2019 (6) TMI 808 - HC - VAT and Sales Tax

Deemed assessment under Section 22(2) of TNVAT Act - Levy of penalty u/s 27(3) of TNVAT Act - HELD THAT - It follows as an inevitable sequitur that the impugned assessment orders in each of the writ petitions levying 150% penalty under Section 27(3) under TNVAT Act deserve to be set aside. Matters are remanded back to the third respondent for fresh consideration for redoing the assessment - petition allowed by way of remand.

Summary

Issues:
1. Assessment under Tamil Nadu Value Added Tax Act, 2006 for two separate assessment years.
2. Levying of penalty under Section 27(3) of TNVAT Act.
3. Application of the principle established in Saravana Super Market's case to the present case.

Analysis:

1. Assessment under Tamil Nadu Value Added Tax Act, 2006:
The case involved two writ petitions concerning assessments under the Tamil Nadu Value Added Tax Act, 2006 for different assessment years. The petitioner, engaged in construction business, had been filing monthly returns without delay or default, and paying taxes promptly. Following an inspection by Enforcement Wing Officers, discrepancies were identified, and the petitioner paid the additional tax in full. Subsequently, assessment orders were issued, levying penalties under Section 27(3) of the TNVAT Act, amounting to 150% of the tax payable. The facts of the case were common, except for the specific assessment years in question.

2. Levying of Penalty under Section 27(3) of TNVAT Act:
The crux of the issue revolved around the imposition of penalties under Section 27(3) of the TNVAT Act. The petitioner argued that based on the precedent set by the Saravana Super Market case, where it was established that penalty should be levied only in cases of willful non-disclosure, the penalties imposed in the present case were unwarranted. The court noted the petitioner's compliance with tax payment even before the discrepancies were formally addressed, indicating a lack of willful non-disclosure. Relying on the Saravana Super Market case, the court found that the penalties levied were not justified and ordered a fresh consideration of the assessments.

3. Application of Saravana Super Market's Principle:
The judgment extensively referenced the Saravana Super Market case, emphasizing that the precedent established in that case had legal sanctity and was binding. The court reiterated the principles laid down in the Saravana Super Market case, highlighting the importance of willful non-disclosure for the imposition of penalties under the TNVAT Act. Based on the legal quietus given to the Saravana Super Market case and its applicability to the present situation, the court set aside the impugned assessment orders and remanded the matters for fresh consideration in line with the principles outlined in the Saravana Super Market case. The writ petitions were allowed, and no costs were imposed, bringing closure to the connected miscellaneous petitions.

In conclusion, the judgment addressed the issues of assessment under the TNVAT Act, the imposition of penalties, and the application of the Saravana Super Market case's principles, ultimately leading to the setting aside of the impugned assessment orders and a direction for fresh consideration based on established legal precedents.