2009 (6) TMI 961 - HC - VAT and Sales Tax

Penalty levied under section 12(3) of the Tamil Nadu General Sales Tax Act 1959 - Tribunal deleted the penalty - Held that - In the case on hand a perusal of the order of the assessing authority dated December 29 2000 does not disclose in any part of the order that the account particulars furnished by the respondent were either incorrect or incomplete. On the other hand the assessment of tax came to be made by accepting the accounts particulars furnished by the respondent while rejecting the stand of the respondent that the business activities of the respondent do not call for levy of any tax liability. Thus we are convinced that the levy of penalty as imposed by the assessing authority and as confirmed by the first appellate authority was wholly improper and was not in conformity with the stipulations contained in section 12(3)(b) of the Act. Consequently the order of the Tribunal in having interfered with the same is perfectly justified.

Summary

Issues:
1. Validity of penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959.
2. Interpretation of provisions related to penalty for incorrect or incomplete returns.
3. Justification of the Tribunal's decision in setting aside the penalty.

Analysis:
1. The State challenged the Tribunal's decision to delete the penalty levied under section 12(3) of the Act. The State argued that the penalty was valid based on the turnover available in the books of accounts. However, the High Court disagreed with the State's contention, stating that there was no question of law to be determined. The assessment year in question was 1992-93, and the respondent, a dealer in rolling shutters, reported its turnover without any default. The penalty was imposed on the basis of best judgment assessment, which the Tribunal partly set aside.

2. The key issue revolved around the interpretation of section 12(3)(b) of the Act, which specifies penalties for incorrect or incomplete returns. The Court emphasized that the assessing authority must establish that the returns were indeed incorrect or incomplete to warrant a penalty. In this case, the assessing authority failed to demonstrate any inaccuracies in the accounts provided by the respondent. The assessment was conducted based on the respondent's furnished account particulars, leading the Court to conclude that the penalty was unjustified and not in line with the statutory requirements.

3. The Tribunal's decision to set aside the penalty was deemed appropriate by the High Court. By referencing a previous judgment, the Court reiterated that penalties under the Act should only be imposed in cases of incorrect or incomplete returns. Since the assessing authority did not prove any discrepancies in the respondent's accounts, the imposition of the penalty was deemed improper. Consequently, the High Court dismissed the revision, stating that no legal question was involved.

In conclusion, the High Court upheld the Tribunal's decision to set aside the penalty imposed under section 12(3) of the Act, emphasizing the importance of establishing the necessity for penalties based on incorrect or incomplete returns as per the statutory provisions.