2017 (7) TMI 1253 - HC - VAT and Sales Tax

Levy of penalty - TNVAT Act - penalty levied on the ground that the petitioner did not declare the income in the monthly returns and did not pay the taxes, and paid the same only during the course of inspection - Held that - In the instant case, the entire turnover was culled out from the books of accounts maintained by the petitioner, and tax was remitted only during the course of inspection. There is no specific finding recorded by the Authority that, there was deliberate intention on the part of the petitioner to evade payment of tax, or, to suppress the turnover. Hence, the imposition of penalty has to deleted - petition allowed.

Summary

Issues:
Challenge to orders of assessment confirming penalty for non-declaration of income and delayed tax payment under TNVAT Act, 2006.

Analysis:
The petitioner, a registered dealer, contested penalty imposition for not declaring income in monthly returns and late tax payment. Legal precedents were cited, including the case of (State of Tamil Nadu Vs. Afra Car Jewels) and (The State of Tamil Nadu Vs. Tvl. Golden Holmes Pvt. Ltd.). The court emphasized that the absence of an assessment return and the timing of inspection play crucial roles in determining penalty applicability.

In the case of Afra Car Jewels, it was noted that without an assessment return, no escaped turnover existed, and inspection timing was pivotal. The Tribunal's decision was upheld due to the lack of a formal assessment under section 22(2) of the Act. Similarly, in Tvl. Golden Holmes Pvt. Ltd., the court highlighted that penalty could be levied post revision of assessment for previously untaxed turnover. The court noted the absence of willful suppression of expenditure, emphasizing the initial oversight by the Assessing Officer.

Moreover, a previous judgment by the same judge in (M/s.Saravana Super Market Vs. The Commercial Tax Officer) held that mere non-disclosure does not automatically warrant a penalty. In the present case, the petitioner's turnover was extracted from their maintained accounts, with tax payment made during inspection. Notably, no deliberate intention to evade tax or suppress turnover was established. Consequently, the court ruled in favor of the petitioner, quashing the impugned orders and dismissing the penalty imposition.

In conclusion, the Writ Petitions were allowed, and the penalties were revoked due to the lack of evidence supporting intentional tax evasion or turnover suppression by the petitioner. The judgment highlighted the significance of formal assessments, inspection timing, and willful intent in determining penalty applicability under the TNVAT Act, 2006.