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2020 (3) TMI 449 - HC - VAT and Sales TaxPrinciples of Natural Justice - Restoration of the penalty under Section 12(3)(a) of TNGST Act - ex-parte order - HELD THAT - The findings of the Assessing Authority in the impugned assessment order itself states that, the Assessee has filed the return. However, without discussing the effect thereof, the assessing authority has imposed the penalty of ₹ 1,97,534/- under Section 12(3)(a) of the Act. The learned Tribunal has erred in restoring the penalty, that too by an exparte order. The contingency in which the penalty under Section 12(3)(a) of the Act can be imposed is if an Assessee does not file any return, and it does not talk whether any return is being filed in pursuance of any inspection or otherwise. The fact that the Assessee was not previously registered and later on got registered upon inspection or survey by the Department is not relevant for the purpose of Section 12(3)(a) of the Act - Since the fact that the Assessee got himself registered and filed the return and paid the due tax thereon is not disputed, it is sufficient to set aside the penalty in question. The Tribunal has erred in restoring the penalty in the impugned order - Petition allowed - decided in favor of assessee.
Issues:
1. Imposition of penalty under Section 12(3)(a) of the Sales Tax Appellate Tribunal. 2. Discrepancy in penalty imposition between the first appellate authority and the Tribunal. 3. Justification of penalty restoration by the Tribunal. 4. Legal interpretation of the conditions for penalty imposition under Section 12(3)(a) of the Act. Issue 1: Imposition of penalty under Section 12(3)(a) of the Sales Tax Appellate Tribunal The Assessee challenged the restoration of the penalty under Section 12(3)(a) of the Sales Tax Appellate Tribunal by an exparte order dated 01.08.2006. The Assessee contended that since they had filed the return and paid the due tax, the condition for imposing the penalty under Section 12(3)(a) was not met. The assessing authority had imposed the penalty without discussing the effect of the Assessee filing the return, leading to the initial penalty imposition. Issue 2: Discrepancy in penalty imposition between the first appellate authority and the Tribunal The first appellate authority had initially deleted the penalty imposed under Section 12(3)(a) of the Act, stating that the Assessee had filed monthly returns before the final assessment and paid the taxes due, thus no penalty was justifiable. However, the Tribunal restored the penalty, emphasizing that the Assessee's registration and filing of returns post-inspection did not absolve them of penalty liability. The Tribunal found the first appellate authority's decision incorrect and reinstated the penalty, disagreeing with the interpretation of compliance with the Act's provisions. Issue 3: Justification of penalty restoration by the Tribunal The Tribunal justified the restoration of the penalty by highlighting that the Assessee's registration and filing of returns post-inspection did not amount to voluntary compliance with the Act's provisions. The Tribunal held that the penalty under Section 12(3)(a) was warranted as the Assessee had not voluntarily filed returns or paid tax before the inspection. The Tribunal concluded that the penalty was correctly levied by the Assessing Authority and reinstated the penalty amount. Issue 4: Legal interpretation of the conditions for penalty imposition under Section 12(3)(a) of the Act The High Court analyzed the legal interpretation of Section 12(3)(a) of the Act and emphasized that the Assessee's registration and filing of returns, post-inspection or survey by the Department, did not absolve them of penalty liability. The Court held that the Act did not differentiate between filing returns voluntarily or post-inspection for the purpose of imposing penalties. Since the Assessee had registered, filed returns, and paid due taxes, the Court found the penalty restoration by the Tribunal erroneous and set it aside, allowing the writ petition. In conclusion, the High Court allowed the writ petition, setting aside the restoration of the penalty under Section 12(3)(a) of the Act by the Tribunal, emphasizing that the Assessee's compliance with registration, return filing, and tax payment post-inspection was sufficient to negate the penalty imposition.
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