2022 (3) TMI 1312 - HC - VAT and Sales Tax

Validity of reassessment order - actual suppression of turnover - levy of penalty under Section 16(2) of TNGST Act - HELD THAT - Admittedly, the actual sales suppression was arrived at by the third respondent only after an inspection was conducted in the business premises of the petitioner. The records so collected during such inspection has prompted the third respondent to arrive at actual sales suppression by means of a revised assessment order. Thus, if an inspection is not conducted in the business premises of the petitioner, the sales suppression could not have come to light. In such event, the third respondent is wholly justified in imposing double the sale suppressed amount in the revised assessment proceedings together with 150% of penalty. The appellate authority as well as the Tribunal have also dealt with this aspect and refused to accede to the plea of the petitioner. This Court is of the view that the order, which is impugned in this writ petition, is not required to be interfered with. However, taking note of the fact that the petitioner had already paid the entire disputed tax amount as well as a portion of the penalty amount to the tune of ₹ 13,651/-, this Court is inclined to reduce the balance amount payable by the petitioner towards penalty from 150% to 50% - Petition disposed off.

Summary

Issues:
1. Correctness of the assessment order dated 15.12.2005 under TNGST Act and CST Act.
2. Validity of the revised assessment order dated 31.10.2002.
3. Appeal process and dismissal of appeals.
4. Justification of the sales suppression amount and penalty.
5. Grounds for interference by the High Court.

Analysis:
1. The petitioner challenged the correctness of the assessment order dated 15.12.2005, where the petitioner's reported turnover was accepted initially. However, a revised assessment order dated 31.10.2002 was passed by the second respondent based on incriminating materials recovered during an inspection, resulting in a higher taxable turnover and penalty under TNGST Act and CST Act.

2. The petitioner appealed the revised assessment order, but the appeals were dismissed by the Appellate Assistant Commissioner and the first respondent. The petitioner then filed a writ petition before the High Court questioning the orders of the lower authorities.

3. The petitioner argued that the assessing authority and appellate authority did not consider the grounds raised properly. They contended that the inspection leading to the revised assessment occurred after the original assessment was completed, and proportionate relief was not given under the CST Act. The petitioner sought a reduction in the penalty amount, having already paid the disputed tax and part of the penalty.

4. The Government Advocate for the second respondent defended the sales suppression amount and penalty, stating that they were justified based on the incriminating materials recovered during the inspection. The authorities held that the actual suppression was uncovered only after the inspection and that the petitioner failed to provide evidence supporting their claims.

5. The High Court upheld most of the Tribunal's order, noting that the sales suppression came to light only after the inspection. The Court found the imposition of double the suppressed amount and 150% penalty justified. However, considering the petitioner had paid the disputed tax and part of the penalty, the Court reduced the remaining penalty amount from 150% to 50%. The rest of the Tribunal's order was confirmed, and the writ petition was disposed of without costs.