2017 (9) TMI 1048 - HC - VAT and Sales Tax

Penalty u/s 27(3) of TNVAT Act, 2006 - deemed assessment - while dealing with penalty, the respondent has pointed out that the petitioner is a registered dealer only with effect from November, 2013. If the petitioner was not a registered dealer before November, 2013, then, obviously, the petitioner could not have been deemed to have been assessed under Section 22 of TNVAT Act, 2006, prior to the said period - whether the respondent was justified in imposing penalty @ 150% of the tax due, on the petitioner? Held that - to impose penalty, it would be sufficient to merely mention that there was wilful non-disclosure on the part of the petitioner and that, but for audit, the matter would not have come to light. What is required to be examined is whether the conduct of the assessee was wilful - In the case on hand, except alleging that there has been wilful non-disclosure of assessable turnover, there is nothing on record to show that the petitioner had deliberately acted with an intention to avoid payment of tax. In fact, all the materials have been gathered from the monthly returns filed by the petitioner and there is no other allegation to show that the petitioner had wilfully suppressed the turnover or refused to pay tax an intentionally avoided payment of tax. In such circumstances, the question of levy of penalty on the petitioner for the assessment years 2012-2013 & 2015-2016 does not arise - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge of assessment orders for levy of penalty under Section 27(3) of Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) for specific assessment years.

Analysis:
1. The petitioner, a Civil Works Contractor and Flat Promoter, contested the penalty orders for the assessment years 2012-2013, 2013-2014, 2014-2015, and 2015-2016 under TNVAT Act. The petitioner accepted the tax liability for 2013-2014 and 2014-2015 but disputed the penalty imposition for other years.

2. The High Court identified an error in the assessment order for 2012-2013 where the respondent mistakenly treated the petitioner as a registered dealer from November 2013, impacting the penalty assessment. The Court highlighted the need to assess whether the respondent was justified in imposing a penalty of 150% of the tax due on the petitioner for the relevant years.

3. Referring to legal precedents, the Court emphasized that penalty under Section 27(3) of TNVAT Act requires a finding of wilful non-disclosure of assessable turnover by the dealer. The Court cited the importance of proving deliberate intent to evade tax obligations for penalty imposition, as outlined in various judicial decisions.

4. In a specific case reference, the Court reiterated the necessity of a clear finding by the Assessing Officer regarding wilful non-disclosure of turnover as a prerequisite for penalty imposition under TNVAT Act. The Court stressed the requirement for a specific determination of wilful non-disclosure to justify penalty charges.

5. The Court found no evidence to support the claim of deliberate intent by the petitioner to avoid tax payments. It noted that all relevant information was sourced from the petitioner's filed returns, without any indication of intentional suppression or evasion. Consequently, the Court ruled in favor of the petitioner, setting aside the penalty orders for the disputed assessment years.

6. Ultimately, the writ petitions were allowed, and the impugned penalty orders for the assessment years 2012-2013 and 2015-2016 were overturned, with no costs imposed. The judgment emphasized the necessity of proving wilful non-disclosure and deliberate intent for penalty imposition under the TNVAT Act, ensuring fair and justified application of tax penalties.