2008 (10) TMI 622 - HC - VAT and Sales Tax

Summary

Issues: Liability to tax and penalty under section 12(3)(b).

Liability to Tax:
The judgment of the court highlighted two key issues - liability to tax and penalty under section 12(3)(b). The assessment in question was based on the books of account produced. The learned counsel focused solely on the penalty under section 12(3)(b). Referring to the case of Appollo Saline Pharmaceuticals (P) Ltd. v. Commercial Tax Officer, the court emphasized that penalty can only be levied in cases of best judgment assessments made on an estimate, not solely relying on the accounts furnished by the assessee. The court noted that assessments made on the basis of accounts, without estimates, do not attract penal provisions under section 12(3). Therefore, once books of account are produced and the assessment is made based on them, it cannot be considered a best judgment assessment.

Penalty under Section 12(3)(b):
The court, following the precedent set by the Appollo Saline case, allowed the tax case only in relation to the levy of penalty under section 12(3)(b). The judgment set aside the penalty levied for the assessment years 1993-94 and 1994-95, as these assessments were made based on the accounts provided by the assessee and not on any other material or estimates. Consequently, the court partly allowed the tax case, ruling in favor of the petitioner on the issue of penalty under section 12(3)(b. No costs were awarded in the matter.

In conclusion, the judgment focused on the distinction between assessments made on the basis of accounts and best judgment assessments, clarifying that penalties under section 12(3) are applicable only in cases of the latter. The court's decision to set aside the penalty for certain assessment years underscores the importance of proper assessment procedures and adherence to statutory provisions in tax matters.