2009 (12) TMI 880 - HC - VAT and Sales Tax

Levy of penalty under section 22(2) cancelled by Tribunal - Held that - All that the assessee has done in this case was that they collected tax at the rate of 15 per cent as per the original rate without being aware of the reduction of tax at the rate of 10 per cent. The tax so collected was duly remitted to the Government. No amount was retained by the assessee In the given set of facts the Tribunal exercised its jurisdiction under section 22(2) of the Act judiciously, properly and bonafidely, which requires no interference at our hands in the revisional jurisdiction of this court under section 38 of the Act.

Summary

Issues:
- Levy of penalty under section 22(2) by the Tribunal
- Legal interpretation of tax collection contravention
- Discretion of assessing officer in imposing penalty

Levy of Penalty under Section 22(2) by the Tribunal:
The case involved a dispute over the levy of penalty under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959. The Tribunal had deleted the penalty of Rs. 10,421 imposed by the assessing officer, leading to the Department filing a revision. The assessing officer had found that the assessee, a dealer in electronic goods, collected tax at 15% instead of the revised 10%, resulting in an excess collection of Rs. 20,842. The penalty was initially set at 1.5 times the excess collection but was reduced to 50% by the first appellate authority. The Tribunal, however, found no illegal retention by the assessee and that the tax collected at 15% was paid to the Government. This led to the Tribunal concluding that the penalty was unwarranted under section 22(2) of the Act, dismissing the Department's enhancement petition.

Legal Interpretation of Tax Collection Contravention:
The legal issue revolved around the interpretation of tax collection contravention under section 22(2) of the Act. The Special Government Pleader argued that no mens rea was required for penalty imposition under this section, emphasizing that unauthorized tax collection automatically triggers penalty imposition. However, the court analyzed section 22(2) which provides discretion to the assessing officer to impose penalties based on the circumstances of each case. In this case, the assessee collected tax at the old rate of 15% unintentionally, promptly remitting the entire amount to the Government without any intention to contravene the Act. Citing legal precedents, the court highlighted that penalty imposition depends on the facts and circumstances of each case, with assessing officers required to exercise discretion judiciously.

Discretion of Assessing Officer in Imposing Penalty:
The judgment underscored the importance of the assessing officer's discretion in determining penalty imposition under section 22(2) of the Act. Referring to legal precedents, the court emphasized that the imposition of penalties is not automatic and must be based on a careful consideration of the facts and circumstances. The court upheld the Tribunal's decision, stating that it had exercised its jurisdiction judiciously, properly, and in good faith, warranting no interference in the revisional jurisdiction of the court under section 38 of the Act. Consequently, the revision petition was dismissed without costs.