liable to be examined not the
omission on the part of the department. Therefore, it was the duty of
appellant to inform the Assistant Commissioner in the original
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assessment proceedings.
09. In view of the above, we do not find any question of law
involved in this appeal. Accordingly, this Value Added Tax Appeal is
hereby dismissed.
(VIVEK RUSIA) (BINOD KUMAR DWIVEDI)
JUDGE JUDGE
Divyansh
