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2014 (1) TMI 210 - HC - VAT and Sales TaxDemand of tax - Assessment were revised treating the purchase turnover as suppression - Section 7A of the Tamil Nadu General Sales Tax Act 1959 - Penalty under Section 16(2) of the Tamil Nadu General Sales Tax Act 1959 - Held that - while the element of deliberateness wilfulness or a blameworthy conduct on the part of the assessee may not be necessary for invoking Section 12(5) of the Act the bona fides of the assessee has to be gone into before imposing penalty. It was further pointed out by this Court that facts of each case has to be separately analysed before coming to the conclusion that the return filed by the assessee is incorrect or incomplete and only with a view to postpone the legitimate due to the Government that the return was not filed in accordance with law - no such allegation that the assessee had deliberately submitted incorrect and incomplete return we are inclined to set aside the order of the Sales Tax Appellate Tribunal - Following decision of State of Tamil Nadu vs. Indian Silk Traders 1991 (10) TMI 302 - MADRAS HIGH COURT - Decided partly in favour of assessee.
Issues:
Assessment of purchase turnover as suppression under Section 7A of the Tamil Nadu General Sales Tax Act, 1959 and levy of penalty under Section 16(2) for assessment years 1992-93, 1987-88, 1990-91, and 1989-90. Analysis: 1. Assessment Under Section 7A and Penalty Levied: The assessee challenged the assessment of purchase turnover as suppression under Section 7A of the Tamil Nadu General Sales Tax Act, 1959, for the assessment years 1992-93. The assessee contended that since tax was paid at the time of sale of rough castings, there was no need for further tax under Section 7-A for declared goods. However, the Appellate Assistant Commissioner upheld the assessment. The Sales Tax Appellate Tribunal affirmed the assessment, stating that rough castings and iron scrap were distinct products, justifying the assessment under Section 7A. The Tribunal also imposed a penalty. The High Court upheld the Tribunal's decision, citing the precedent [1976] 37 STC 319(SC) [State of Tamil Nadu vs. Pyarelal Malhotra], confirming the liability on the iron scrap purchased from unregistered dealers. 2. Questions of Law Raised: The revision raised questions challenging the Tribunal's decision, including the applicability of purchase tax on iron scrap under Section 7-A, the Tribunal's disregard for apex court judgments on commercial commodities, the obligation of vendors to be registered under the Act, and the exemption criteria based on earlier taxable sales. The High Court found no grounds to set aside the Tribunal's order, emphasizing the liability on the scrap purchased through unregistered dealers. 3. Penalty Imposition Under Section 12(5)(iii): Regarding the penalty imposed under Section 12(5)(iii) of the Act, the assessee argued against the levy due to tax payment on rough castings manufacture. The Assessing Officer justified the penalty due to unreported scrap turnover. The High Court referred to [State of Tamil Nadu vs. Indian Silk Traders] and highlighted the need to assess the bona fides of the assessee before imposing penalties. Finding no deliberate submission of incorrect returns, the Court set aside the penalty imposed by the Tribunal. 4. Overall Decision: The High Court partially allowed the revision, dismissing the challenges to the tax levied under Section 7-A but canceling the penalty under Section 12(5)(iii) for the assessment year 1992-93. The Court extended this decision to related assessment years (1987-88, 1990-91, and 1989-90), dismissing the revisions except for canceling the penalty. All Tax Case Revisions were partly allowed, with no costs imposed.
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