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TMI Blog2014 (12) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... r of exercise of power by the AO and the correctness and propriety of the decision making process and whether principles of natural justice was adhered - Therefore, the Writ Petitions are maintainable and cannot be rejected solely on the ground that as against the assessment orders, the statute provides for alternate remedy – Decided in favour of assessee. Best judgment u/s 27(1)(c) –Whether the assessment orders are best judgement assessments while made u/s 27(1)(a) - Held that:- The AO has invoked his power u/s 27(1)(a) - the assessment is not a best judgement assessment as the AO has not rejected the accounts - the power u/s 27(1)(a) has been invoked for reopening the assessments as certain defects were pointed out during the course of audit - Therefore, it cannot be stated that merely because Section 27(1)(a) of the TNVAT Act has been referred to in the impugned assessments, they are best judgment assessments – in Commissioner Of Sales-Tax, Madhya Pradesh Versus HM Esufali HM Abdulali [1973 (4) TMI 49 - SUPREME Court] it has been held that what is true of the assessment must also be true of re-assessment because re-assessment is nothing but a fresh assessment - the contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration of the assessing officer after affording an opportunity of personal hearing to the petitioner/dealer. Non-payment of tax on the sale of asset to M/s. NSNPL – Held that:- The test applied by the AO to hold that the transfer is not a transfer of a business as a whole is incorrect - unless that issue has been addressed and a fact finding exercise made, the AO could not have straightaway held that the transfer was only partial and not the whole business - the effect of the assessment under the Income Tax Act with respect to this very transaction treating the same as a slump sale should have also been gone into, as it cannot be stated that the facts which were taken note of during the assessment under the Income Tax Act is wholly irrelevant while considering whether the sale was covered under Explanation III to 2(41) - the decision making process was incorrect - Therefore, the finding with regard to the non-payment of tax on sale of assets to NSNPL calls for interference and accordingly, it is set aside and the matter is remitted back to the AO to make thorough enquiry into the contentions raised by the assessee by applying proper test and to see whether the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have borne in mind the guidelines issued in the circular which as on date is a statutory circular and deemed to be valid and binding on the AO - the reasons assigned in this order wile deleting equal addition on the probable suppression of scrap sales would come to the aid of the petitioner to justify deletion of penalty - there is no justification spelt out in the impugned assessment order to impose penalty on the entire tax demanded - the penalty imposed is deleted – Decided partly in favour of petitioner. - W.P. Nos.22066 to 22072 of 2014 & Connected Mps. W.P.No.22066 of 2014 - - - Dated:- 9-12-2014 - The Honourable Mr. Justice T. S. Sivagnanam,JJ. For the Petitioner : Mr. Arvind P Datar,Sr. Counsel for Mr.Arun Karthik Mohan Mr. Sanjeev Sachdeva For the Respondents : Dr. Anita Sumanth ORDER Since the prayer in all these Writ Petitions are identical these Writ Petitions were heard together and are disposed of by this common order. 2.The petitioner, a Private Limited Company, incorporated under the Indian Companies Act, is a registered dealer on the file of the first respondent under the provisions of the Tamil Nadu Value Added Tax Act, 2006 ('A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intainability of the Writ Petitions, contending that the petitioners have an effective alternate remedy under the Act and without preferring statutory appeal, the petitioner cannot maintain these Writ Petitions. The contentions on the merits of the petitioner's case have also been dealt with in the counter affidavit. 6.Mr.Arvind P.Datar, learned Senior Counsel appearing for the petitioner submitted that for all the seven assessment years, three issues are raised common, viz., (i) that best judgment assessment under section 27(1)(a) of the Act is erroneous as the books of accounts of the petitioner is the basis of the impugned assessment; (ii) Imposition of huge penalty of ₹ 66.02 crores under section 27(3) of the Act is not valid and (iii) Equal Time addition of probable omission and suppression of scrap sales is unwarranted. The other issues are with regard to tax on export of capital assets which is common for five years from 2007-08 to 2011-12 (W.P.Nos.22067/2014, 22068/2014, 22069/2014, 22070/2014 and 22071/2014); tax imposed on transfer of business