2017 (10) TMI 325 - HC - VAT and Sales Tax

Penalty u/s 27(3) of the TNVAT ACT - reassessment - Held that - it is seen that the petitioner has admitted their mistake that the purchases effected by them were not accounted for in the year 2014-15. However, their specific case is that the same is accounted for in the closing stock of the year 2014-15, as they intended to sell the stock during the assessment year 2015-16. Unfortunately, the petitioner did not produce their purchase ledger, stock register, balance sheet etc., before the Assessing Officer. The explanation that is said to be given now is by stating that the Assessing Officer did not call for these documents. The burden of proof is on the petitioner to prove that there was no suppression. One factor, which appears to be correct is that the petitioner has not availed any ITC on the alleged purchase suppression. This factor is a main factor to be noted to examine the conduct of the petitioner/dealer. The second respondent/appellate authority rightly observed that the petitioner did not produce any documents before the Assessing Officer or before the appellate authority - matter is remanded to the second respondent/appellate authority with a specific direction to the petitioner to produce all the records before the appellate authority - appeal allowed by way of remand.

Summary

Issues:
Assessment under TNVAT Act for the year 2014-15, re-assessment proposal, levy of penalty under Section 27(3) of TNVAT Act, appeal rejection by Appellate Deputy Commissioner, request for remand for fresh consideration.

Analysis:

Assessment and Re-Assessment Proposal:
The petitioner, a two-wheeler and spare parts dealer, faced assessment issues for the year 2014-15 under the TNVAT Act. The first respondent proposed to assess the petitioner to tax under Section 27 of the TNVAT Act due to unreported purchase value of ?15,83,362. The petitioner admitted the mistake due to a clerical error and explained that the purchases were included in the closing stock for the following year. The second respondent, after considering objections, upheld the assessment, citing discrepancies in reported stock values and lack of proper documentation.

Appeal and Rejection:
Aggrieved by the assessment order, the petitioner appealed to the Appellate Deputy Commissioner, who rejected the appeal and confirmed the assessment order. The petitioner then approached the High Court through a writ petition challenging the rejection of the appeal.

Court's Decision and Remand:
After hearing arguments from both sides, the Court noted the petitioner's admission of the mistake and the lack of documentary evidence provided during the assessment process. The Court acknowledged the absence of any intentional tax evasion or benefit gained from the unreported purchases. Consequently, the Court decided to remand the matter to the appellate authority for fresh consideration. The Court directed the petitioner to submit all relevant records and additional grounds of appeal within a week for a reevaluation of the case, including the issue of penalty levy. The appellate authority was instructed to conduct a thorough review and make a decision promptly in accordance with the law.

In conclusion, the High Court allowed the writ petition, set aside the previous order, and remanded the case for a reevaluation by the appellate authority with specific directions to consider all aspects, including the levy of penalty, based on the evidence and submissions provided by the petitioner.