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2014 (5) TMI 685 - HC - VAT and Sales TaxRate of Tax Suppression of turnover - Exemption - Purchase of raw hides and skins from outside the State Bogus claims - Furnishing of declaration forms - Amendment of Provisions Hearing of Proceedings - pending proceeding Interpretation of Statutes - Whether there had been any initiation of proceedings u/s 34 of the TNGST Act Levy of penalty - Submission of incorrect or incomplete return - Section 12(3)(b) of TNGST Act Held That - Judgment in State of Tamil Nadu and another V. K.Damodarasamy Naidu & Bros and another 2007 (9) TMI 542 - MADRAS HIGH COURT followed The proceedings initiated on 31.3.1998, even though served subsequently, is a pending proceeding on the files of the Joint Commissioner Given the fact that a decision was already taken and a notice had been signed by the Joint Commissioner on 31.3.1998 initiating revisional proceedings, applying the decision of this Court as to the meaning of the phrase pending , the proceedings of the Joint Commissioner are saved by the provision u/s 14 of the Amending Act 60 of 1997 - Section 14 of Act 60 of 1997 saves all actions in the present case as one falling u/s 14 of Act 60 of 1997. The mere fact that the turnover was drawn in the books of accounts, by itself, would not save the assessee from the operation of the provisions of Section 12(3)(b), which is concerned about the submission of incorrect or incomplete return - Thus going by the Explanation to Section 12(3)(b) of the Act, estimation of turnover and rejection of claim for exemption or concessional rate, which are subject to the furnishing of declaration forms, would not invite penal provisions and that actual suppressions alone would attract penal provision - Since the explanation to the said provision was inserted under Act 60 of 1997, effective only from 1.4.1998, the benefit of the same could not be extended to assessee herein - Thus, accounts maintained by the assessee is of relevance both on the aspect of the nature of transaction stated therein as well as to the turnover given therein for the purpose of understanding Section 12(3) of TNGST Act. The turnover of ₹ 49,06,107/- treated as local sales in the assessment, was considered by the Appellate Assistant Commissioner - On this, the turnover of ₹ 21,62,834/- was exempted as export turnover on the basis of the materials produced by the assessee - However, in respect of the balance of the turnover, AO pointed out that the assessee had created records that it had purchased raw hides and skins from outside the State - Thus, the Assessing Authority levied tax under TNGST Act. This Court do not find any justification to allow the Revision - However, the Joint Commissioner considered restoring the levy of penalty as given in the order, which means, the relief granted to the assessee on quantum assessment also was taken in for restoring the penalty - As far as the Revenue is concerned, the Appellate Assistant Commissioner s order, granting relief to the turnover of ₹ 36,36,259/-, was not the subject matter of revision - JC should have considered Section 12(3)(b)(i) of TNGST Act, as to the quantum of penalty payable by the assessee - In fairness to the claim of the assessee, the proper course herein would be to set aside the levy of penalty and thereby direct AO to quantify the penalty payable in respect of the turnover - Thus, AO shall re-fix the penalty in tune with the order of the Appellate Assistant Commissioner by granting relief to the assessee on the turnover of ₹ 36,36,259/-, and pass orders on the portion which was upheld by the Appellate Assistant Commissioner Decided partly in favour of Assessee.
Issues Involved:
1. Jurisdiction of the Joint Commissioner to revise the order of the Appellate Assistant Commissioner. 2. Validity of the levy of penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act. 3. Interpretation of the term "pending" in the context of the saving clause under Section 14 of Act 60 of 1997. Issue-wise Detailed Analysis: 1. Jurisdiction of the Joint Commissioner: The core issue was whether the Joint Commissioner had the jurisdiction to revise the order of the Appellate Assistant Commissioner following the amendment to Section 34 of the Tamil Nadu General Sales Tax Act by Act 60 of 1997. The amendment restricted the Joint Commissioner's revisional powers to specific sections, excluding orders passed by the Appellate Assistant Commissioner. The court examined the original and amended provisions of Section 34 and concluded that the amendment, effective from 1.4.1998, limited the Joint Commissioner's revisional powers. However, Section 14 of Act 60 of 1997 saved proceedings initiated and pending before the commencement of the amended Section 34. The court found that the Joint Commissioner had initiated proceedings on 31.3.1998, thus falling within the saving clause. Therefore, the Joint Commissioner had the jurisdiction to revise the order. 2. Validity of the Levy of Penalty: The assessee argued that the turnover was available in the books of accounts, and thus, the levy of penalty under Section 12(3)(b) was not justified. The court noted that Section 12(3)(b) mandates a penalty for submission of incorrect or incomplete returns. The mere presence of turnover in the books does not exempt the assessee from penalty if the returns are incorrect or incomplete. The court emphasized that the accounts' relevance extends to both the turnover and the nature of the transactions. Since the assessee's claim of inter-state purchases was found to be bogus, the penalty was justified. However, the court directed the Assessing Officer to re-quantify the penalty considering the relief granted by the Appellate Assistant Commissioner. 3. Interpretation of "Pending" in the Saving Clause: The court analyzed the term "pending" as used in Section 14 of Act 60 of 1997, which saved proceedings initiated and pending before the commencement of the amended Section 34. The court referred to previous judgments and dictionaries to interpret "pending" as including proceedings initiated but not necessarily completed. It held that the initiation of proceedings by the Joint Commissioner on 31.3.1998, even though served later, constituted a pending proceeding. Thus, the proceedings were validly initiated and protected under the saving clause. Conclusion: The court upheld the jurisdiction of the Joint Commissioner to revise the order of the Appellate Assistant Commissioner under the saving clause of Section 14 of Act 60 of 1997. It validated the levy of penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, emphasizing that the presence of turnover in the books does not preclude penalty if returns are incorrect or incomplete. The court directed the Assessing Officer to re-quantify the penalty considering the relief granted by the Appellate Assistant Commissioner. The Tax Case (Revision) was disposed of, with no costs awarded.
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