to Nokia Siemens Networks Private Limited (hereinafter called as NSNPL ) for the year 2007-08 (W.P.No.22067/2014); t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t judgement assessment and if certain items were not included in the turnover or discovered from the dealer accounts books, the assessing authority includes those items in the dealers turnover, the assessment cannot be regarded as based on best judgement and penalty cannot be levied in respect of such items. It is further submitted that the decision in the case of S.G.JAYARAJ NADAR (supra) was relied on by the Hon'ble Supreme Court in the case of STATE OF TAMIL NADU v. INDIAN METAL AND METALLURGICAL CORPORATION [ 1978 (41) STC 165]. Further it is submitted that the Hon'ble Supreme Court in the case of COMMISSIONER OF SALES TAX,M.P. v. H.M.ESUFAIL [(1973) 2 SCC 137], pointed out the distinction between the best judgement assessment and assessment based on accounts submitted by the assessee and observed that assessment made on the basis of the accounts maintained where the assessing officer adds item that might have been omitted should not be a best judgement assessment and only where no reliance can be placed on the accounts maintained by the assessee, the assessee can be assessed on the basis of best judgement. On the above contentions the learned counsel submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven years, it is submitted that while the audit wing of the petitioner were preparing for audit by department, it came to their notice that scrap sales from SEZ unit were inadvertently not declared in returns due to clerical error and tax had not been paid thereon. This was disclosed to the Audit Officials of the Department by the petitioner and tax and interest was voluntarily paid by the petitioner on 28.02.2014. However, without considering the conduct of the petitioner in suo motu paying the tax along with interest on the turnover of scrap sales which was inadvertently not disclosed in the monthly return, the respondent has made equal time addition on the ground of probable suppression and omission. It is submitted that equal time addition is illegal and arbitrary and the levy of such equal time addition was held to be not sustainable in the decisions in the case of Jayalakshmi Oil Mills V. State of Tamil Nadu [(2013) 58 VST 535]; Sri Ramu Furniture Co. V. State of Tamil Nadu [(2013) 57 VST 383 and S.V.Cycles stores V. Commercial Tax Officer [(2011) 46 VST 565]. It is submitted that though the petitioner relied on the decisions, the assessing officer has not even attempted to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent State-wise break up and corresponding sales vouchers for its claim for exports. Therefore, it is submitted that the impugned order was based on surmises and conjectures. Relying upon the assessment order for the year 2007-08, wherein the value of the capital assets transfer to Nokia Siemens Networks Private Limited (NSNPL), on which tax was demanded had been separately confirmed and has also been added in the value of export sales for the purpose of levying tax thereon. Therefore, the respondent ought to have considered that aspect in so far as export sales of capital assets. 8.5 Transfer of business to M/s.NSNPL:- The next issue which arises for the assessment year 2007-08 (W.P.No.22067/2014) relates to transfer of business to NSNPL. It is submitted that the business was transferred as a going concern and it is a transfer of a business as a whole and clearly falls with an Explanation III to section 2(41) of TNVAT Act and that the petitioner had three business operations viz. (i) Mobile Phone Division, (ii) Network Division and (iii) Research and Development and all the three lines of business are separate and from 01.04.2007, the petitioner transferred all its assets an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner should be directed to avail the 'statutory Appellate remedy. 9.1 As regards the decisions which are relied on by the learned Senior counsel for the petitioner with regard to alternate remedy, they are not applicable to the facts of the present case inasmuch as the present cases would require thorough examination of disputed questions of fact. Therefore the Writ Petitions are liable to be dismissed as not maintainable. 9.2 As regards the contention regarding the imposition of penalty under section 27(3) of the Act, it is submitted that all the decisions relied on by the petitioner are all arising out of the judgments rendered in Appeals filed by the Department or the assessee, wherein assessee had exhausted the Statutory Appellate remedies. Further, it is submitted that the decision in the case of S.G.JAYARAJ NADAR (supra), the matter arises under the provisions of the Madras General Sales Tax Act, 1959 and the Hon'ble Supreme Court considered the scope of section 12(2) of the said Act and rendered the decision and the said provision is not in para materia with section 27(1)(a) of the TNVAT Act. The language employed under section 27(1)(a) of the TNVAT Act, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 STC 374]. 