1983 (2) TMI 261 - HC - VAT and Sales Tax

Summary

Issues:
Assessment validity and penalty levy under sections 12(2) and 12(3) of the Tamil Nadu General Sales Tax Act for turnover of unserviceable cranes sold by a building contractor.

Assessment Validity:
The assessee, a building contractor, challenged the assessment and penalty for the turnover of unserviceable cranes sold during the assessment years. The Supreme Court's principle in Burmah Shell case was cited to argue that the turnovers should not be taxable as they were not part of the regular business. However, the court held that since the assessee was engaged in construction activity in the state and the sales were incidental to its main business, the turnovers were liable for tax. The absence of evidence regarding the purchase location of the cranes did not exempt the assessee from tax liability.

Penalty Levy:
The assessee contended that the assessment was not a best judgment assessment as it was based on figures provided by the assessee and not a return. The court clarified that the absence of a return necessitated a best judgment assessment under section 12(2), making the penalty under section 12(3) applicable. The contention that the non-submission of the return was due to a bona fide mistake of law was rejected, as the failure to submit the return, even if unintentional, still constituted a wilful act. The Tribunal reduced the penalty due to extenuating circumstances but upheld its imposition. The court agreed with the Tribunal's decision, emphasizing that the extenuating circumstances did not absolve the assessee from penalty liability.

Conclusion:
The court dismissed the tax revision cases, upholding the assessment validity and penalty levy under sections 12(2) and 12(3) of the Act. The judgment highlighted that the absence of a return necessitated a best judgment assessment, and even unintentional non-submission of the return constituted a wilful failure, justifying the penalty imposition. The extenuating circumstances cited were deemed insufficient to negate the penalty liability, leading to the dismissal of the assessee's appeal.