1995 (10) TMI 219 - HC - VAT and Sales Tax

Summary

Issues:
Penalty under section 22(2) of the Tamil Nadu General Sales Tax Act for assessment year 1977-78, Penalty under section 3-A of the Tamil Nadu Additional Sales Tax Act for assessment year 1977-78, Penalty under section 22(2) of the Tamil Nadu General Sales Tax Act for assessment year 1976-77, Penalty under section 3-A of the Tamil Nadu Additional Sales Tax Act for assessment year 1976-77, Penalty under section 22(2) of the Tamil Nadu General Sales Tax Act for assessment year 1978-79, Penalty under section 3A of the Tamil Nadu Additional Sales Tax Act for assessment year 1978-79.

Analysis:
The case involves multiple appeals relating to penalties imposed under different sections of the Tamil Nadu tax laws for various assessment years. The assessee, a decorticator, collected sales tax from customers and paid it to the Government. The assessing officer levied penalties under section 22(1) of the Tamil Nadu General Sales Tax Act and section 3A of the Tamil Nadu Additional Sales Tax Act, claiming the assessee collected tax without authority. The Appellate Assistant Commissioner initially deleted the penalties, stating the assessee was not a dealer and had paid the tax collected. However, the Joint Commissioner, using suo motu power under section 34, reinstated the penalties, considering the order prejudicial to revenue. The assessee appealed against these orders.

Upon hearing arguments, it was established that the assessee, being a decorticator and not a dealer, was not entitled to collect sales tax. There was initial uncertainty regarding whether the decorticator or the oil mill owners should collect the tax, later clarified in favor of the oil mill owners. Citing a previous judgment (State of Tamil Nadu v. K. Mohammed Ibrahim Sahib), the Court held that in cases of doubt like this, penalties were not applicable under section 22(2) of the Tamil Nadu General Sales Tax Act. Following this precedent and considering the assessee's actions of collecting and remitting tax to the Government, the Court concluded that penalties should not be imposed. Consequently, the suo motu penalty orders by the Joint Commissioner were set aside, and the appeals by the assessee were allowed, canceling the penalty orders for all assessment years.