1972 (6) TMI 56 - HC - VAT and Sales Tax

Summary

Issues:
- Appeal against the order of the Board of Revenue setting aside assessments made under section 12(2) of the Tamil Nadu General Sales Tax Act, 1959 for the assessment years 1962-63 and 1963-64.
- Contention regarding the justification of setting aside the order of assessment to enable the assessing authority to invoke the power under section 12(3) for levying penalty.

Analysis:
The appeal before the High Court of Madras involved assessments made against the appellant for the years 1962-63 and 1963-64 under section 12(2) of the Tamil Nadu General Sales Tax Act, 1959. The appellant, engaged in business dealing with foreign goods, had not registered as a dealer under the Act and had not submitted any returns for previous years. The assessing authority determined taxable turnovers for the respective years based on recovered slips and anamath accounts. The appellant was assessed under section 12(2) without considering the levy of penalty at the time of assessment. Subsequently, a notice proposing a penalty was issued and confirmed after objections from the assessee.

Upon appeal, the appellate authority set aside the penalty orders, stating that the power to levy a penalty under section 12(3) was not invoked during the assessment, rendering the independent penalty order invalid. The Board of Revenue then intervened to set aside the original assessment orders to allow the assessing authority to invoke both section 12(2) and 12(3) powers simultaneously for assessment and penalty. The appellant contended that the Board had no justification to interfere with the assessment orders merely to enable the levy of penalty under section 12(3).

The High Court agreed with the appellant's contention, emphasizing that the power under section 12(2) was exercised correctly, and the assessment orders were legally sound. The Board's decision to set aside the assessment orders based on the failure to exercise the penalty power under section 12(3) was deemed unjustified. The Court held that since the assessment orders were legally valid, they should not be set aside for reasons unrelated to the assessment process. Consequently, the appeal was allowed, and no costs were awarded.

In conclusion, the High Court's judgment focused on the proper exercise of powers under sections 12(2) and 12(3) of the Tamil Nadu General Sales Tax Act, highlighting the importance of justifying any interference with assessment orders and ensuring that assessments are conducted in accordance with the law without unwarranted disruptions for collateral purposes.