2018 (5) TMI 1284 - HC - VAT and Sales Tax

Penalty u/s 12 (5) (iii) of TNGST Act - Whether Tribunal erred in law, in taking the view that since the appellant has recorded the turnover in his books of accounts, no penalty could be levied under Section 12 (5) (iii)? - Held that - In Appollo Saline Pharmaceuticals (P) Ltd., Vs. Commercial Tax Officer (FAC) and Others 2001 (10) TMI 1100 - MADRAS HIGH COURT , it was held that The levy of penalty without considering the bona fides of the petitioner cannot be sustained. 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. Tax Case Revision Petition is dismissed.

Issues:
1. Assessment of turnover and penalty under the Tamil Nadu Sales Tax Act.
2. Appeal against the assessment before the Appellate Assistant Commissioner.
3. Dismissal of the appeal by the Tamil Nadu Sales Tax Appellate Tribunal.
4. Challenge to the Tribunal's decision through a Tax Case Revision.
5. Interpretation of Section 12(3)(b) of the Act regarding submission of incorrect or incomplete returns.
6. Application of legal precedents regarding the levy of penalties under the Act.

Analysis:
1. The case involved the assessment of turnover and penalty under the Tamil Nadu Sales Tax Act against a dealer in various products. The Assessing Officer assessed the turnover of the dealer for different items and imposed a penalty under Section 12 (5) (iii) of the Act.

2. The dealer appealed the assessment before the Appellate Assistant Commissioner, who sustained part of the turnover but deleted certain items and the penalty. The dealer then filed an appeal before the Tamil Nadu Sales Tax Appellate Tribunal, which dismissed the appeal based on lack of evidence and non-compliance with registration requirements.

3. The State challenged the Tribunal's decision through a Tax Case Revision, arguing that the penalty was warranted due to incorrect returns and wilful wrong claims of exemption. The State contended that the Tribunal erred in law by not levying the penalty under Section 12 (5) (iii).

4. The Court analyzed Section 12(3)(b) of the Act, which deals with the submission of incorrect or incomplete returns and the levy of penalties based on the tax assessed on final assessment. Legal precedents, such as the decision in Appollo Saline Pharmaceuticals case, were cited to interpret the provisions regarding the assessment and levy of penalties.

5. Referring to the Indira Industries case, the Court emphasized that penalties under Section 12(3)(b) should only be imposed when there is specific concealment of turnover and not when the turnover is based on the accounts themselves. The Court highlighted the importance of considering the bona fides of the assessee while exercising discretion in levying penalties.

6. In light of the legal principles and precedents discussed, the Court dismissed the Tax Case Revision, stating that there was no suppression in the books of accounts and that the penalties were not justifiable based on the facts presented. The Court upheld the decisions of the lower authorities and rejected the State's challenge.

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