2022 (11) TMI 495 - HC - VAT and Sales Tax

Imposition of penalty under Section 12(5)(iii) of Tamil Nadu General Sales Tax Act, 1959 - inclusion of cylinder holding charges and delivery charges in the taxable turnover - It was the specific case of the petitioner that both these amounts were not liable to be included in the taxable turnover and therefore, the petitioner and the department were in dispute for the assessment years 1987-88, 1988-89, 1990-91, 1991-92, 1992-93 and 1994-95. HELD THAT - The decision in the case of State of Tamil Nadu V. Indian Silk Traders 1991 (10) TMI 302 - MADRAS HIGH COURT , followed where it was held that Since a finding on this crucial aspect is necessary to find out whether penalty can be levied under section 12(3) or 12(5) of the Act, we are constrained to remand the case back to the assessing authority to render a finding on this aspect as to whether the assessment is based on the books of accounts or de hors the books of accounts. Though the views expressed in State of Tamil Nadu V. Indian Silk Traders, 1991 (10) TMI 302 - MADRAS HIGH COURT are fraught with contradictions and require for a re-consideration, we are refraining from taking a different view, as the view of this Court in the aforesaid case was followed by this Court in State of Tamil Nadu vs. Periyar District Cooperative Milk Producers United Ltd. 1992 (4) TMI 236 - MADRAS HIGH COURT and State of Tamil Nadu vs. Papco Offset Printing Works 1998 (1) TMI 508 - MADRAS HIGH COURT . Petition allowed.

Summary

Issues:
1. Imposition of penalty under Section 12(5)(iii) of TNGST Act, 1959.
2. Inclusion of cylinder holding charges and delivery charges in taxable turnover.

Imposition of Penalty under Section 12(5)(iii) of TNGST Act, 1959:
The writ petition challenged the final order of the Sales Tax Appellate Tribunal regarding the imposition of penalty under Section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959. The Tribunal partly allowed the appeal, reducing the penalty imposed. The relevant provision, Section 12(5)(iii), allows for the imposition of a penalty not less than fifty per cent but not more than one hundred and fifty per cent of the difference in tax payable based on the turnover disclosed in the return and determined by the assessing authority. The Tribunal's decision was based on the assessment officer's penalty imposition of Rs.1,04,888 under this section for the assessment year 1991-92. The Appellate Assistant Commissioner had initially deleted the penalty, leading to a dispute between the State and the respondent. Ultimately, the Tribunal reduced the penalty to 50% of the tax due, considering the incorrect/incomplete return filed by the assessee. The petitioner argued against the penalty imposition, citing relevant case law and judgments.

Inclusion of Cylinder Holding Charges and Delivery Charges in Taxable Turnover:
The petitioner, engaged in manufacturing goods, disputed the inclusion of cylinder holding charges and delivery charges in the taxable turnover for various assessment years. The dispute arose over whether these charges were liable to be included in the turnover. The issue was recently addressed in a common order where the Division Bench upheld the taxation of cylinder delivery charges and handling/rental charges. The petitioner relied on a previous decision of the Division Bench and the Supreme Court's ruling in Cement Marketing Co. Of India Ltd. V. Assistant Commissioner of Sales Tax [1980] 45 STC 197 to contest the penalty imposition under Section 12(5)(iii) of the TNGST Act. The petitioner argued that the penalty, even to the extent of 50%, could not be justified based on the existing legal precedents. The Additional Government Pleader defended the Tribunal's decision, asserting that the penalty was rightly upheld, albeit restricted to 50% of the difference in taxable turnover and the turnover disclosed in the returns.

The High Court, after considering the arguments presented by both parties, refrained from deviating from the existing precedents, acknowledging the contradictions in previous judgments but opting not to take a different stance. The Court highlighted that the issue could be revisited in the future. Consequently, the writ petition was allowed, and no costs were imposed. The Court left the matter open for future consideration in an appropriate case.