2007 (11) TMI 584 - HC - VAT and Sales Tax

Summary

Issues:
1. Quashing of assessment order and penalty in writ petitions.
2. Reduction of penalty from 150% to 50% by revisional authority.
3. Interpretation of section 7B(3) of the Tamil Nadu Entertainments Tax Act, 1939.
4. Discretion in quantum of penalty before and after amendment.
5. Modification of penalty amount already deposited by the petitioner.
6. Adjustment of deposited amount towards penalty payable.

Analysis:

1. The judgment pertains to appeals against a common order quashing the assessment order and penalty in writ petitions filed by the respondent regarding three theatres. The single judge upheld the assessment but quashed the penalty, citing the petitioner's non-habitual offender status.

2. The original penalty of 150% was reduced to 50% by the Joint Commissioner of Commercial Taxes. The single judge set aside the penalty solely based on the petitioner not being a habitual offender, without discussing wilful misstatement or suppression of facts as required by section 7B(3) of the Act.

3. Section 7B(3) of the Act allows for penalty imposition if tax evasion is due to wilful misstatement or suppression of facts. The judgment highlights the absence of findings by the single judge regarding the presence of such factors, making the penalty quashing decision unsustainable.

4. Before the amendment, the penalty could reach 150%, but post-amendment, it was fixed in three slabs based on the shortfall percentage. The court modified the penalty to the amount already deposited by the petitioner, exercising discretion in the interest of justice due to the matter dating back 30 years.

5. The court directed that the deposited amount be the penalty payable, adjusting it towards the penalty amount, with no additional payment required by the respondent. The single judge's direction for a refund with interest was deemed inoperative.

6. The writ appeals were allowed partially, modifying the penalty amount and adjusting the deposited sum towards the penalty payable, with no further costs imposed.