2009 (12) TMI 867 - HC - VAT and Sales Tax

Summary

Issues:
Levy of penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act based on figures from books of account, confirmation of penalty for claiming exemption in works contract, sustaining penalty without concrete findings on best judgment assessment.

Analysis:
The case involves a tax case revision against the Sales Tax Appellate Tribunal's order, addressing the levy of penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act. The petitioner, engaged in works contract business, reported the turnover for the assessment year 1993-94 and claimed exemption on works contract turnover due to the absence of a charging section at the time. The petitioner used materials purchased interstate and locally for works contract without remitting tax. The charging provision for works contract tax was retroactively included in the Act. The assessing officer taxed a portion of the turnover and levied a penalty under section 12(3)(b) of the Act.

The key issue is whether the penalty under section 12(3)(b) can be imposed in this case. Referring to a previous judgment, the court highlighted that if assessments are based on filed returns and maintained accounts, not estimates, they fall under section 12(1) of the Act, excluding the applicability of penal provisions under section 12(3). The Division Bench's ruling in a similar case emphasized that penalties for the relevant assessment years were not justified if assessments were not based on estimates but on actual figures provided by the assessee.

In line with the Division Bench's decision, the court set aside the penalty imposed by the assessing officer and upheld by the Tribunal. The judgment concluded by setting aside the tax case revision without imposing any costs. This case serves as a precedent for similar situations where penalties under section 12(3)(b) are challenged based on assessments made from filed returns and maintained accounts rather than estimates.