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2018 (4) TMI 1299 - HC - VAT and Sales TaxRevision of assessment - penalty for the wrong availment of ITC - Section 12(3)(b) of the TNGST Act, 1959 - Held that - In Appollo Saline Pharmaceuticals (P) Ltd., Vs. Commercial Tax Officer (FAC) and Others, 2001 (10) TMI 1100 - MADRAS HIGH COURT held that The legislative intention therefore, except during the period December 3, 1979 to May 27, 1993 and on and after April 1, 1996 must be taken to be to, permit the levy of penalty only in case where the assessment is a best judgment assessment made on an estimate and not by relying solely on the accounts furnished by the assessee in the prescribed return. On and after April 1, 1996 an explanation has been added below Section 12 (3) which requires the turnover relating to the tax assessed on the basis of the accounts of the assessee, to be disregarded, while determining the turnover on which the penalty is to be levied under Section 12 (3). Penalty set aside - Tax Case Revision Petition is dismissed.
Issues Involved:
1. Whether die development charges collected by the dealer should be included in the taxable turnover. 2. Whether the penalty levied under Section 12(3) of the Tamil Nadu General Sales Tax Act was justified. Detailed Analysis: 1. Inclusion of Die Development Charges in Taxable Turnover: The main issue in the case was whether die development charges collected by the dealer should be included in the taxable turnover. The dealer argued that the charges were for engineering and development skills and not for the manufacture of dies, which were retained by the dealer and not transferred to the customer. The Tribunal examined the records and found that the die development charges were related to the cost of engineering and development skills, and no transfer of property was involved. The Tribunal referred to Section 2(r) of the Tamil Nadu General Sales Tax Act, which defines turnover to include any sums charged for anything done by the dealer in respect of goods sold at the time of or before the delivery thereof. The Tribunal concluded that the die development charges were pre-sale expenses and should be included in the taxable turnover. The Tribunal also noted that the relief given by the excise duty was not relevant to the case under the Tamil Nadu General Sales Tax Act. Consequently, the Tribunal restored the turnovers deleted by the Appellate Assistant Commissioner. 2. Justification of Penalty under Section 12(3): The second issue was whether the penalty levied under Section 12(3) of the Tamil Nadu General Sales Tax Act was justified. The Tribunal noted that the turnover was available in the books of accounts and that the dealer had a bona fide belief that it was not taxable. The Tribunal referred to the decision in Appollo Saline Pharmaceuticals (P) Ltd. v. Commercial Tax Officer and Others, where it was held that penalty could not be levied if the turnover was available in the books of accounts and there was no suppression. The Tribunal also considered the decision in Indira Industries v. State of Tamil Nadu, which stated that penalty under Section 12(3)(b) could not be levied if the turnover was drawn from the books of accounts and there was no specific concealment. The Tribunal confirmed the deletion of the penalty by the Appellate Assistant Commissioner, as the turnover was available in the books of accounts and there was no deliberate and willful non-disclosure. Conclusion: The High Court upheld the Tribunal's decision that die development charges should be included in the taxable turnover and that the penalty under Section 12(3) was not justified due to the availability of the turnover in the books of accounts and the absence of suppression. The Tax Case Revision Petition was dismissed, and the substantial question of law was answered in favor of the assessee.
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