2006 (1) TMI 591 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to correctness of order in O.P. No. 1688 of 2003 dated January 30, 2004; Proposal to levy tax on sale of REP licence and penalty under section 12(3)(b) of TNGST Act; Serving of assessment order and statutory appeal; Filing of returns and renewal of registration certificate; Imposition of penalty under section 12(3)(a) of TNGST Act.

Analysis:
The petitioner contested the order made in O.P. No. 1688 of 2003 dated January 30, 2004, challenging the proposal to levy tax on the sale of a REP licence and imposition of penalty under section 12(3)(b) of the TNGST Act. The petitioner's business was inspected by Enforcement Wing officials, leading to a D3 proposal sent to the assessing officer based on gathered information. The assessing officer issued pre-assessment notices calling for objections to the tax proposal and penalty. The petitioner, in response, expressed financial difficulties, paid a sum towards tax liability, and requested penalty waiver. The assessment order was contested before the Special Tribunal, leading to the current writ petition.

A crucial contention raised was the imposition of penalty under section 12(3)(b) of the TNGST Act, deemed unwarranted by the petitioner's counsel. Reference was made to the Explanation to section 12(3)(b), emphasizing that penalty deduction should consider additions to turnover without special concealment. The petitioner argued that since the REP licence sale amount was from the books, penalty imposition was unjustified. The court examined the submission and reviewed the material on record.

Regarding the serving of the assessment order and statutory appeal, the petitioner's counsel initially claimed non-receipt of the order, hindering appeal filing. However, upon inspection, it was confirmed that the assessment order was served on the petitioner, contradicting the counsel's assertion. The court also noted discrepancies in documents submitted, highlighting the seriousness of misleading filings.

In terms of filing returns and registration certificate renewal, it was revealed that the petitioner failed to submit returns or renew the registration certificate, leading to unregistered dealer status. This non-compliance absolved the assessing authority from verifying accounts and empowered penalty imposition under section 12(3)(a) of the TNGST Act due to non-filing of returns.

Ultimately, the court determined that the penalty was correctly imposed under section 12(3)(a) despite initial references to section 12(3)(b). Quoting the wrong provision did not invalidate the penalty, as the petitioner's failure to file returns necessitated penalty imposition as per statutory provisions. Consequently, the petition was dismissed, affirming the validity of the penalty and assessment order.