2004 (10) TMI 555 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of consignment sales turnover and tax liability.
2. Jurisdiction and authority to levy penalty for revised assessment order.
3. Applicability of penalty provisions under TNGST Act.
4. Validity of penalty imposition prior to amendment to Sec.12(3)(b) of TNGST Act.
5. Maintainability of writ petition against revised assessment order.

Assessment of Consignment Sales Turnover and Tax Liability:
The petitioner, a spinning mill, reported a total turnover of Rs.1,80,000 for the assessment year 1994-95 under the Central Sales Tax Act. However, consignment sales amounting to Rs.8,30,000 were not included in the monthly statement as they were deemed non-taxable. The second respondent assessed the consignment sales turnover, resulting in a revised taxable turnover of Rs.10,10,000 at 2% tax rate. Subsequently, a penalty of Rs.24,900 was imposed under Section 12(3)(b)(v) of the TNGST Act. The petitioner contested the assessment, arguing that consignment sales were not taxable, and that the penalty was unjustified as the turnover had been disclosed. The revised assessment order raised the tax rate to 4%, leading to additional tax and penalty, which the petitioner deemed illegal without awaiting the outcome of the appeal against the original assessment order.

Jurisdiction and Authority to Levy Penalty for Revised Assessment Order:
The petitioner challenged the revised assessment order, contending that the penalty under Section 12(3) could only be imposed for the original assessment, not for a revised assessment under Section 16 of the TNGST Act. The petitioner argued that the penalty was unauthorized and lacked jurisdiction, especially since an appeal against the original order was pending. The petitioner further highlighted the lack of power for the Appellate Authority to condone delays beyond 30 days, prompting the filing of the writ petition to contest the revised order of assessment and penalty imposition.

Applicability of Penalty Provisions under TNGST Act:
The petitioner's counsel emphasized that penalty under Sec.12(3)(b) of the TNGST Act could only be justified in cases of best judgment assessments or non-submission of returns. As the turnover was disclosed, the imposition of penalty was deemed unlawful. Additionally, the counsel argued that the amendment to Sec.12(3)(b) came into effect post the assessment period, rendering the penalty imposition invalid. The petitioner sought to set aside the penalty and deemed the impugned order illegal due to the incorrect application of penalty provisions.

Validity of Penalty Imposition Prior to Amendment to Sec.12(3)(b) of TNGST Act:
The petitioner contended that the penalty imposition was unjust as the turnover had been intimated to the authorities, albeit claimed as exempt consignment sales. The petitioner argued that penalties could only be imposed under specific circumstances, such as incomplete or incorrect returns, which did not apply in this case. The counsel highlighted that the penalty provisions under Sec.12(3) could not be invoked retroactively, leading to the conclusion that the penalty imposition was not legally justified.

Maintainability of Writ Petition Against Revised Assessment Order:
The petitioner justified the filing of the writ petition against the revised assessment order, citing the illegality of the order and the absence of alternative remedies due to the inability to file an appeal. The petitioner's counsel argued that the revised assessment lacked legal support, providing grounds for challenging the order through a writ petition. The court accepted the petitioner's arguments, emphasizing the challenge to the order's validity and the absence of other available remedies, thereby allowing the writ petition and setting aside the penalty imposition.

The judgment delves into the intricacies of tax assessment, penalty imposition, and the legality of revised assessment orders under the TNGST Act, ultimately ruling in favor of the petitioner by setting aside the penalty and allowing the writ petition against the revised assessment order.