2000 (4) TMI 804 - AT - VAT and Sales Tax

Summary

Issues:
1. Limitation period for imposing penalty under section 12(5) of the Tamil Nadu General Sales Tax Act, 1959.
2. Requirement of 'mens rea' or motive for penalty imposition.
3. Failure to disclose turnover of cotton and justifiability of penalty imposition.

Issue 1: Limitation period for imposing penalty under section 12(5) of the Tamil Nadu General Sales Tax Act, 1959:

The Tribunal considered the argument regarding the limitation period for imposing penalties under section 12(5) of the Act. The notice proposing the penalty was issued within five years from the relevant assessment year, meeting the statutory requirement. Although the final order was passed after the five-year period, the Tribunal relied on a Supreme Court decision emphasizing that the initiation of proceedings within the limitation period is sufficient, even if the final order is passed later. Reference was made to a Madras High Court case and other decisions supporting this interpretation. Ultimately, the Tribunal rejected the contention that the penalty imposition was beyond the limitation period.

Issue 2: Requirement of 'mens rea' or motive for penalty imposition:

The appellant argued that there was no 'mens rea' or motive to suppress the disputed turnover, hence no penalty should be imposed. The Tribunal highlighted that under section 12(5) of the Act, no wilful failure is required for penalty imposition. The Tribunal emphasized that the focus should be on whether the Revenue was deprived of legitimate income at the relevant time and if there was a delay in paying the due revenue to the Government. Since the tax was not paid on the disclosed turnover at the time of filing the revised return, the Tribunal rejected the argument that the appellant acted bona fide in disclosing the turnover during the final assessment.

Issue 3: Failure to disclose turnover of cotton and justifiability of penalty imposition:

The appellant contended that the purchase of cotton was duly accounted for and included in the revised return filed voluntarily before the final assessment order. However, the Tribunal noted that the tax was not paid on this turnover at the time of filing the revised return. The Tribunal agreed with the Joint Commissioner that the dealer should have disclosed the purchase of cotton in the monthly returns and paid tax accordingly. As the dealer failed in this aspect, the Tribunal upheld the penalty imposition. Consequently, all contentions were rejected, the order of the Joint Commissioner was upheld, and the appeal was dismissed.

In conclusion, the Tribunal ruled in favor of upholding the penalty imposition under section 12(5) of the Tamil Nadu General Sales Tax Act, 1959, rejecting the appellant's arguments regarding the limitation period, 'mens rea' requirement, and justifiability of penalty imposition for failure to disclose the turnover of cotton.