2009 (12) TMI 872 - HC - VAT and Sales Tax

Levy of penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 Held that - There is no error or any perversity in the approach of either the original authority or the appellate authority or the Tribunal and we are convinced that the finding of fact recorded by the original authority as confirmed on further appeals establishes wilful nondisclosure of the assessable turnover by the petitioner. The law relating to as to whether the REP licence and exim scrips are goods within the definition of section 2(j) of the Act, having been settled by the judgment of the honourable Division Bench of this court on April 4, 1994 in the case of P. S. Apparels 1994 (4) TMI 366 - MADRAS HIGH COURT , cannot be stated to have created any confusion in the minds of the petitioner/dealer, when on the facts also such was not the case of the petitioner. Hence, the writ petition fails and accordingly the same is dismissed. Consequently, connected miscellaneous petition is also dismissed.

Issues Involved:
1. Levy of penalty under Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959.
2. Wilful non-disclosure of assessable turnover.
3. Taxability of quota sales under the Act.
4. Applicability of case precedents and judicial interpretations.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959:
The primary issue in the writ petition is the challenge against the order of the Sales Tax Appellate Tribunal which upheld the levy of penalty under Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959. The section stipulates that if the escape from assessment is due to wilful non-disclosure by the dealer, a penalty in addition to the tax assessed is warranted. The petitioner contended that the disposal of quota sales was recorded in the books of account and that there was no wilful escape from assessment. However, the court found that the suppression of the quota sales was wilful, justifying the penalty.

2. Wilful Non-disclosure of Assessable Turnover:
The petitioner argued that there was no mens rea or intention to evade tax, as evidenced by the immediate payment of tax following the inspection. The court, however, emphasized that the burden of proving wilful non-disclosure lies with the Department. It was found that the petitioner failed to disclose the premium received from the quota sales in their trading accounts, which constituted wilful suppression. The court relied on the precedent that mere use of the term "suppression" is insufficient; mens rea must be established, which the Department successfully did in this case.

3. Taxability of Quota Sales under the Act:
The petitioner contended that there was ambiguity regarding whether quota sales were taxable as "goods" under the Act. They referenced the Supreme Court's decision in Yasha Overseas v. Commissioner of Sales Tax [2008] 17 VST 182, which clarified that REP licences and DEPB credits qualify as goods. However, the court noted that this legal position had already been settled by the Division Bench in P.S. Apparels v. Deputy Commercial Tax Officer [1994] 94 STC 139, which held that such licences are "goods" and taxable. Thus, the court dismissed the argument of ambiguity and upheld the taxability of quota sales.

4. Applicability of Case Precedents and Judicial Interpretations:
The petitioner cited several judgments to support their case, including the Division Bench judgment in Krishna Alloy Steels v. Registrar, Tamil Nadu Taxation Special Tribunal, Chennai [2008] 13 VST 424. However, the court found these precedents inapplicable due to the specific facts of the present case, particularly the wilful suppression of quota sales. The court also referenced the Supreme Court's decision in Vikas Sales Corporation v. Commissioner of Commercial Taxes [1996] 102 STC 106, which affirmed that REP licences and exim scrips are goods.

Conclusion:
The court concluded that there was no error or perversity in the approach of the original authority, the appellate authority, or the Tribunal. The findings of fact established wilful non-disclosure of assessable turnover by the petitioner. The legal position regarding the taxability of REP licences and exim scrips as goods had been settled by the Division Bench judgment in P.S. Apparels [1994] 94 STC 139. Therefore, the writ petition was dismissed, and the penalty under Section 16(2) was upheld.

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