1992 (9) TMI 340 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to penalty levied under section 12(3) of the Act based on turnover discrepancies.

Analysis:
The case involved a challenge by the State against an order of the Tamil Nadu Sales Tax Appellate Tribunal setting aside a penalty imposed under section 12(3) of the Act. The respondent/assessees, dealing in various products, reported their sales turnover for the assessment year 1979-80. The assessing officer, after verification, determined a higher turnover than reported, leading to tax, surcharge, additional tax, and a penalty under section 12(3) of the Act.

The assessees appealed to the Appellate Assistant Commissioner, who adjusted the turnover and reduced the penalty. Unsatisfied, the assessees further appealed to the Tribunal. The Tribunal modified the taxable turnover and completely annulled the penalty. The State challenged the deletion of the penalty through a revision petition.

The Tribunal considered the explanation provided by the assessees for the discrepancy in sales reporting, particularly regarding sales to Government departments. The Tribunal found that the failure to account for these sales did not amount to wilful omission or non-disclosure justifying the penalty. The Tribunal's decision was based on extenuating circumstances and the subsequent reporting and payment of the disputed turnover.

The High Court, in its analysis, emphasized that not every assessment under section 12(2) automatically warrants a penalty under section 12(3). The Court reiterated the need to establish wilfulness on the part of the assessee in suppressing turnover. It found the Tribunal's decision reasonable and not vitiated by any legal error, noting that the turnover in question was disclosed in a subsequent return and the tax was paid before final assessment.

Ultimately, the High Court dismissed the revision petition, upholding the Tribunal's decision to set aside the penalty based on the specific facts and circumstances of the case. The Court found no legal basis to interfere with the Tribunal's ruling and ordered no costs to be imposed.