2022 (1) TMI 863 - HC - VAT and Sales Tax

Levy of penalty under section 12(3)(a) of the TNGST Act, 1959 - validity of assessment order - main contention of petitioner is that the Tribunal erred in restoring the levy of penalty on the premise that the returns filed by the petitioner were not available in the assessment file and therefore, no returns were filed during the assessment years in question - HELD THAT - The Tribunal before reversing the order of the first appellate authority, ought to have remanded the matter back to the assessing officer to verify, as to whether the submission of the petitioner that the returns have been filed, is factually correct. But, the Tribunal failed to do so. In such circumstances, the order passed by the third respondent / Tribunal, restoring the levy of penalty, cannot be allowed to be sustained. The matter remanded back to the assessing officer to verify whether the petitioner had filed their returns and decide the legality of levy of penalty under section 12(3)(a) of the TNGST Act, 1959, after giving reasonable opportunity of hearing to the petitioner - petition allowed by way of remand.

Summary

Issues:
Challenge to the levy of penalty under section 12(3)(a) of the TNGST Act, 1959.

Analysis:
The judgment involves four writ petitions challenging the order passed by the Tamil Nadu Sales Tax Appellate Tribunal. The petitioner, engaged in works contract, had not registered or paid taxes during certain assessment years. Following an inspection, they registered and paid taxes. The first respondent issued show cause notices, levying tax and penalty. The second respondent deleted the penalty, finding the petitioner admitted tax liability. The State appealed to the Tribunal, which reinstated the penalty, citing non-filing of returns and delayed tax remittance. The High Court found fault with the Tribunal's failure to verify return filings and remanded the matter to the assessing officer for reevaluation within twelve weeks.

The core contention was the Tribunal's restoration of the penalty based on missing returns in the assessment file. The petitioner argued for a remand instead of confirming the penalty, alleging arbitrariness and illegality in the Tribunal's decision. The High Court acknowledged the validity of this argument, emphasizing the Tribunal's oversight in not verifying the petitioner's claim of filing returns. Consequently, the Court set aside the Tribunal's order and directed the assessing officer to examine return filings and assess the penalty under section 12(3)(a) after granting a fair hearing to the petitioner within twelve weeks.

In conclusion, the High Court's judgment focused on the procedural error committed by the Tribunal in reinstating the penalty without verifying the petitioner's return filings. By remanding the matter to the assessing officer for a thorough review, the Court ensured a fair assessment of the penalty under the TNGST Act, 1959.