1995 (1) TMI 354 - HC - VAT and Sales Tax

Summary

Issues:
1. Deletion of penalty by the Appellate Assistant Commissioner.
2. Validity of enhancement petition filed by the State against the deletion of penalty.
3. Interpretation of section 36(3)(a)(iii) of the Act.
4. Power of the Tribunal to allow enhancement petition in penalty proceedings.
5. Legitimacy of penalty when assessment is remanded back for fresh disposal.

Detailed Analysis:
1. The assessee, a dealer in pulses and food grains, declared a total turnover of Rs. 96,82,250.68, and taxable turnover of Rs. 51,28,245.09. The assessing officer determined higher turnovers and levied a penalty under section 12(3) of the Tamil Nadu General Sales Tax Act. The Appellate Assistant Commissioner remanded the matter to investigate local or fictitious purchases and deleted the penalty. The Tribunal upheld the order of remand, leading to an appeal by the State against the penalty deletion.

2. The State contended that the deletion of penalty was inconsistent with the remand order, as the penalty depended on the authenticity of purchases. The department argued that the Appellate Assistant Commissioner lacked independent material to delete the penalty. The Tribunal dismissed the enhancement petition, prompting the State to file a revision before the High Court.

3. The Additional Government Pleader argued that the Tribunal should have allowed the enhancement petition, citing the scope of section 36(3)(a)(iii) of the Act. Referring to relevant case laws, the State asserted that penalty proceedings are integral to assessments, allowing for enhancement even if the penalty is deleted entirely. The assessee's counsel contended that the penalty should not apply when the original assessment is set aside and remanded.

4. Upon hearing both sides, the Court noted the discrepancies in the assessee's turnover declarations and the alleged fictitious purchases. The Appellate Assistant Commissioner had remanded the assessment and deleted the penalty, a decision upheld by the Tribunal. The Court affirmed the Tribunal's decision, emphasizing the assessing officer's authority to levy penalties during reassessment.

5. The Court concluded that when an assessment is remanded for fresh disposal, the penalty imposed based on the original assessment becomes unsustainable. Therefore, the department's attempt to restore the penalty through an enhancement petition was deemed invalid. The Court upheld the Tribunal's decision to confirm the Appellate Assistant Commissioner's orders in both the quantum and penalty appeals, dismissing the State's revision petition.