2019 (11) TMI 1011 - HC - VAT and Sales Tax

Imposition of penalty u/s 27(3) of the TN VAT Act,2006 without levying any tax - excess stock found on inspection - HELD THAT - In this case, the Assessing Office has straightaway issued the notice of proposal only for imposing penalty and thereafter, passed the impugned order confirming the proposal. Thus, it is evident that the order impugned in this writ petition is an independent order levying penalty alone without assessing the tax liability. The question as to whether the independent or separate order levying only penalty can be passed or not has been considered by this Court in THE DEPUTY COMMISSIONER (C.T.) , COIMBATORE VERSUS VSR. RAMASWAMI CHETTIAR AND BROS. 1975 (8) TMI 114 - MADRAS HIGH COURT wherein it was held that the Assessing Authority has no jurisdiction to impose penalty by a separate and independent order. Petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to order imposing penalty under Section 27(3) of the TamilNadu VAT Act, 2006 for the assessment year 2016-17.

Analysis:
1. The petitioner, a dealer in granite and marbles, filed a Writ Petition challenging the penalty order dated 28.03.2018. The petitioner paid the tax amount after an inspection by Enforcement Wing officials, but a penalty was still imposed under Section 27(3) of the Act.

2. The petitioner contended that penalty cannot be levied if the tax amount is paid before the assessment notice. The respondent argued that the penalty order was comprehensive, covering tax and penalty under the Act.

3. The Court noted that the Assessing Officer should have issued a notice for both tax liability and penalty based on the inspection report. The order imposing only penalty without assessing tax liability was deemed incorrect.

4. Referring to previous judgments, the Court held that the Assessing Authority cannot impose penalty through a separate and independent order. The Respondent's argument that a new section introduced made the previous decision irrelevant was rejected.

5. The Court set aside the penalty order based on the legal principle that the assessing authority cannot levy penalty through a separate order. The Respondent failed to provide contrary decisions supporting their stance.

6. Another decision in a similar case followed the same legal reasoning, setting aside the penalty order. The Court emphasized that the assessing authority lacks jurisdiction to impose penalty independently under Section 16(2) of the Act.

7. Considering the legal precedents and the lack of contrary decisions presented by the Respondent, the Court allowed the Writ Petition, setting aside the penalty order and closing the connected miscellaneous petitions.