2008 (11) TMI 626 - HC - VAT and Sales Tax

Summary

Issues involved: The legality and validity of three times addition of estimated suppression u/s 12(3)(b) and the sustainability of penalty imposed on the estimated suppression.

Summary:

The tax case involved the assessment of a dealer in sweets and savouries for the year 1998-99, where discrepancies were found during an inspection on October 26, 1998. The actual suppression detected was Rs. 1,31,892, while for the previous year 1997-98, there was a suppression of sales turnover of Rs. 9,18,762. The assessing authority applied a three times estimated suppression and imposed a penalty u/s 12(3)(b) based on this calculation.

The appellate authority upheld the three times addition and penalty imposition, citing a previous decision. Subsequently, the Tribunal also confirmed these findings. The appellant contended that the three times addition lacked basis and penalty should be calculated based on the actual suppression amount of Rs. 1,31,892.

Referring to the precedent of A.V.K. Marimuthu Nadar and Bros. v. State of Tamil Nadu [1981] 47 STC 314 (Mad), the Special Government Pleader defended the multiplier of 3 for the addition and argued against interference in the penalty imposition. The court, in line with the mentioned precedent, found the three times suppression calculation justified and upheld it. However, it directed the penalty to be calculated based on the actual suppression amount of Rs. 1,31,892.

In conclusion, the tax case was partly allowed with no costs incurred.