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2018 (5) TMI 650 - HC - VAT and Sales TaxLevy of turnover tax - penalty u/s 12(3)(b) of TNGST Act - Held that - There is no suppression in the books of accounts and this fact has been categorically stated by the appellate authority, in his order, in which event, the assessee is entitled to invoke explanations (i) and (ii) to Section 12(3)(b) of the Act. Reliance placed in the case of Appollo Saline Pharmaceuticals (P) Ltd., Vs. Commercial Tax Officer (FAC) and Others 2001 (10) TMI 1100 - MADRAS HIGH COURT , where it was held that n 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). Petition dismissed - decided against petitioner-Revenue.
Issues Involved:
1. Competence of the Assessing Officer to levy tax under Section 3B. 2. Legality of the levy of penalty under Section 12(5)(iii) for 1990-91. 3. Legality of the levy of penalty under Section 12(5)(iii) and 12(3)(b) for 1991-92 and 1993-94. 4. Sustainability of the levy of penalty under Section 22(2) for 1991-92 and 1993-94. Issue-wise Detailed Analysis: 1. Competence of the Assessing Officer to Levy Tax under Section 3B: The appellants entered into contracts with parties outside Tamil Nadu to manufacture and supply printed wax papers and printed cellophane papers using their own materials. The Assessing Officer invoked Section 3B of the Tamil Nadu General Sales Tax Act, asserting that the works contract was executed within Tamil Nadu, thus levying tax on 70% of the contract receipts and allowing a 30% exemption for labor. The appellants contended that the conversion charges received from parties outside the state should not be taxed under Section 3B, as it was a works contract receipt under the Central Sales Tax Act, 1956. The court upheld the Assessing Officer's decision, citing the accretion of goods within Tamil Nadu and previous judgments confirming the same. 2. Legality of the Levy of Penalty under Section 12(5)(iii) for 1990-91: The court found that the levy of penalty under Section 12(5)(iii) was not correct when the assessment was made under Section 16(1) of the Act. The case was remanded back to the Assessing Officer for fresh disposal, emphasizing the need for tangible evidence of wilful non-disclosure of assessable turnover. 3. Legality of the Levy of Penalty under Section 12(5)(iii) and 12(3)(b) for 1991-92 and 1993-94: For 1991-92, the penalty under Section 12(5)(iii) was confirmed as the assessment was made under Section 12(1) by accepting the book turnover. However, for 1993-94, the penalty under Section 12(3)(b) was deemed illegal as the assessment was made under Section 12(1) by accepting the book turnover, and thus, it was deleted. 4. Sustainability of the Levy of Penalty under Section 22(2) for 1991-92 and 1993-94: The appellants had collected tax on the entire conversion charges instead of 70%, violating Section 22(2) of the Act. The court confirmed the levy of penalty under Section 22(2) for both years. Appeal by the State: The State filed an appeal disputing the deletion of the penalty under Section 12(3)(b) for 1993-94. The Tribunal dismissed the appeal, confirming the Appellate Assistant Commissioner's order that the penalty was not legal as the assessment was made under Section 12(1) by accepting the book turnover. The Tribunal referenced previous decisions and principles, including the Supreme Court's ruling in Jayaraj Nadar, which established that penalty under Section 12(3)(b) is not applicable when the assessment is based on the book turnover. Final Judgment: The High Court dismissed the Tax Case Revision Petition, upholding the Tribunal's decision that the penalty under Section 12(3)(b) was not justified as there was no suppression in the books of accounts. The substantial question of law was answered in favor of the assessee, and no costs were awarded.
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