2011 (2) TMI 1307 - HC - VAT and Sales Tax

Whether, in the facts and circumstances of the case, the Tribunal is correct in fixing the ratio at the rate of 50 50, which is against the accounts produced by the assessee ? Whether in the facts and circumstances of the case, the Tribunal is right in sustaining the penalty in respect of estimated addition in view of Explanation to section 12(3)(b), which provides for deduction of tax due on the estimated turnover for the purpose of calculating penalty? Held that - Part of the order of the Appellate Assistant Commissioner in altering the ratio from 35 65 for other brasswares and domestic utensils to 50 50 cannot be justified, inasmuch as the same was without any legally acceptable material. As far as the levy of penalty is concerned when the statutory provision providing for imposition of penalty under section 12(3)(b) read along with Explanation (1) does not contemplate levy of penalty, the penalty imposed by the assessing officer and sustained by the appellate authority cannot be sustained. In favour of assessee.

Summary

Issues:
1. Challenge to the Tribunal's order regarding the ratio of tax assessment.
2. Challenge to the penalty imposed under section 12(3)(b) of the Tamil Nadu General Sales Tax Act.

Analysis:
1. The petitioner, a dealer in brasswares, contested the tax assessment by the assessing authority, which proposed a 70:30 ratio for tax calculation. The petitioner argued for a 100% assessment at a lower rate, but the authority apportioned the turnover at 35:65 for domestic utensils and other brass items. The Appellate Assistant Commissioner increased this ratio to 50:50 without providing sufficient reasoning. The High Court found this alteration unjustified as it lacked legal basis and material evidence. The Tribunal also deemed the Commissioner's decision reasonable without adequate explanation, leading to the revision being allowed in favor of the petitioner.

2. Regarding the penalty imposed under section 12(3)(b) of the Act, the High Court highlighted Explanation (1) which allows deductions for additions to turnover made by the assessing authority without specific concealment. Since the turnover adjustment was based on apportionment rather than concealment, the penalty was deemed unjustified. The Court ruled in favor of the petitioner on this issue as well, concluding that the penalty imposed and upheld by the lower authorities could not be sustained under the statutory provisions. The revision was allowed, and no costs were awarded in the case.