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2001 (10) TMI 1100 - HC - VAT and Sales Tax
Issues:
1. Challenge to penalty imposition upheld by Tribunal. 2. Liability to purchase tax on bottles containing I.V. fluids. Issue 1: The High Court upheld the imposition of penalty on the assessee based on the sale of I.V. fluid in bottles being considered a composite sale, thus attracting the levy of purchase tax on the bottles purchased from unregistered dealers. The Court followed the law laid down by the Supreme Court in the case of Premier Breweries v. State of Kerala. Issue 2: Between December 3, 1979, and May 27, 1993, the penalty under Section 12(3) could be levied only in cases of best judgment assessment. The Court emphasized that the assessing authority must consider the bona fides of the person alleged to have withheld tax, even in cases where tax is found to have been withheld. Assessments for the years 1993-94 and 1994-95 were made under Section 12(1) based on the return filed by the assessee, and the Court set aside the penalty levied for these years as they were not best judgment assessments. The Supreme Court clarified that penalty can be levied under Section 12(3) only when the assessing authority makes an assessment to the best of its judgment, not solely based on account books. The best judgment assessment is based on an estimate and not solely on account books, as reiterated in various judgments. The Court noted that assessments made on the basis of accounts for the years 1993-94 and 1994-95 were not estimates and were not made under Section 12(2), hence the penal provisions of Section 12(3) were not applicable. The levy of penalty for these years was set aside. The assessing authorities were directed to consider the bona fides of the assessee for assessments where penalty was levied, especially in cases of best judgment assessments. The Court set aside the order upholding penalty for certain years and instructed the authorities to reevaluate the penalty in light of the law and circumstances. The writ petitions were partly allowed, and the assessing authorities were directed to reconsider the penalty imposition for specific assessment years in accordance with the Court's directions and applicable law.
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