2018 (11) TMI 1838 - HC - VAT and Sales Tax

Levy of penalty without properly considering the provisions of Section 27(3)(c) of the Tamil Nadu Value Added Tax Act, 2006 - no tax due at all on the turnover estimated as sales suppressions at the time of passing the revised order - HELD THAT - As per the section contemplates levy of penalty only on the tax due on the turnover that was willfully not disclosed. Admittedly, in the instant case, the dealer had paid the tax at the time of inspection, which was done in the business premises of the dealer on 09.3.2011. The revision of assessment took place much after that and was concluded by the revised order dated 14.8.2012. Since the dealer paid tax even much prior to initiation of revision proceedings, the question would be as to whether the dealer can be directed to pay penalty under Section 27(3) of the Act - In the instant case, the dealer paid the entire tax much prior to the issuance of the revision notice i.e even at the time of inspection. The dealer, having paid the tax much prior to initiation of revision proceedings, cannot be mulcted with penalty - revision allowed.

Summary

Issues:
- Revision against order passed by Tamil Nadu Sales Tax Appellate Tribunal
- Interpretation of Section 27(3)(c) of the Tamil Nadu Value Added Tax Act, 2006
- Consideration of penalty levy in cases of willful non-disclosure of assessable turnover
- Precedent from the Tamil Nadu General Sales Tax Act, 1959 regarding penalty levy when tax has been paid prior to notice issuance

Analysis:
The judgment involves a tax case revision filed by the petitioner against an order passed by the Tamil Nadu Sales Tax Appellate Tribunal for the assessment year 2009-10 under Section 60 of the Tamil Nadu Value Added Tax Act, 2006. The petitioner raised substantial questions of law regarding the levy of penalty under Section 27(3)(c) of the Act, emphasizing that the tax due on the turnover was paid before the completion of the assessment. The main issue revolved around whether the Tribunal correctly confirmed the penalty without considering the specific provisions of the Act.

During the hearing, the petitioner's counsel and the Additional Government Pleader presented their arguments. The court noted that the dealer had indeed paid the tax at the time of inspection before the revision of assessment was concluded. The court analyzed the provisions of Section 27(3) of the Act, which allows for the imposition of penalty in cases of willful non-disclosure of assessable turnover. However, it was crucial to determine whether the penalty could be imposed when the tax had already been paid by the dealer before the revision proceedings.

In a significant reference to a precedent under the Tamil Nadu General Sales Tax Act, 1959, the court highlighted a similar provision regarding penalty levy. The court cited a specific case where it was held that no penalty could be levied if the tax had been paid even before the notice was issued. Despite the Tribunal's misinterpretation of this precedent, the court emphasized that the ratio laid down in the earlier decision should have been considered. Ultimately, the court concluded that since the dealer had paid the tax well before the initiation of revision proceedings, imposing a penalty would be unjustified.

As a result, the court allowed the tax case revision, answered the substantial question of law in favor of the dealer, and deleted the penalty that had been levied. The judgment emphasized that the penalty could not be imposed when the tax due on the turnover had already been paid before the revision proceedings.