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1973 (4) TMI 113 - HC - VAT and Sales Tax
Issues:
1. Whether the levy of penalty on the assessee is justified under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959. Detailed Analysis: The case involved an assessee, a spinning mill with a head office in Bangalore and a branch office in Tiruppur. The assessing officer proposed an assessment to tax on the first sales of cotton yarn and the purchase value of cotton in respect of last purchases made within the Madras State through the Tiruppur branch. A penalty was also proposed for non-disclosure of the turnover. The assessee contended that the purchase of cotton was not completed at Tiruppur as the branch office had only taken delivery of cotton purchased by the head office. They argued that they had disclosed the turnover of cotton purchases soon after receiving the pre-assessment notice, and penalty should not be levied. However, the assessing authority held that the turnover was not disclosed in the monthly returns or the branch office's books, leading to a best judgment assessment adding the undisclosed turnover to the declared turnover. The main issue was whether the penalty of Rs. 13,694 on the assessee was justified under section 12(3) of the Act. The Tribunal found that the turnover related to the purchase of cotton had not been included in the monthly returns or the branch office's books. The assessee failed to prove that the turnover was recorded in the head office's account books. The assessing authority's investigation revealed the undisclosed turnover, and the assessee's explanation for non-disclosure was considered insufficient. The court rejected the assessee's argument that the assessment was not a best judgment assessment, as the disputed turnover was not included in the returns or the account books. Referring to a Supreme Court decision, the court distinguished the case where the assessment was based on the dealer's own account books, which was not the situation in the present case. The court concluded that section 12(3) was correctly invoked, and upheld the penalty on the assessee for non-disclosure of turnover related to cotton purchases. In light of the above analysis, the court dismissed the tax case, affirming the levy of penalty on the assessee and ordering them to pay the costs.
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