OFFENCES AND PENALTIES UNDER TAMIL NADU VALUE ADDED TAX ACT, 2006

[Mr. M. GOVINDARAJAN]

The following provides for penalties under the Tamil Nadu Value Added Tax Act, 2006:

Collection of tax:         

Section 40 (1) provides that no person, who is not a registered dealer, shall collect any amount by way of tax or purporting to be by way of tax under the Act and no registered dealer shall make any such collection except in accordance with the provisions of the Act and the rules made there under. For this purpose the State Government or the Central Government or any dealer shall be deemed to be registered dealer.

Section 40(2) provides that if any person or registered dealer collects any amount by way of tax or purporting to be by way of tax, in contravention of the provisions of Section 40(1), whether or not any tax is due from such person or dealer under the Act in respect of the transaction in which he collects such amount, the assessing authority may, after giving such person or a dealer a reasonable opportunity of being heard, by order, in writing, impose upon him by way of penalty a sum, which shall be:

• Where the excess amount has been collected in the bona fide belief that it had to be collected, 150% of the amount collected;
• Where the excess amount has been collected willfully and knowing that it was not due to be collected, 150% of the amount collected.

No proceeding shall be commenced after a period of five years from the date of order of the assessment.   No prosecution for an offence under Section 71(2) shall be instituted in respect of the same facts on which a penalty has been imposed under Section 40(2).

Transit Pass

Section 70(1)(a) of the Act provides that when a goods vehicle carrying any goods mentioned in the VI Schedule, coming from any place outside the State and bound for any other place outside the State, passes through the State, the owner or other person in charge of such goods vehicle shall obtain a transit pass in the prescribed form and in the prescribed manner from the officer-in-charge of the first check post or barrier, after its entry into the State.

Section 70(1)(b) of the Act provides that the owner or other person in charge of the goods vehicle shall deliver the prescribed period, the transit pass to the officer-in-charge of the last check post or barrier, before the exit of the goods vehicle from the State.

Section 70(1)(c) of the Act provides that if the owner or other person in-charge of the goods vehicle fails to comply with Section 70(1)(b) it shall be deemed that the goods carried thereby have been sold within the State by the owner or person in-charge of the goods vehicle, and such owner or person in-charge of the goods vehicle shall, notwithstanding anything contained in Section 3, be jointly and severally liable to pay tax in accordance with the provisions of the Act, irrespective of the quantum of turnover and also penalty which shall be 150% of such tax. Where the goods carried by such goods vehicle are, after their entry into the State, transported outside the State by any other vehicle or conveyance, the onus of proving that the goods have actually moved out of the State, shall be on the owner or person in-charge of the goods vehicle who originally brought the goods into the State. In a case where a goods vehicle owned by a person is hired to transportation of goods by some other person, the hirer of the vehicle shall, for the purposes of this section, be deemed to be the owner of the goods vehicle.

Escaped Assessment

Section 27 provides for assessment of escaped turnover and wrong availment of input tax credit.   Section 27(3) provides that in making an assessment order the assessing authority may, if it is satisfied that the escape from the assessment is due to willful non disclosure of assessable turnover by the dealer, direct the dealer, to pay, in addition to the tax assessed, by way of penalty a sum which shall be-

• 50% of the tax due on the turnover that was willfully not disclosed if the tax due on such turnover is not more than 10% of the tax paid as per the return;
• 100% of the tax due on the turnover that was willfully not disclosed if the tax due on such turnover is not more than 10% but not less than 50% of the tax paid as per the return;
• 150% of the tax due on the assessable turnover that was willfully not disclosed, if the tax due on such turnover is more than 50% of the tax paid as per the return.

Section 27(4) provides that in addition to the tax determined as above the assessing authority shall direct the dealer to pay as penalty a sum-

• which shall be in the case of first such direction 50% of the tax due in respect of such claim; and
• which shall be in the case of second or subsequent directions, 100% of the tax due in respect of such claim.

No penalty shall be levied without giving the dealer a reasonable opportunity of showing cause against such imposition.

Failure to file returns

Section 22(5) provides that in the case of failure to submit return, in addition to the tax assessed, the Assessing Authority shall, in the same order of assessment or by a separate order, direct the dealer to pay way of penalty a sum which shall be 150% of the tax assessed. No penalty shall be imposed after the period of five years from the date of assessment order unless the dealer affected has had a reasonable opportunity of showing cause against such imposition

Price variation

Section 29 provides for assessment in case of price variation. Section 29(a) provides that if a dealer receives in any year any amount due to price variation which would have been included in his turnover for any previous year if it had been received by him in that year, he shall, within 30 days from the end of the year in which such amount is received, submit a return in the prescribed form to the assessing authority and there upon the assessing authority shall proceed to assess the tax payable on such amount. If noreturn is submitted Section 29(f) provides that in addition to the tax assessed the dealer is liable to pay a penalty at 150% of tax assessee in the same assessment order or by a separate order.   If there is willful non disclosure of assessable turnover by the dealer the dealer is liable to pay a penalty -

• 50% of the tax due on the turnover that was willfully not disclosed if the tax due on such turnover is not more than 10% of the tax paid as per the return;
• 100% of the tax due on the turnover that was willfully not disclosed if the tax due on such turnover is not more than 10% but not less than 50% of the tax paid as per the return;
• 150% of the tax due on the assessable turnover that was willfully not disclosed, if the tax due on such turnover is more than 50% of the tax paid as per the return.

