2015 (2) TMI 1268 - HC - VAT and Sales Tax

Revision of assessment notice - section 27 of the TNVAT Act, 2006 - petitioner s total turnover is in excess of one crore rupees and the petitioner failed to to file the mandatory audit report in Form WW for the assessment year 2012-13 - Held that - Admittedly, the petitioner has sought for time and he has not given any reply in detail. The respondent is unable to refute the contention - A reading of section 63-A makes it very clear that levy of 2% of the reported taxable turnover on the petitioner is not mentioned in section 63-A of the Act. The notice dated 7.11.2014 refers to imposing of 2% on account of probable increase in sales. When the Department had chosen to proceed against the petitioner for violation of Section 63, they cannot impose fine of 2% to the taxable turnover - the matter is remitted to the authority for consideration of the case on merits afresh and in accordance with law. Petition disposed off.

Summary

Issues: Assessment under section 22(4) of the Tamil Nadu Value Added Tax Act, 2006 based on inspection by the Enforcement Wing, failure to file mandatory audit report in Form WW, imposition of penalty under section 63-A, imposition of 2% on taxable turnover, non-filing of objections by the petitioner, legality of the impugned order.

Analysis:
The petitioner in this case challenged the revision of assessment notice issued by the respondent under section 27 of the Tamil Nadu Value Added Tax Act, 2006, proposing to assess under section 22(4) by adding 2% to the taxable turnover due to the petitioner's total turnover exceeding one crore rupees and failure to submit the mandatory audit report in Form WW for the relevant assessment year. The petitioner requested an extension of time and paid the prescribed fine of Rs. 10,000 under section 63-A of the Act. The respondent issued a final notice, to which the petitioner responded seeking more time to file objections. However, the respondent proceeded to confirm the proposals in the notices without considering the objections filed by the petitioner.

The petitioner argued that as per section 63-A of the Act, failure to file audited accounts attracts only a penalty, and the imposition of 2% on the reported taxable turnover is not authorized by law. The petitioner had already paid the penalty of Rs. 10,000 as required. The impugned order mentioned the non-filing of objections by the petitioner, but the petitioner had acknowledged the notices and sought an extension to respond. The court noted that section 63-A does not mention the imposition of 2% on taxable turnover and that the notice referred to the 2% increase in sales, not as a penalty under section 63-A.

The court held that since the Department proceeded against the petitioner for violation of section 63, they could not impose a 2% fine on the taxable turnover. Additionally, the petitioner had not submitted detailed objections and had requested more time. Therefore, the impugned order was set aside, and the matter was remitted to the authority for fresh consideration in accordance with the law. The petitioner was directed to appear for a personal hearing on a specified date. The writ petition was disposed of without costs, and the connected miscellaneous petition was closed.