Realization of tax arrears
A case of tax evasion by the tax payers and connivance of tax recovery agencies is making rounds at the High Court in Jammu for some time. Pursuing a PIL, the Division Bench of the High Court had on June 15 asked the State officials to submit a compliance report on the tax defaulting cases and what measures were taken by the Government for the recovery of the arrears of taxes. On examining the report supposed to deal with all the five directions issued by the DB on June 15, 2012, the Division Bench found it deficient in many ways and pulled up the Counsel for the Sales Tax saying that the directions given by the court in preparing the compliance report were not appropriate.
Sales Tax has been a contentious subject and the general complaint is that either the taxes are avoided and not paid or paid only partially. In either case, it is loss to the state exchequer. Sales tax default is a crime and cognizable under law. Among the punishments stipulated is confiscating the properties of the defaulters and putting them on auction if taxes are not paid within the stipulated time. We fail to understand why the officials concerned did not consider the sensitivity of the case and why they did not go deep into the text of the compliance report before it was submitted to the Division Bench. Obviously, after receiving the directive from the High Court delineating the lines along which the compliance report had to be prepared, the State Government, following the normal practice, called in all the senior bureaucrats involved in the matter, and discussed the issues with them in all dimensions. How come that a compliance report was drafted that missed vital links and information to which the Division Bench has hinted in its observations?
Identification of defaulters is the job of the Sales Tax Department, and if orders are issued in any case for attachment of the property of a defaulter, then the judiciary and the police department both come into the picture. From what has been reported by the concerned authorities about deliberate evasion of sales tax, one finds that the authorities have, in pursuance of the rules and laws, directed the police department to attach the properties of the defaulters and put it to sale/auction and the money refunded to the government. It is this part of activity which the Division Bench has found to be lacking. It has termed it non-compliance of the directives of the court.
Somehow one feels that non-compliance by the police is not without some motive. Either there has been slackness on the level of the police or the sales tax department or the revenue department, which has given defaulters the much-needed opportunity of escaping the dragnet. The Court is very right in saying that, “This is the public money and respondents are answerable for that. It is because of the High Court’s intervention that Government is at it. We will not leave this PIL till every penny is recovered from the defaulters”. Mishandling of public money and non-compliance with court’s directive, amount to intentional dereliction of duty on the part of law enforcing agency. The court stricture has to be taken literally and not just underestimated. Advocate on behalf of the defendant said that during the period between April 1, 2011 to April 1, 2012 and first quarter of 2012-13 financial year an amount of Rs 6.98 crore was recovered from 966 persons in Jammu region and Rs 5.48 crore from 1888 persons in Kashmir valley. But pointing out that recovery of Rs. 7 crore Sales Tax was yet to be affected from one person only, Senior Advocate Sethi said, “This report is silent on how much recovery has been made from the defaulters, whose list has already been submitted by the Sales Tax Department as per the directives of the Division Bench, and how much money is still pending against them”,
This is a question of public money and its recovery. There are strong laws with the Sales Tax Department and the Police Department which can be invoked to ensure quick recovery of evaded taxes. The amount recovered so far and disclosed by the authorities in compliance report to the court seems to be just the tip of the iceberg. This is a serious matter and the court is proceeding right in demanding that each outstanding penny on this account has to be recovered and deposited in the state exchequer.
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