1998 (2) TMI 577 - HC - VAT and Sales Tax

Summary

Issues:
Inter-State sales suppression, Manipulation of accounts, Imposition of penalty under CST Act, Assessment for assessment years 1985-86, 1987-88, and 1988-89, Conflicting decisions by different authorities, Correct specification of penalty provisions under TNGST Act.

Inter-State Sales Suppression:
The case involved an assessee-dealer who camouflaged accounts to show inter-State sales as stock transfers to evade tax. The manipulation was discovered during inspections revealing direct despatches to locations outside Tamil Nadu, leading to a suppression of sales turnover. The assessing officer imposed tax and a 150% penalty for each assessment year due to the absence of "C" forms.

Imposition of Penalty under CST Act:
The assessee-dealers appealed the assessment and penalties imposed. The Appellate Assistant Commissioner (A.A.C.) confirmed the tax but reduced the penalty to 75% for some years and entirely for one year. The Sales Tax Appellate Tribunal further reduced the penalty to 50%, leading to appeals by both the Revenue and the assessee-dealers.

Conflicting Decisions by Different Authorities:
The Tribunal's decisions on penalty varied for different assessment years. The High Court noted conflicting orders by different authorities, highlighting the need for a consistent approach. It emphasized the Tribunal as the ultimate authority on factual findings, except in cases of perverse appreciation of facts warranting interference.

Correct Specification of Penalty Provisions under TNGST Act:
The High Court analyzed the penalty provisions under the Tamil Nadu General Sales Tax Act (TNGST Act) for furnishing incorrect returns. It noted that penalties should be imposed under the relevant provisions, with a maximum penalty of 150% for violations. The Court upheld the minimum penalty of 50% imposed by the Tribunal due to the assessee-dealers' manipulation of records.

Conclusion:
The High Court dismissed certain appeals while allowing one to set aside the Tribunal's order and restore the A.A.C.'s decision for a specific assessment year. It emphasized the need for consistent application of penalty provisions and upheld the minimum penalty imposed on the assessee-dealers. The judgment aimed to ensure fair treatment while discouraging tax evasion through account manipulation.