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2018 (4) TMI 1297 - HC - VAT and Sales TaxRevision of assessment - penalty for the wrong availment of ITC - Section 12(3)(b) of the TNGST Act, 1959 - Held that - In Appollo Saline Pharmaceuticals (P) Ltd., Vs. Commercial Tax Officer (FAC) and Others, 2001 (10) TMI 1100 - MADRAS HIGH COURT held that The legislative intention therefore, except during the period December 3, 1979 to May 27, 1993 and on and after April 1, 1996 must be taken to be to, permit the levy of penalty only in case where the assessment is a best judgment assessment made on an estimate and not by relying solely on the accounts furnished by the assessee in the prescribed return. On and after April 1, 1996 an explanation has been added below Section 12 (3) which requires the turnover relating to the tax assessed on the basis of the accounts of the assessee, to be disregarded, while determining the turnover on which the penalty is to be levied under Section 12 (3). Penalty set aside - Tax Case Revision Petition is dismissed.
Issues Involved:
1. Justifiability of turnovers sustained by the Appellate Assistant Commissioner. 2. Reasonableness of penalties levied under Section 12(3)(b) of the TNGST Act, 1959. Issue-wise Detailed Analysis: 1. Justifiability of Turnovers Sustained by the Appellate Assistant Commissioner: The dispute pertained to the turnovers of ?18,10,200/- for the year 1997-98 and ?1,02,58,177/- for the year 1995-96, which were sustained by the Appellate Assistant Commissioner. The Assessing Officer had estimated these turnovers due to the non-production of Form XX declarations and treated the transactions as sales omissions. The Tribunal, however, found that the transactions mentioned in the Form XX declarations were accounted for in the books of accounts and supported by corresponding invoices. The Tribunal noted that the dealers had lodged a police complaint for the loss of Form XXIV register and maintained a movement register for recording the movement of goods, which was verified and found to be accurate. Consequently, the Tribunal held that the estimation made by the Assessing Officer was not sustainable and ordered the deletion of the turnovers from the assessment. 2. Reasonableness of Penalties Levied under Section 12(3)(b) of the TNGST Act, 1959: The penalties in question were ?2,35,950/-, ?17,23,703/-, and ?6,48,708/- for the respective assessment years. The Tribunal observed that the pre-export and export sales figures were available in the books of accounts but were rejected by the lower authorities due to the lack of supporting documents. The Tribunal referenced the Supreme Court judgment in Tvl. S.G. Jayaraj Nadar and Sons (28 STC 700), which held that penalties under Section 12(3)(b) could only be levied if there was proven suppression or concealment of turnover. Since no such suppression was established by the department, the Tribunal found the penalties to be illegal and ordered their deletion. Arguments by the Petitioner (State): The State contended that the Tribunal failed to consider that the Form XX declarations were not accounted for in the dealers' books and that the estimation of transactions for the missing forms was justified. The petitioner argued that the Tribunal did not follow the precedent set by the STAT(MB), Chennai, and other judicial forums that upheld similar estimations. Additionally, the petitioner asserted that the levy of penalty under Section 12(3)(b) was automatic and warranted due to the filing of incorrect or incomplete returns by the dealers. Tribunal's Findings and Legal Precedents: The Tribunal framed two points for consideration: the justifiability of the turnovers and the reasonableness of the penalties. It discussed the relevant facts, analyzed the evidence, and followed the Supreme Court's judgment in Tvl. S.G. Jayaraj Nadar and Sons. The Tribunal noted that Section 12(3)(b) of the TNGST Act allows for the levy of penalties only when there is proven suppression or concealment of turnover. The Tribunal also referenced the case of Appollo Saline Pharmaceuticals (P) Ltd. vs. Commercial Tax Officer (125 STC 505), which held that penalties could not be levied if the assessment was based on the accounts turnover without any specific concealment. Furthermore, the Tribunal cited the case of Indira Industries vs. State of Tamil Nadu (69 VST 139), which reiterated that penalties under Section 12(3)(b) were not justifiable when the turnover assessed was drawn from the books of accounts without any reference to specific concealment. Conclusion: The Tribunal concluded that the estimation of turnovers for the missing Form XX declarations was not sustainable and ordered their deletion. It also found the penalties levied under Section 12(3)(b) to be illegal due to the lack of proven suppression or concealment of turnover. Consequently, the Tax Case Revision Petition filed by the State was dismissed.
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