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TMI Blog2009 (12) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 - - - Dated:- 23-12-2009 - IBRAHIM KALIFULLAH F.M. AND SIVAGNANAM T.S. , JJ. ORDER:- The order of the court was made by T. S. SIVAGNANAM J. The challenge in this writ petition is to an order passed by the Sales Tax Appellate Tribunal, the third respondent, in T. A. No. 485/01 dated December 21, 2005. The issue involved in the present writ petition relates to levy of penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as the Act ), which contemplates that the escape from the assessment to tax, if due to wilful non-discloser by the dealer shall attract penalty in addition to the tax assessed. Facts leading to the filing of the writ petition The petitioner is a registered dealer on the file of the first respondent, engaged in the export of ready-made garments. The sales tax assessment for 1998-99 was completed and an order of assessment dated August 5, 1999 was passed by the first respondent. On October 26, 1999, the place of business of the petitioner was inspected and the documents available were verified and it revealed that the petitioner received premium from the transfer of the quota entitlement certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er preferred an appeal to the third respondent-Tribunal in T. A. No. 485/01 and the third respondent by order dated December 21, 2005 dismissed the appeal and confirmed the orders passed by the respondents Nos. 1 and 2. Aggrieved by such order of the third respondent Tribunal the petitioner is before this court. Contentions Mr. N. Inbarajan, the learned counsel appearing for the petitioner, would contend that the disposal of quota sale was available in the books of account, which was seen by the first respondent and the original assessment was completed on August 5, 1999 and in such circumstances, it cannot be stated that there is an escaped assessment, which is wilful. It is further submitted that there is no finding as regards mens rea and in the absence of such findings there cannot be a levy of penalty under section 16(2) of the Act. The conduct of the petitioner in having paid the entire tax liability within three days from the date of inspection would itself establish that there was no intention to evade payment and once the tax has been paid, it cannot be stated there is wilful non-disclosure of any assessable turnover. The learned counsel relied upon another order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Tamil Nadu Taxation Special Tribunal, Chennai [2008] 13 VST 424. On the above submissions the learned counsel prayed for setting aside the impugned order. Per contra, Mr. Haja Nazirudeen, learned Special Government Pleader appearing for the respondents, would contend that the case on hand was a case of wilful suppression, since a perusal of the assessment order, dated August 5, 1999, reveals that the petitioner reported the entire turnover as export sales and therefore, the assessing authority determined the total and taxable turnover at nil under the provision of the TNGST Act. The learned Special Government Pleader would further submit that what was produced was only the trading account and the amount towards the quota sale was not shown and the entire turnover was shown as export sale, which itself would establish the conduct of the dealer warranting penalty under section 16(2). The learned Special Government Pleader further contented that the issue relating to the scope of entry 46A in the First Schedule to the Act was not raised by the petitioner before the Tribunal nor before the statutory authorities and it has been raised for the first time before this court. In any ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sub-section (1) by way of penalty, a sum which shall be (a) fifty per cent of the tax due on the turnover that was wilfully not disclosed if the tax due on such turnover is not more than ten per cent of the tax paid as per the return; (b) one hundred per cent of the tax due on the turnover that was wilfully not disclosed if the tax due on such turnover is more than ten per cent but not more than fifty per cent of the tax paid as per the return; (c) one hundred and fifty per cent of the tax due on the assessable turnover that was wilfully not disclosed if the tax due on such turnover is more than fifty per cent of the tax paid as per the return; (d) one hundred and fifty per cent of the tax due on the assessable turnover that was wilfully not disclosed, in the case of selfassessment referred to in sub-section (1) of section 12: Provided that no penalty under this sub-section shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause against such imposition. Section 16 provided for reopening of the completed assessment by the same authority who made it so as to include any turnover, which had escaped taxation and also to rectif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Tribunal, Chennai [2008] 13 VST 424 as referred to supra. Countering the said submission the learned Special Government Pleader would submit that it is the specific case of the Department that only trading accounts were produced by the dealer and the details of receipt of premium on quota sales did not find place in the trading accounts and the dealer proceeded to show the entire turnover as export sales. At this juncture, it is worthwhile to note that the petitioner is an exporter presumed to be well-versed in the export procedures and there is a clear distinction between export sales and remium received on quota sales. Quotas are incentives granted by the Central Government under various schemes announced from time to time. In the instant case, the quota was issued by AEPC, which the petitioner earned on account of export to non-quota countries during the relevant point of time. This quota is a freely transferable commodity, hence falling within the definition of goods under section 2(j) of the Act. In fact this position came to be examined in respect of REP licences and exim scrips, which were held to be goods by the honourable Division Bench of this court in P. S. Appa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue which make it a marketable commodity. The DEPB credit is also clearly 'goods' within the meaning of the sales tax laws. From the facts of the present case, it is evident that the suppression was wilful and the assessee failed to disclose the premium received towards sale of quota. In view of the same, we find no reason to upset the factual findings of the original authority, appellate authority as well as the Tribunal on this aspect of the matter. Therefore, the contention raised by the learned counsel that there was substantial doubt as regards whether the quota was goods within the scope of section 2(j) of the Act and therefore the dealer should not be penalised and that the said issue was finally decided by the honourable Supreme Court on May 6, 2008 in the case of Yasha Overseas [2008] 17 VST 182 (SC), though appears to be attractive at the first blush, does not merit acceptance, since factually, the case of the petitioner was not as projected by the learned counsel appearing for the petitioner. In fact in the statement given by the proprietrix of the petitioner on October 26, 1999, what was stated is that for the quota sales tax due the proprietrix shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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