2013 (7) TMI 154 - HC - VAT and Sales Tax

Penalty u/s 10(3) of Act I of 1959 - Whether the Tribunal is correct in concluding that the petitioner has colluded with the buyers and obtained C forms to avail the concessional rate in the absence of specific finding of the assessing officer? - Held that - As it is no doubt true that immediately on receipt of notice, the assessee paid the differential tax for the reasons best known to the assessee, but one cannot infer any knowledge on the part of the assessee that the forms used by them to gain concessional levy are only bogus forms and while confronted with the fact situation, they had reversed the claim. As pointed out by this Court, if at all there had been any notification indicating the bogus nature of the C forms used by certain assessees, motive can be attributed to the assessee for misusing his declaration to gain concessional tax rate - there is no ground for attracting the provisions under Section 10(3) of the Tamil Nadu General Sales Tax Act, quite apart from the relevance of this provision to the assessment under the Central Sales Tax Act and that the assessment herein is made only under Section 16(1)(b) of the Tamil Nadu General Sales Tax Act, for which no penalty could be levied. - Decided in favor of assessee.

Summary

Issues:
1. Correctness of concluding collusion for concessional levy.
2. Correctness of concluding genuineness of the petitioner.
3. Correctness of confirming the higher rate of tax.
4. Correctness of remanding the appeal by the Revenue.
5. Correctness of giving direction to levy penalty.

Issue 1: Correctness of concluding collusion for concessional levy.
The case involved an assessee dealing in plywood and Hardboard claiming concessional rate of tax based on 'C' forms issued by outside State dealers. However, it was later discovered that these forms were bogus. The Tribunal confirmed the higher tax rate due to the bogus forms, rejecting the assessee's appeal. The court upheld the assessment, stating that without valid 'C' forms, the assessment was rightly made.

Issue 2: Correctness of concluding genuineness of the petitioner.
The Tribunal ordered a penalty under Section 9(2)(A) of the Central Sales Tax Act and Section 10(3) of the Tamil Nadu General Sales Tax Act, citing mens rea due to knowingly furnishing bogus 'C' forms. The petitioner argued lack of knowledge about the forms' bogus nature and that no penalty should apply under Section 16(2) of the Tamil Nadu General Sales Tax Act. The court found no grounds to levy the penalty and dismissed the revisions.

Issue 3: Correctness of confirming the higher rate of tax.
The Tribunal upheld the higher tax rate, citing the bogus 'C' forms and the liability to pay a higher rate under the law. The court found no grounds to interfere with the assessment, as the forms were invalid, leading to the correct assessment.

Issue 4: Correctness of remanding the appeal by the Revenue.
The Revenue appealed for a penalty under Section 10(3) of Act I of 1959, which the Tribunal remanded despite no specific grounds raised by the Revenue. The court found the remand unjustified and set aside the order, allowing the revisions.

Issue 5: Correctness of giving direction to levy penalty.
The Tribunal directed to levy a penalty under Section 9(2)(A) of the Central Sales Tax Act and Section 10(3) of the Tamil Nadu General Sales Tax Act. The court found no justifiable grounds for the penalty and set aside the Tribunal's order, allowing the revisions.

This detailed analysis of the judgment covers all the issues involved, providing a comprehensive understanding of the legal proceedings and outcomes.