( 2022:HHC:16799-DB ) IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CR No.22 of 2017 a/w CR Nos.23 and 24 of 2017 Decided on: 09.12.2025 M/s Combine Retreads ....Petitioner(s) Versus The H.P. Tax Tribunal & another ....Respondent(s) Coram The Hon’ble Mr. Justice G.S. Sandhawalia, Chief Justice The Hon’ble Mr. Justice Jiya Lal Bhardwaj, Judge Whether approved for reporting?1 Yes. For the Petitioner(s) : Mr. Ajay Vaidya, Advocate. For the Respondent(s) : Mr. Rakesh Dhaulta and Mr. Sushant Keparate, Additional Advocate Generals, for the respondents-State. G.S. Sandhawalia, Chief Justice (Oral). The present Reivision Petitions have been filed under Section 48 of the Himachal Pradesh VAT, Act, 2005 against the assessment order dated 29.04.2015, passed by the Assistant Excise & Taxation Commissioner (AETC)-cum- Assessing Authority-I, Shimla, Himachal Pradesh for the year 2009-10, 2010-11 and 2011-12 (Annexure P-1), which order was upheld in appeal on 30.09.2015 by the Appellate Authority and 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 further maintained on 19.01.2017 by the Himachal Pradesh Tax Tribunal Dharamshala, Camp at Shimla, Himachal Pradesh. 2. The facts have been taken for convenience from Civil Revision No.22 of 2017 which pertains to the assessment year 2010-11. 3. The Assessment Authority was of the view that it had given a reasonable and affordable opportunity of being heard to the dealer and come to the conclusion that the deduction was being claimed upto 13% of the goods used but from the perusal of the books and calculations, it came to the conclusion that the deduction should only be 9.5%. to the tune of Rs.17,30,260/-. 4. It was noticed that opening stock was amounting to Rs.18,78,660/- and purchasing stock was amounting to Rs.1,72,13,456/- during the year 2010-11. The total stock worked out to the tune of Rs.1,90,92,116/- and closing stock was of Rs.8,78,850/- and, therefore, the net taxable amount of Rs.1,82,13,266/- was not accepted. 5. Resultantly, the demand was created of Rs.3,05,000/- by imposing a penalty of Rs.1,20,000/- under Section 16(8) of the Himachal Pradesh VAT, Act, 2005 (hereinafter referred to as the ‘Act, 2005’). 3 6. The appeal as such was dismissed by the First Appellate Authority on 30.09.2015 (Annexure P-2) while noticing that the assessee was involved in the work of Retreading of Tyres and the value of goods passed in the execution of a works contract could not be less than the purchase value and such situation could arise only either by understating sales and/or overstating labour and/or similar other expenses etc., eligible for deduction. Cost of goods as well as cost of labour, services etc., was shifted/passed on to the customers and, in addition, some profit was also earned from the customers and no business could survive by charging less than what it costs. Accordingly, it was held that the overstating of labour etc., had been done alongwith understating of the sales to arrive at such a value of the taxable turnover. 7. Resultantly, the Appellate Authority came to the conclusion that no injustice had been caused to the appellant as such and the Assessing Authority had shown special indulgence by not determining any value addition on purchases while dismissing the appeal and upholding the levy of interest and penalty also. 8. The Himachal Pradesh Tax Tribunal Dharamshala, Camp at Shimla, Himachal Pradesh had also upheld the said 4 order on 19.01.2017 (Annexure P-3) and come to the conclusion that due notices had been issued for the assessment years 2009- 10, 2010-11 and 2011-12, the first of which appears to have been issued on 18.01.2012, in Form VAT-XXIX which was issued under Sections 21 and 32 of the ‘Act, 2005’. The proceedings were only delayed on account of the repeated non-appearance as such and could not be concluded in the prescribed period by the statute of three months and therefore the argument raised was accordingly repelled. 9. It was noticed that tyre retreading was not a manufacturing process but was a work contract acitivity. It was noticed that the appellant was given due allowance on account of the wastage of 9.5% on the basis of the actual figures of wastage and the allowance given to him was not faulted. The appellant was not allowed to deduct 40-50% amount from the purchase value to determine the tax liability. Accordingly, it was held to be not justifiable and the appellant had transferred the goods below their actual price and the procedure adopted by the appellant to determine the taxable turnover amounted to deliberate suppression of the purchase value to avoid tax, which could not be approved and, therefore, the penalty levied as such had been rightly upheld and the appeal was accordingly dismissed. 5 10. Learned counsel for the petitioner(s) has fairly tried to argue to that extent and submit that as per Section 16(8) of the ‘Act, 2005’, the reasonable opportunity of being heard and directing him to pay by way of penalty fresh notice had to be issued before penalty could have been directed to be paid which has been done by the Assessing Authority and accordingly, which had been upheld but we are not convinced with the said arguments. The Section 16(8) of the ‘Act, 2005’ reads as under:- “(8) If a dealer has maintained false or incorrect accounts with a view to suppressing his sales, purchases or stocks of goods, or has concealed any particulars of his sales or purchases of has furnished to, or produced before, any Authority under this Act or the rules made thereunder any account, return or information which is false or incorrect in any material particular, the Commissioner or any person appointed to assist him under sub-section (1) of Section 3 may, after affording such dealer a resonable opportunity of being heard, direct him to pay by way of penalty in addition to the tax to which he is assessed or is liable to be assessed, an amount which shall not be less than twenty five percentum, but which shall not exceed one and a half times of the amount of tax to which he is assessed.” 11. A perusal of the above provisions would go on to show that the reasonable opportunity of being heard is to be given and there is no such provisions that fresh notice has to be issued under the above said provisions for penalty proceedings. 12. If one is to look at the Form VAT-XXIX of the ‘Act, 2005’, it shows that the assessee was put to notice that it could 6 produce any evidence adduced in support thereof and to show cause on that date as to why a penalty not less than fifteen percentum but not exceeding one-and-a-half time the amount of value added tax should not be imposed under sub-section (7) of Section 21 of the ‘Act, 2005’. 13. It is thus apparent that the Tribunal had found that the notice under Form VAT-XXIX of the ‘Act, 2005’ had been issued. The assessee was well aware that the penlaty could be levied if it was found that there was any such concealment or if there was any such information given which was false or incorrect in any material particulars. 14. Having been duly put to notice now, it would not lie in the mouth as such of the learned counsel to submit that the procedure had not been followed. Section 21(8) of the ‘Act, 2005’ also talks about the amount of any tax, penalty or interest payable under this Act, which is to be paid and therefore, it cannot be said that the assessee had not been put to notice regarding imposition of penalty as now has been contended. 15. Thus, a factual matrix has been recorded by the authorities at three levels and penalty has been imposed on account of taking a higher deduction and, therefore, the order as such cannot be faulted. It is also to be noticed that we are 7 exercising the power of revision under Section 48 of the ‘Act, 2005’ and only if there is any substanital question of law arising out of erroneous decision of law or failure to decide the question of law, this Court would interfere. 16. The cumulative examination of the file does not show that any substantial question of law arises for consideration. Resultanlty, the present Civil Revision Petitions stand dismissed, so also the pending application(s), if any. 17. Accordingly, all interim orders stand vacated. (G.S. Sandhawalia) Chief Justice (Jiya Lal Bhardwaj) Judge 9th December, 2025 (Munish Thakur)