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2018 (2) TMI 120 - HC - VAT and Sales TaxPenalty u/s 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 - Exemption towards the sales made to 100% EOU - disallowance of exemption on the ground that on the ground that tools did not fall, within the scope of the notification, issued in GO Ms.No.528 CT & RE dated 21.11.1997 - Held that - similar issue decided in the case of Appollo Saline Pharmaceuticals Versus Commercial Tax Officer (Fac) And others 2001 (10) TMI 1100 - MADRAS HIGH COURT , where it was held that The assessments for the assessment years 1993-94 and 1994-95 which were assessments made on the basis of the accounts, and not based on any other material and were not estimates, have therefore, to be regarded as assessments made under Section 12(1) to which the penal provisions of Section 12(3) are not attracted. The levy of penalty for those two assessment years is set aside - revision dismissed - decided against Revenue.
Issues:
1. Disallowance of exemption claimed by the dealer for sales made to 100% EOU. 2. Assessment of total and taxable turnover by the Assessing Authority. 3. Appeal filed by the dealer before the Appellate Deputy Commissioner. 4. Appeal filed by the State against the order of the Appellate Deputy Commissioner. 5. Tribunal's order in STA 15/2011 partly allowing the appeal. 6. Tax Case Revision filed by the State challenging the penalty levied. Issue 1: Disallowance of exemption claimed by the dealer for sales made to 100% EOU The respondent, a dealer in tools, reported a total and taxable turnover for the assessment year 2006-07. The Assessing Authority disallowed the exemption claimed for sales to 100% EOU, stating that tools did not fall under the notification issued in 1997. The Appellate Deputy Commissioner set aside the assessment on the turnover related to sales to 100% EOU, treating the goods as consumables eligible for exemption. The Tribunal partly allowed the appeal, deleting the penalty but dismissing the appeal concerning the equal addition and partially dismissing the appeal regarding the penalty. Issue 2: Assessment of total and taxable turnover by the Assessing Authority The Assessing Authority determined the total and taxable turnover based on an inspection that revealed actual suppression, leading to the addition for probable omission. The penalty was levied under Section 12(3)(b) of the TNGST Act. The Appellate Deputy Commissioner sustained the actual suppression, remanding the penalty portion. Issue 3: Appeal filed by the dealer before the Appellate Deputy Commissioner The dealer filed an appeal before the Appellate Deputy Commissioner challenging the disallowance of exemption and the addition made for probable omission. The Appellate Deputy Commissioner set aside the assessment on sales made to 100% EOU but upheld the actual suppression and remanded the penalty portion for further consideration. Issue 4: Appeal filed by the State against the order of the Appellate Deputy Commissioner The State filed a second appeal before the Tribunal against the order of the Appellate Deputy Commissioner. The Tribunal partly allowed the appeal related to sales made to 100% EOU, dismissed the appeal concerning the equal addition, and partially dismissed the appeal regarding the penalty. Issue 5: Tribunal's order in STA 15/2011 partly allowing the appeal The Tribunal, after considering the facts and judicial pronouncements, held that the Carbide Tip inserts were not consumables, thus not eligible for exemption. The Tribunal also confirmed the actual suppression but set aside the penalty, stating there was no mens rea on the dealer's part to attract penalty under Section 12(3)(b) of the TNGST Act. Issue 6: Tax Case Revision filed by the State challenging the penalty levied The State filed a Tax Case Revision challenging the penalty levied under Section 12(3)(b) of the TNGST Act. The State argued that the Tribunal erred in deleting the penalty and failing to consider the amended section with effect from 2002. The Government Advocate contended that the penalty was justifiable based on the difference between the tax assessed and tax paid as per the returns. In conclusion, the High Court dismissed the Tax Case Revision, citing relevant legal precedents and holding that the penalty was not justified based on the facts and circumstances of the case. The court upheld the Tribunal's decision to set aside the penalty and confirmed the findings related to the exemption claimed for sales made to 100% EOU and the actual suppression noted during the inspection.
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