Criminal action required against firms evading revenue taxes: HC

CHENNAI: A division bench of the Madras High Court held that criminal action should be initiated against the private firms which are evading the revenue taxes. The court made this observation citing that taxes are the primary source of revenue for the government to implement welfare schemes for the public.

"It is saddening to note that tax evasion has been mushrooming in our State / Country day-by-day, which is purely illegal, and such evasion includes hiding of true income and portrayal of false income, not reporting cash flow, etc., " the bench comprising Justice S Vaidyanathan and Justice C Saravanan lamented.

The judges specifically pointed out that the companies/firms / entities, which evade payment of tax are liable to be punished under criminal charges with substantial penalties.

"It is pertinent to state that taxes are the main sources of income for the Government to concentrate on the welfare of the people and the monies can be invested in various development projects, " the court added.

The judges made these observations on dismissing a petition filed by Tiruppur Sree Annapoorna, a hotel firm from Tiruppur. The petitioner hotel sought a direction to quash the award of Tamil Nadu Sales Tax Appellate Tribunal, Coimbatore, directing the firm to pay revenue tax for the taxable income of Rs.66,60,363 and Rs.14,35,123 for the hotel and sweet business for the year 1995-1996.

The petitioner hotel submitted that the hotel and sweet stall are running under different companies but the tax department imposed it collectively. However, the judges rejected the contention as there is no evidence to show that.

"There is not even an iota of material evidence adduced to establish that Sree Annapoorna Sweet stall is the sister concern of the petitioner herein, " the judges said, adding, "There is a famous saying of Abraham Lincoln that "You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time."