2009 (12) TMI 848 - HC - VAT and Sales Tax

Summary

Issues:
- Appeal against order restoring penalty under TNGST Act read with CST Act
- Interpretation of statutory provisions regarding penalty under Section 12(3)(b) of TNGST Act
- Application of legal precedent set by Division Bench in Appollo Saline Pharmaceuticals case

Analysis:

The judgment by the Madras High Court pertains to a tax case appeal filed by the assessee against the order of the Joint Commissioner dated 25.05.1998, which restored the penalty under Section 12(3)(b) of the TNGST Act read with Section 9(2-A) of the CST Act. The counsel for both the department and the assessee referred to the Division Bench decision in the case of Appollo Saline Pharmaceuticals, which favored the assessee by ruling that the penalty under Section 12(3)(b) cannot be imposed for assessments made under Section 12(1) of the TNGST Act.

In this specific case concerning the assessment year 1993-94, the penalty was levied solely for the assessment made under Section 12(1) of the TNGST Act. The court highlighted the legislative intention behind the statutory provisions, emphasizing that penalties are applicable only in cases of best judgment assessments made on estimates and not solely based on the accounts provided by the assessee. The court cited that assessments made on the basis of accounts, without reliance on other materials, do not fall under Section 12(1) and, therefore, are not subject to penalties under Section 12(3).

Based on the legal precedent and interpretation of the statutory provisions, the court concluded that the order of the Joint Commissioner restoring the penalty was not in line with the law as established by the Division Bench decision and the legislative intent. Consequently, the tax case appeal was allowed, and no costs were imposed. The judgment reaffirmed the principle that penalties under Section 12(3) are not applicable to assessments made solely on the basis of accounts, setting aside the penalty for the relevant assessment years in question.