2016 (2) TMI 1348 - HC - VAT and Sales Tax

Confirmation of the levy of penalty u/s 27(3) of TNVAT Act - main contention of assessee/petitioner is that there was no order of assessment made in the case on hand, so as to enable the Assessing Officer to come to the conclusion that there was wilful non-disclosure of turnover - Admission of suppression of facts - retraction of statements or not - HELD THAT - Under Section 27(1)(a) of the Act, where for any reason, the whole or any part of the turn over of business of a dealer has escaped assessment to tax, the Assessing Authority may within a period of five years from the date of assessment order, determine to the best of his judgment, the turnover which has escaped assessment. But, Section 27(1)(a) is made subject to the provisions of Sub-section (3) - Sub-section (3) makes it clear that if the Assessing Authority is satisfied, in making an assessment under Sub-section (1)(a) that the escape from assessment is due to wilful non-disclosure of assessable turnover by the dealer, he may impose a penalty at the rates indicated in clauses (a), (b) or (c). In the case on hand, the assessee has filed monthly returns. In the monthly returns filed, for the period from 01.10.2008 to 09.7.2010, the total quantity of purchases was indicated as 2060 MT and the total quantity of sales was indicated as 1464 MT. Therefore, on the date of the inspection, namely 09.7.2010, the assessee should have had a stock of 596 MT. But, no stock was available on the date of inspection. Therefore, the difference between the purchases and sales was taken to be suppressed sales turnover. In a statement recorded from the Accounts Officer of the petitioner company, by name Rajagopal, he had admitted to the suppression - Till date, the above statements have not been retracted. There was nothing more needed to show suppression of turnover in this case. There was no variation in the quantity of stock available and the quantity of stock arrived at on the basis of returns. As per the returns, the petitioner ought to have had a stock of 596 MT, but they had none. Lastly, it is contended by the learned counsel for the petitioner that at least the rate of penalty should be reduced. But, unfortunately, clauses (a), (b) and (c) of Sub-section (3) of Section 27 do not vest any discretion either upon the respondent or upon this Court to interfere with the rate of penalty. Therefore, the questions of law raised by the petitioner, are to be answered against him in the facts and circumstances of the case. Revision dismissed.

Summary

Issues:
Levy of penalty under Section 27(3) of the TNVAT Act based on suppressed sales turnover and wilful non-disclosure.

Analysis:
The petitioner, a dealer in iron and steel, was assessed under Section 22(2) of the TNVAT Act based on monthly returns. An inspection revealed a discrepancy in the reported sales turnover, leading to a penalty being levied under Section 27(3)(c) of the Act. The Assessing Officer imposed a penalty of Rs.5,97,907/-, which was challenged by the petitioner.

The main contention raised by the petitioner was the absence of an assessment order to establish wilful non-disclosure. The petitioner argued that without a finding of mens rea and additional evidence beyond stock variation, the penalty was unwarranted. The petitioner relied on past court decisions to support their position.

The court examined the provisions of Section 27(1)(a) and (3) of the Act. It was noted that the discrepancy in stock indicated suppressed sales turnover, supported by a statement from the petitioner's Accounts Officer admitting to the suppression. The court highlighted the lack of stock on the inspection date, reinforcing the suppressed turnover.

The court emphasized that the suppressed turnover had indeed escaped assessment, leading to the imposition of the penalty. The court also noted that the inspection by the Enforcement Wing revealed the discrepancy, indicating wilful non-disclosure. The absence of an equal time addition further strengthened the case for penalty imposition.

Distinguishing the current case from past judgments under the TNGST Act, the court highlighted the self-assessment nature of the TNVAT Act. The court noted the absence of equal time addition in the current case, rendering past judgments inapplicable.

Lastly, the court addressed the plea for a reduced penalty rate, highlighting the lack of discretion in altering penalty rates under Section 27(3). Ultimately, the court dismissed the revision, upholding the penalty imposition and denying any cost to the petitioner.

In conclusion, the court upheld the penalty under Section 27(3) of the TNVAT Act based on the suppressed sales turnover and wilful non-disclosure, emphasizing the lack of assessment order, the admission of suppression, and the absence of discretion in altering penalty rates.