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TMI Blog1999 (9) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing authority, the assessee refunded the money by issuing credit notes in the month of April, 1980. This fact was referred to in the order of the Appellate Tribunal and when the entire amount collected as tax and surcharge has been refunded, there is no case to levy any penalty. In this connection, he referred to the decisions reported in R.S. Joshi, Sales Tax Officer, Gujarat v. Ajit Mills Limited [1977] 40 STC 497 (SC), Amrutanjan Limited v. State of Tamil Nadu [1995] 97 STC 575 (Mad) ; (1994) 6 MTCR 562 and State of Tamil Nadu v. K. Mohammed Ibrahim Sahib [1991] 83 STC 402 (Mad). Mr. D.T. Chopda, the learned counsel for the petitioner, argued that in all these decisions, it was held that there is no violation warranting levy of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be forfeited to the State Government". In that context, the following observations were made: "If a dealer merely gathered a sum by way of tax and kept it in suspense account because of dispute about its taxability or was ready to return it if eventually it was found to be not taxable, it was not collected within the meaning of section 37(1). The spirit of the provision lends force to the construction that 'collected' means 'collected and kept as his' by the trader". 4.. Similarly, in the case of State of Tamil Nadu v. K. Mohammed Ibrahim Sahib [1991] 83 STC 402, the Madras High Court considered the case of "decorticating mills" who collected purchase tax from the oil mill owners on the value of groundnut belonging to agriculturists s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that penalty under section 22(2) of the Act was not exigible. Having held so, the Tribunal gave a direction to the assessing officer to ascertain whether the assessee has refunded the sales tax and surcharge collected by the assessee on the amounts given by way of rebate and cash discount to its stockists and if the assessee has not refunded the amount collected by way of surcharge and sales tax, then the assessing authority was directed to levy penalty under section 22(2) of the Act. Thus, the point for consideration before the High Court was whether the Tribunal was justified in giving such direction to levy penalty under section 22(2) of the Act, if the assessee failed to return the sales tax and surcharge collected on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Sales Tax Act, 1959. The amount collected as sales tax and surcharge on second sales goods were retained by the assessee and it was not remitted to the Government as has been the case in the various decisions relied on by the learned counsel for the petitioner. Though the assessing authority levied a penalty of Rs. 28,476, the Appellate Assistant Commissioner reduced the quantum of penalty to 100 per cent. However, in the second appeal, the Sales Tax Appellate Tribunal has taken into consideration, the credit notes passed in the accounts subsequent to levy of penalty and has further reduced the quantum of penalty to Rs. 12,500. 6.. Section 22(2) of the Tamil Nadu General Sales Tax Act, 1959 con templates levy of penalty where a deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, for want on collection of tax and surcharge on second sales goods, the assessing authority has rightly invoked section 22(2) of the Act. After levy of penalty, to escape from the penalty or to reduce the rigour of the punishment, the assessee has chosen to issue credit notes and exhibit the same in the accounts. In fact, the Sales Tax Appellate Tribunal has not recorded any finding regarding any amount having been received by the purchaser of goods. We are of the firm opinion that passing of credit notes alone would not be equated with actual refund of amount to the purchasers. As far as this case is concerned, prima facie, it is clear that the assessee deliberately collected sales tax and surcharge on second sales when no such amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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