2024 (11) TMI 1076 - HC - VAT / Sales Tax

Imposition of penalty u/s 22(5) of the TNVAT Act, 2006 - petitioner would submit that the petitioner has paid the tax immediately after the inspection for the assessment years and therefore, there was no question of any best judgment assessment involved in the present case - HELD THAT - The petitioner cannot escape from the penal consequence under Section 22(5) of the TNVAT Act, 2006 merely because the tax was paid after inspection and before the assessment order dated 29.12.2017 was passed under Section 22(5) of the TNVAT Act, 2006. The question of filing a revised return on 31.07.2016 was also not available in view of the Rule 7(9) of the TNVAT Rules, 2007. As per Rule 7(9) of the TNVAT Rules, 2007, only if a return was filed and the dealer finds any omission or error, he can file a revised return rectifying the omission or error within a period of six months from the last day of the relevant period to which the return relates. Revised return cannot be filed if the tax payable is unearthed on account of an inspection or audit or receipt of any other information or evidence by the assessing authority. The question of self assessment on the so called return filed on 31.07.2016 cannot be countenanced. The provision of Section 22(5) of the TNVAT Act, 2006 is clear. The authorities have no discretion to either drop penalty where tax has been evaded. Even if no best judgment has been made, the tax payable by the petitioner after evasion was noticed during inspection has been admitted. The fact remains that the tax was not paid in time and tax has been paid pursuant to the inspection on 15.07.2016. The return that was purportedly filed on 31.07.2016 is not a return recognized under the provisions of TNVAT Rules, 2007. It was not return in the eye of law. The decision rendered by the Hon'ble Supreme Court in the context of Section 16 of TNGST Act, 1959 which was followed by the Division Bench of this Court in Ram Sun Fabi Techs Case 2008 (11) TMI 645 - MADRAS HIGH COURT cannot be applied to the facts of these cases as the provisions are different. These Tax Case Revisions are dismissed.

Summary

Issues:
1. Dispute over penalty imposition under Section 22(5) of the TNVAT Act, 2006.
2. Validity of the impugned order by the Tamil Nadu Sales Tax Appellate Tribunal.
3. Interpretation of provisions of Tamil Nadu Value Added Tax Act, 2006 and Rules, 2007.
4. Applicability of precedents in penalty imposition cases.

Analysis:
The judgment pertains to tax case revisions against an order by the Tamil Nadu Sales Tax Appellate Tribunal concerning penalty imposition under Section 22(5) of the TNVAT Act, 2006. The petitioner, a registered assessee under the TNVAT Act, failed to file returns on time for assessment years 2015-16 and 2016-17. Following an inspection, it was discovered that out of 72 imported machineries, 30 were used internally, and 42 were sold to third parties. The petitioner belatedly filed a return and paid taxes, leading to a penalty under Section 22(5). The Appellate Commissioner initially allowed the appeals, but the Tribunal reversed this decision, prompting the petitioner's challenge.

The petitioner argued that immediate tax payment post-inspection negated best judgment assessment and unjust penalty imposition. Citing relevant case law, the petitioner contended that the impugned order should be set aside. Conversely, the respondent argued against the petitioner's claims, relying on Supreme Court and High Court decisions to support their stance.

The Court analyzed the TNVAT Act and Rules, emphasizing Rule 7(9) which restricts revised returns post-inspection or audit. It concluded that the petitioner couldn't evade penalty under Section 22(5) due to belated tax payment and non-compliant return filing. The Court differentiated the present case from past precedents, clarifying the legal obligations and consequences under the TNVAT Act. Notably, the Court referenced the Supreme Court's stance on penalty imposition under specific statutory provisions, reinforcing the strict liability framework in tax matters.

Ultimately, the Court dismissed the Tax Case Revisions, upholding the penalty imposition and emphasizing adherence to statutory provisions. The judgment underscores the significance of timely compliance and accurate tax filings, highlighting the legal repercussions of non-compliance and the limited scope for discretion in penalty assessments under tax laws.