2011 (4) TMI 1266 - HC - VAT and Sales Tax

Summary

Issues:
1. Levy of penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act for non-disclosure of turnover under section 3(4) of the TNGST Act, 1959.
2. Justification of penalty levied when turnover under section 3(4) was estimated from the turnover available in books.

Analysis:
1. The case involved a revision against the order of the Tamil Nadu Sales Tax Appellate Tribunal regarding the imposition of penalty under section 12(3)(b) of the TNGST Act. The assessing authority determined the turnover using a formula for incorrect and incomplete return. The substantial questions of law admitted for revision included the correctness of confirming the penalty for non-disclosure of turnover under section 3(4) of the TNGST Act, especially considering the introduction of the levy in the assessment year 1993-94.

2. The assessment revealed discrepancies during an inspection by the Enforcement Wing, where stock variations and consignment sales of finished goods using raw materials purchased at concessional rates were found. The assessing officer adopted a formula to determine the taxable turnover based on the books, as the actual turnover was not reported in the returns. The Appellate Assistant Commissioner allowed the appeal only on the penalty aspect but confirmed the quantum of assessment. Subsequently, the Tribunal, relying on precedent, upheld the levy of penalty under section 12(3)(b) amounting to Rs. 45,404, leading to the current revision.

3. The counsel for the assessee contended that in an assessment under section 12(1) of the TNGST Act, the penalty under section 12(3)(b) does not apply. However, the order of assessment clearly indicated that the taxable turnover was fixed based on the turnover derived from the books due to non-disclosure in the returns. The assessing officer justified the penalty by highlighting the consignment sales using concessional raw materials, leading to the best judgment assessment. The Tribunal's decision to uphold the penalty was deemed correct, as the assessing officer acted within the provisions of the law. Consequently, the revision was dismissed with no costs incurred.