1991 (7) TMI 301 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Justification of the Tribunal in deleting the levy of penalty u/s 22(2) of the Tamil Nadu General Sales Tax Act, 1959.

Summary:

Issue 1: Justification of the Tribunal in deleting the levy of penalty u/s 22(2) of the Tamil Nadu General Sales Tax Act, 1959

The Tribunal found that the assessees, who were decorticating millers, had collected sales tax from purchasing oil millers under the directions of the Commercial Tax Officers and remitted it to the Government. The tax collected was not retained by the assessees but was remitted to the Government on behalf of the purchasing merchants. The Tribunal concluded that the levy of penalty by the Appellate Assistant Commissioner and the assessing authority u/s 22(2) of the Act was not justified and deleted the same.

The Revenue challenged this order, but the Tribunal's findings were based on uncontroverted facts, including that the assessees collected the tax at the behest of the sales tax authorities and remitted it to the Government. The Supreme Court's interpretation in Joshi, Sales Tax Officer v. Ajit Mills Limited was cited, where "collected" was interpreted to mean "collected and kept as his" by the trader. Since the assessees did not retain the tax but remitted it to the Government, they did not contravene section 22(1) of the Act.

Furthermore, section 22(2) of the Act provides discretion to the assessing authority to impose a penalty, considering the facts and circumstances of each case. Previous judgments, such as State of Tamil Nadu v. Selvakumar Timber Traders and State of Tamil Nadu v. Sasman and Company, supported the view that the imposition of penalty is not automatic and must be exercised judiciously.

In the present case, the Tribunal's deletion of the penalty was deemed a proper exercise of discretion, both judiciously and reasonably. Therefore, the High Court found no error in the Tribunal's order and dismissed the tax revision cases filed by the Revenue.

Petitions dismissed.