2018 (5) TMI 177 - HC - VAT and Sales Tax

Penalty u/s 16 (2) of the TNGST Act - suppression of facts - Held that - the Tribunal concurred with the view of the Appellate Assistant Commissioner that there was no justification in penalising the assessee, as the turnover in question was based on assessee s books of accounts and that there was no element of willful non-disclosure of turnover - reliance was placed in the case of R. Subba Reddy Versus State of Tamil Nadu 1992 (8) TMI 251 - MADRAS HIGH COURT , where it was held that Under the proviso to sub-section (5) of Section 12 of the Tamil Nadu General Sales Tax Act,1959 penalty cannot be imposed after the period of five years from the expiry of the year to which the assessment relates. The finding and reasoning of the Tribunal affirming the order of the Appellate Assistant Commissioner that there was no willfulness attributable to the dealer and therefore penalty under Section 16(2) of the Act is not leviable, does not warrant any interference. Tax case revision petition dismissed.

Issues:
1. Assessment of taxable turnover and penalty under Section 16(2) of the Act.
2. Appeal against the order of the first appellate authority.
3. Consideration of connected sale invoices and related materials.
4. Justification for penalizing the assessee.
5. Time-barred imposition of penalties.

Analysis:

Assessment of Taxable Turnover and Penalty:
The case involved the assessment of taxable turnover and penalties under Section 16(2) of the Act for multiple years. The Commercial Tax Officer had determined turnovers and penalties for different assessment years. However, the Appellate Assistant Commissioner partially allowed the appeals and deleted the penalties levied under Section 16(2) of the TNGST Act, stating that there was no willful non-disclosure of turnover.

Appeal Against First Appellate Authority:
The respondent/dealer filed a second appeal before the Tamil Nadu Sales Tax Appellate Tribunal challenging the order of the first appellate authority. The Tribunal, after considering submissions, confirmed the assessment made by the Assessing Authority. It noted the absence of material evidence such as connected sale invoices and related materials to ascertain the tax payable on sales, leading to the confirmation of the assessment.

Consideration of Sale Invoices and Related Materials:
The Tribunal highlighted that the failure to produce connected sale invoices and related materials hindered the verification of whether the amount shown in the bills was inclusive of tax. The absence of proper documentation and inability to verify the tax element led to the confirmation of the assessment by the Tribunal.

Justification for Penalizing the Assessee:
Regarding the levy of penalties, the Tribunal concurred with the Appellate Assistant Commissioner that there was no willful non-disclosure of turnover, as the turnovers were available in the assessee's books of accounts. Citing relevant case laws, the Tribunal held that the penalties imposed under Section 16(2) of the Act were illegal and time-barred, as they were imposed belatedly.

Time-Barred Imposition of Penalties:
The Tribunal emphasized that penalties imposed after the expiry of five years from the closure of the financial year of assessment were time-barred. Citing specific case laws, the Tribunal held that the imposition of penalties much after the statutory period was legally void, leading to the setting aside of the penalties by the Appellate Assistant Commissioner.

In conclusion, the High Court dismissed the Tax Case Revision Petition, upholding the Tribunal's decision regarding the assessment of taxable turnover, penalties, and the absence of willful non-disclosure, emphasizing the importance of proper documentation and timely imposition of penalties under the law.

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