2019 (2) TMI 250 - HC - VAT and Sales Tax

Levy of penalty u/s 22(2) of the TNGST Act, 1959 - consequential penalty u/s 16(2) of the TNGST Act - whether there is a question of law to be decided by the Court in an appeal? - Section 38 of the TNGST Act - Held that - The mandate under Sub-section (1) of Section 38 is very clear that the jurisdiction of the revisional court is to decide whether the appellate tribunal has either decided erroneously or failed to decide any question of law. In the instant case what was collected as incidental charges or service charges was found to recoup the sale tax liability payable by the Petitioner. The onus of proof was on the Petitioner to establish that there was no excess collection of sales tax. However, the Petitioner failed to discharge the burden cast upon them rather failed to co-operate in the assessment proceedings, which is evident from the conduct in not responding to the show cause notice dated 04.01.2006. There is no error of law nor any substantial question of law arising out of consideration - appeal dismissed.

Summary

Issues:
Levy of penalty under Section 22(2) of TNGST Act and consequential penalty under Section 16(2) of TNGST Act.

Analysis:
The case involved tax case revisions challenging an order by the Tamil Nadu Sales Tax Appellate Tribunal. The substantial questions of law included issues related to the reversal of orders, misdirection in ignoring certain provisions, and the imposition of penalties under Section 22(2) of the TNGST Act. The main issue was whether the penalties imposed were justified.

The Petitioner, a registered dealer, was found to have collected tax at a higher rate than what they had paid on purchases. Despite explanations, the Petitioner failed to produce required records, leading to the assessing officer adopting a formula to determine excess tax collected. The First Appellate Authority initially allowed the appeals, but the Tribunal reversed this decision, considering the Petitioner's lack of cooperation.

The Court noted that the assessing officer's actions were justified given the Petitioner's failure to provide necessary records. The Tribunal relied on precedent to include all excess collections in calculating penalties under Section 22(2) of the TNGST Act. The Petitioner's argument against estimation under Section 22(2) was dismissed due to their non-compliance.

The Court rejected the Petitioner's plea for remand to produce records, emphasizing the limited scope of revisional court jurisdiction. Precedents were cited to support the legality of recovering unauthorised collections through penalties. The Court distinguished a Supreme Court case cited by the Petitioner, highlighting the Petitioner's failure to prove no excess tax collection and lack of cooperation during assessment proceedings.

Ultimately, the Court found no error of law or substantial question of law, leading to the dismissal of the tax case appeals without costs. The judgment upheld the penalties imposed under Section 22(2) of the TNGST Act, emphasizing the importance of compliance and cooperation in tax assessment processes.