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2019 (12) TMI 425 - HC - VAT and Sales TaxLevy of penalty u/s 12(5)(iii) of the T.N.G.S.T. Act - sale of REP licences by the assessee during the assessment period - Assessment Year 1992-93 - HELD THAT - The imposition of penalty or deletion thereof is essentially a question of discretion and therefore the final fact finding body i.e., the Tribunal constituted under the provisions of the TNGST Act, and unless the findings for setting aside or imposition of penalty are found to be perverse, no question of law arises for consideration for this Court in its revisional jurisdiction. Unless the ingredients for invoking the penal provisions are satisfied and there are clear findings by the assessing authority about mens rea or lack of bonafides on the part of the assessee in applying such provisions, the discretion employed by the Tribunal to delete the penalty cannot be held to be perverse. Prior to Assessment Year 1992-93, the judgment of this Court did not permit imposition of penalty in such cases, but from Assessment Year 1992-93 onwards, the judgment did not make it compulsory to impose penalty. Therefore, the argument of Revenue to that effect is misconceived. Since admittedly in the period of assessment of Assessment Year 1992-93 itself, the High Courts were seized of the controversy about the REP licences itself being treated as 'goods or not', the non disclosure of the sale transactions in the returns, even though such transactions were part of the Books of Accounts maintained in the regular course of business by the Assessee, it cannot be said that the penal provisions of Section 12(5)(iii) of the Act stood automatically attracted - Penalty not levied - petition dismissed - decided against Revenue.
Issues:
Levying penalty under Section 12(5)(iii) of the T.N.G.S.T. Act on the respondent assessee for the Assessment Year 1992-93 on the sale of REP licences. Analysis: The State filed a revision challenging the dismissal of its appeal and the setting aside of the penalty under Section 12(5)(iii) of the T.N.G.S.T. Act on the respondent assessee for the Assessment Year 1992-93. The Tribunal's decision was based on the respondent's belief that the transactions were not liable for sales tax due to confusion regarding the assessability of the transaction. The respondent argued that penalty is not attracted when there is no intention to suppress turnover, especially when there was confusion regarding the tax liability on REP licences during the assessment year. The High Court affirmed the Tribunal's decision, stating that the confusion surrounding the tax liability on REP licences during the relevant period justified setting aside the penalty. In a separate judgment, the Madras High Court clarified the taxability of REP licences as 'goods' subject to sales tax laws. The High Court held that penalties under Section 12 or 16 of the T.N.G.S.T. Act could be imposed by assessing authorities from Assessment Year 1992-93 onwards. The State argued that since the assessee did not disclose the sale of REP licences in its taxable turnover for the assessment year 1992-93, the penalty under Section 12(5)(iii) should apply. However, the High Court emphasized that the imposition or deletion of penalties is a matter of discretion for the Tribunal, and unless the findings are perverse, no legal question arises for the Court to consider in its revisional jurisdiction. The High Court noted that the confusion regarding the taxability of REP licences during the relevant period did not automatically attract the penal provisions of Section 12(5)(iii). The Court highlighted that prior to Assessment Year 1992-93, penalties were not imposed in such cases, and the discretion to impose penalties for that year was not mandatory. The Court concluded that the Tribunal's decision to delete the penalty was not perverse, as there was no clear evidence of mens rea or lack of bonafides on the part of the assessee. Therefore, the High Court dismissed the State's petition, stating that the reasons for setting aside the penalty did not raise any legal questions, and there was no merit in the appeal.
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