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2013 (5) TMI 135 - HC - VAT and Sales TaxPenalty U/s 16(2) of the Tamil Nadu GST Act, 1959 - Wrongful claim U/s 3-A(2)(b) was an intentional one so as to result in wilful non-disclosure of Turnover U/s 16(2) of the Tamil Nadu GST Act, 1959 - Held that - In the decision reported in STATE OF TAMIL NADU v. S.M. BABA SAHIB(1977 (10) TMI 93 - MADRAS HIGH COURT ), this Court pointed out to the earlier decision of this Court reported in STATE OF TAMIL NADU v. SRI SWAMY & CO.(1976 (2) TMI 147 - MADRAS HIGH COURT ), and held that wilful non-disclosure of assessment turnover is a necessary ingredient to make out that part of the section, namely, a deliberate intention to suppress an assessable turnover to attract levy of penalty under Section 16(1) of the Act. A mere reassessment of escaped turnover, per se, would not lead to a finding that non-disclosure of assessable turnover was a wilful one. Learned Special Government Pleader could not point out any finding in the order of the Assessing Authority as regards this necessary ingredient on wilful non-disclosure so as to attract the levy of penalty under Section 16(2) of the Act. Even though Section 16(2) of the Act had undergone amendment with effect from 20th May 1993, necessary ingredients of wilful non-disclosure including the penalty, remains as it is. In the circumstances, we have no hesitation in setting aside the order of the Tribunal, thereby allowing the above appeals by holding that in the absence of any finding as regards wilful non-disclosure, the levy of penalty could not be sustained.
Issues:
1. Imposition of penalty under Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 - necessity of finding of wilful non-disclosure. 2. Whether the petitioners, who disclosed their turnover but claimed deduction, can be considered as not disclosing their turnover under Section 16(2) of the Act. Analysis: 1. The petitioner, a company engaged in hire purchase and leasing, leased centering sheets to M/s. Alsa Investments Limited during the assessment years 1994-95, 1995-96, and 1996-97. The petitioner's claim for deduction under Section 3-A(2)(b) of the Act was initially allowed, showing a NIL taxable turnover. However, upon inspection revealing fictitious sellers, a notice of revision was issued under Section 16 of the Act. The petitioner contended that they never directly interacted with the suppliers, acting based on lessees' representations. The Assessing Officer imposed liability under Section 3A and levied a penalty under Section 16(2) without findings of wilful non-disclosure. The Appellate Authorities confirmed the penalty, leading to an appeal before the Sales Tax Appellate Tribunal. 2. The Tribunal confirmed the quantum but reduced the penalty from 150% to 50% since the tax was paid voluntarily. However, the Tribunal upheld the penalty citing previous court decisions and the order of the Sales Tax Appellate Tribunal. The petitioner argued that wilful non-disclosure was absent as they disclosed the assessable turnover based on lessees' representations. Citing a relevant court decision, the petitioner emphasized the necessity of wilful non-disclosure for penalty under Section 16(2). The Revenue contended that the turnover came to light due to inspection, justifying the penalty. 3. The High Court analyzed the order and previous court decisions, emphasizing the importance of wilful non-disclosure for penalty under Section 16(2). The Court noted the lack of discussion on intentional wrongful claims leading to wilful non-disclosure in the assessment order. Referring to a previous decision, the Court highlighted that reassessment alone does not imply wilful non-disclosure; there must be evidence of intentional suppression of assessable turnover. As no finding on wilful non-disclosure existed in the order, the Court set aside the penalty, allowing the appeals. 4. The Court concluded that despite amendments in Section 16(2) of the Act, the essential requirement of wilful non-disclosure for penalty remains unchanged. As the order lacked findings on wilful non-disclosure, the Court held that the penalty could not be sustained, ultimately setting aside the Tribunal's decision.
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