Offences and penalties

                   Section 71 of the Act deals with offences and penalties.

                   Section 71(1) provides that any person who-

• being an assessee fails to submit a return;
• being a person obliged to register himself as a dealer

shall on conviction by a Magistrate shall be liable to fine which may extend to Rs.500.

Section 71(2) provides that any person who collects any amount by way of tax or purporting to by way of tax under this Act in contravention of the provisions of Section 40(1), on conviction by a Magistrate be liable to fine which may extend to Rs.1000/-

Section 71(3) provides that any person who-

• willfully submits an untrue return, or not being already an assessee fails to submit a return as required by the provisions of the Act or rules made there under; or
• fraudulently evades the payment of any tax assessed on him or any fee or other amount due from him under the Act; or
• dishonestly objects to a notice issued to him under Section 27(1);
• being a person obliged to keep and maintain true and correct amount and record under Section 64(1) fails to keep and maintain such account or record or keeps any books of account at any place in contravention of section 64(2) or moves the goods from one place to another in pursuance of a sale or purchase or otherwise in contravention of the provisions of Section 64(3) without a bill or sale or delivery note or such other documents as may be prescribed; or
• willfully acts in contravention of any of the provisions of this Act; or
• after purchasing any goods in respect of which he has made a declaration fails without reasonable excuse to make use of the goods for the declared purpose; or
• makes any statement or declaration in the application for registration, submitted to the registering authority, which he knows or has reason to believe to be false; or
• willfully acts in contravention of the undertaking given under Section 67(9)

shall on conviction by a Magistrate, be liable to a fine which may extend to Rs.2000/- and in the event of a second or subsequent conviction, to simple imprisonment which may extend to six months or a fine which extend to Rs.2000/- or both.

Section 71(4) provides that any person who prevents or obstructs from exercising his powers or discharging his duties under Section 65 or Section 66 shall, on conviction, be liable to simple imprisonment which may extend to 6 months, or a fine which extend to Rs.2000/- or both.

Section 71(5) (a) provides that any owner or other person in-charge of a boat or a goods vehicle who fails to carry with him any of the records or documents specified in Section 68 or Section 69, as the case may be, shall, on conviction, be liable to simple imprisonment which may extend to six months or fine which may extend to Rs.2000/- or both.

Section 71(5)(b) provides that the owner of the boat or the goods vehicle, if he was not in charge of the boat or the goods vehicle, at the time of the commission of an offence under Section 71(5)(a) shall also be liable to be punished with the punishment provided for in the said section unless he proves that the offence was committed without his knowledge or that he exercises all due diligence to prevent the commission of such offence.

Section 71(6) provides that if any driver or any other person in-charge of any goods vehicle or boat, refuses on demand by the officer-in-charge of the check post or barrier of the officer empowered under Section 67(2) to give the name and address or the name and address of the owner of the vehicle or boat or of consignor and consignee of the goods or gives any name and address which he knows or has reasons to believe to be false, or if the driver refuses on demand by such officer, to produce for inspection his driver’s licence, he shall, on conviction, be liable to simple imprisonment which may extend to 6 months or a fine which may extend to Rs.2000/- or both.

Section 71(7) provides that any person who makes any statement or declaration in any of the records or documents specified in Section 68 or Section 69 as the case may be, which statement or declaration he knows or has reason to believe to be false, shall, on conviction, be liable to simple imprisonment which may extend to 6 months or a fine which may extend to Rs.2000/- or both.

Section 71(8) provides that any person who is in any way knowingly concerned in any fraudulent evasion or attempt at evasion or abetment of evasion of any tax, payable in respect of the sale or purchase of any goods under the Act, shall, on conviction, be liable to simple imprisonment which may extend to 6 months or a fine which may extend to Rs.2000/- or both.

Section 71(9) provides that any person, who knowingly issues a false bill, voucher, declaration, certificate or other document with a view to support any dealer to claim exemption or rectification in rate of tax on the sale or purchase of any goods under the Act shall, on conviction, be liable to simple imprisonment which may extend to 3 months and in the event of second and subsequent conviction to rigorous imprisonment for six months.