2011 (10) TMI 547 - HC - VAT and Sales Tax

Penalty under section 12(3)(b) - Whether on the facts and circumstances of the case the Appellate Tribunal is right in law in deleting the penalty under section 12(3)(b) especially when the Tribunal itself had held that there is stock variation - Held that - This is a case where the Tribunal applied its mind to set aside the penalty and it is not as if the Tribunal has entirely ignored the entire transaction. Further we are of the view that the Sales Tax Appellate Tribunal has adopted correct method to arrive at the conclusion to set aside the penalty. Therefore no substantial question of law arise for consideration for admitting the tax case revision. Accordingly we have no hesitation in rejecting the tax case revision - Decided against Revenue.

Summary

Issues:
1. Validity of modifying the appeal without giving findings.
2. Justification of modifying the appeal despite stock differences.
3. Deletion of penalty under section 12(3)(b) based on stock variation.

Issue 1: Validity of modifying the appeal without giving findings
The revision petition challenged the Sales Tax Appellate Tribunal's modification of the appeal without providing any specific findings. The assessing officer revised the assessment for the year 1993-94 due to stock variations noticed during an inspection. The Appellate Assistant Commissioner partly remanded the matter for fresh disposal. The Tribunal sustained additions to a certain extent and set aside the penalty portion due to the assessment being based on the best judgment. The Special Government Pleader argued that admitting stock variation should lead to penalty imposition. However, the Court disagreed, stating that the Tribunal applied its mind and correctly set aside the penalty. The Court found no substantial question of law to consider for admitting the tax case revision and dismissed it, concluding that no costs were to be awarded.

Issue 2: Justification of modifying the appeal despite stock differences
The Appellate Tribunal modified the appeal despite stock differences being acknowledged. The Tribunal sustained certain additions made by the assessing officer. The Special Government Pleader contended that penalty imposition should follow stock variation admission. However, the Court disagreed with this argument. The Tribunal's decision to set aside the penalty was deemed appropriate as it was not based on a concrete estimate but on a best judgment assessment. The Court held that the Tribunal's method in arriving at this conclusion was correct, leading to the rejection of the tax case revision.

Issue 3: Deletion of penalty under section 12(3)(b) based on stock variation
The deletion of the penalty under section 12(3)(b) by the Appellate Tribunal was challenged. The Tribunal set aside the penalty portion on the grounds of it being assessed based on best judgment rather than a concrete estimate. The Special Government Pleader argued that admitting stock variation should automatically result in penalty imposition. However, the Court disagreed, emphasizing that the Tribunal correctly applied its mind in setting aside the penalty. The Court found no substantial question of law warranting the admission of the tax case revision and subsequently dismissed it, without awarding any costs.