2008 (10) TMI 621 - HC - VAT and Sales Tax

Summary

Issues:
Levy of penalty under section 12(3)(b) - Whether justified or not.

Analysis:
The court addressed the issue of whether the levy of penalty under section 12(3)(b) was justified in this case. The Tribunal had previously relied on a judgment in Indian Metal and Metallurgical Corporation v. State of Tamil Nadu and held that the penalty was valid in cases where a claim of exemption by an assessee was disallowed, resulting in a best judgment assessment. However, the Tribunal argued that the assessment in question was not a best judgment assessment but was based on the books of accounts provided by the assessee.

In a previous case, Appollo Saline Pharmaceuticals (P) Ltd. v. Commercial Tax Officer, the court had ruled that penalty under section 12(3) should only be levied in cases where the assessment is a best judgment assessment made on an estimate, not solely relying on the accounts furnished by the assessee. The court highlighted the legislative intent behind the relevant sections and explained that assessments based on accounts, without any other material or estimates, should not attract penal provisions under section 12(3).

The court also noted that the assessing authorities had not considered whether the provisions of section 12(4) and 12(5) applied, as they had been deleted. The assessee had argued that the uncertainty in the law regarding the taxability of certain turnover was resolved by the court in a previous case. The court ultimately ruled in favor of the assessee, setting aside the penalty based on the principles established in the Appollo Saline Pharmaceuticals case.

In conclusion, the court allowed the tax case and set aside the penalty, finding that the levy of penalty under section 12(3)(b) was not justified in this instance based on the specific circumstances and legal interpretations presented in the case.