2018 (10) TMI 1318 - HC - VAT and Sales Tax

Levy of penalty - entry tax paid was mistakenly credited by the respondent to the previous assessment year of the petitioner TNGST 2003-04 and the respondent in his final assessment order in proceedings TNGST 5721409/03-04, dated 26.05.2009, has refunded the said amount through Form C - Held that - It is an accepted fact that the mistake was committed by the respondent in crediting the entry tax in the assessment year 2003-04 instead of 2004-05. One cannot expect to remember in 2009 that the tax amount was not paid for 2004-05, as the mistake had crept in by the act of the respondent themselves and therefore, in my considered opinion, the respondent cannot seek any penalty for the assessment year 2004-05 even if the respondent found that there was arrears tax for the assessment year 2004-05. Penalty set aside - petition allowed.

Summary

Issues:
1. Incorrect crediting of entry tax for the assessment year 2003-04 instead of 2004-05.
2. Refund of excess amount and adjustment to sister concern's account.
3. Imposition of tax and penalty for assessment year 2004-05.
4. Petitioner's request to set aside the impugned order.
5. Consideration of penalty imposition due to respondent's mistake.

Issue 1: Incorrect Crediting of Entry Tax
The petitioner filed a writ petition seeking a Writ of Certiorari to challenge the final assessment proceedings by the respondent, where entry tax for the assessment year 2004-05 was mistakenly credited to the previous year. The respondent refunded the excess amount through Form 'C' notice, but later issued an assessment order for the assessment year 2004-05, demanding tax and penalty.

Issue 2: Refund and Adjustment
The petitioner argued that the respondent mistakenly refunded the excess amount to the petitioner, which was then adjusted to the petitioner's sister concern's account for the assessment years 2009-10. Despite the adjustment, the respondent raised a demand for tax and penalty for the assessment year 2004-05, causing surprise to the petitioner.

Issue 3: Imposition of Tax and Penalty
The petitioner contended that the amount wrongly credited for the assessment year 2003-04 was not transferred to the CST account for 2004-05, leading to arrears of tax. The respondent allowed the excess amount to be adjusted to the sister concern, resulting in a balance of tax and penalty imposed on the petitioner for the assessment year 2004-05.

Issue 4: Petitioner's Request
The petitioner requested to set aside the impugned order, highlighting the irregularity in the respondent's actions and the mistaken refund and adjustment of the excess amount. The petitioner had already paid the amount for the correct assessment year but faced penalties due to the respondent's error.

Issue 5: Penalty Imposition
The Court acknowledged the mistake made by the respondent in crediting the entry tax to the wrong assessment year. It was deemed unfair to penalize the petitioner for non-payment of tax in the correct year when the mistake was a result of the respondent's error. Consequently, the Court quashed the penalty imposed for the assessment year 2004-05, allowing the writ petition in part and closing the connected miscellaneous petition without costs.