9.7 Further the other issues relating to sales returns and tax at higher rate on parts and accessories are all questions of fact to be adjudicated before the appellate authority. 10. In reply, learned Senior Counsel for the petitioner submitted that the principle laid down by the Supreme Court in the decisions are important and it is immaterial to see as to how the matter travelled upto Hon'ble Supreme Court and what is the material is the principle laid down. In this regard, reference was made to the decision in the case of East India Commercial Co.,Ltd., Vs. Collector of Customs reported in AIR 1962 SC 1893. Therefore, it is submitted that the decisions relied on by the petitioner as regards best judgment assessments are fully applicable. The other contentions raised earlier were reiterated and it is submitted that there is no statutory provision for equal addition and therefore not sustainable. Further, it is submitted that the allegation of suppression was only with regard to scrap sales, whereas the penalty has been imposed on the entire demand, which is wholly illegal and the impugned proceedings are vitiated on account of the total non-application of mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is being raised for the first time and the assessment order also does not proceed on those lines. 14. Heard the learned counsel appearing on either side and perused the materials placed on record. 15.The following issues arises for consideration in these Writ Petitions: (i)Whether the Writ Petitions are maintainable, when the petitioner has an appellate remedy as against the impugned assessment orders? (ii)Whether the best judgment assessment made under section 27(1)(a) of the TNVAT Act are bad in law as the quantum of turnover has been determined based on the books of accounts and there can be no grounds for making best judgment assessment ? (iii)Whether imposition of penalty under section 27(3) of the TNVAT Act that too on the entire demand was justified ? (iv)Whether equal time addition on probable omission and suppression of scrap sales was warranted ? (v)Whether the Assessing Authority was right in treating the export sale of capital assets as local sales, on the ground that the assessee has not disclose the same in the tax return ? (vi)Whether the transfer of business to NSNPL was by way of sale of business as a whole falling under Explanation III to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment years from 2006-07 to 2012-13. For all assessment years, there are four common issues and the remaining issues are confined to a few or one year. 19.The petitioner had filed the monthly return in Form No.I in respect of all the assessment years under section 21 of the Act and they were deemed to have been assessed under section 22(2) of the Act. The place of business of the petitioner was audited by the Enforcement Wing officials from 29.01.2013 to 07.02.2013 and from 26.2.2013 to 28.2.2013. The petitioner's case is that their books of accounts were perused and the impugned assessment orders are not best judgment assessments. To support this proposition, series of decisions of the Hon'ble Supreme Court have been relied on and in particular, the case of S.G.JAYARAJ NADAR (supra), arising out of an assessment under the Madras Sales Tax Act, 1959. 20.The other contentions relating to the manner and proportionality in imposing penalty. The petitioner would state that there is no willful non-disclosure, that their conduct was not contumacious and there is no justification for levy of penalty and the authority mechanically imposed penalty in utter disregard to the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be crucial because it goes to the root of the matter affecting the jurisdiction of the officer. Further, the issue relating to equal addition has to be examined to see whether it was warranted on the admitted facts. The justifiability of the penalty on the entire demand to be considered and whether the legal principle laid down in various decisions were followed by the assessing officer. It has to be examined whether there was any material available with the assessing officer to state that transfer to NSNPL would not fall within Explanation III to Section 2(41) of the Act and whether the assessing officer assigned reasons on other issues. In the light of the above, the statutory remedy of filing an appeal will be extremely ill-suited to meet the demands of the situation arising in these cases and therefore, this Court is convinced that there are good and sufficient reasons to bypass the alternate remedy available under the Act. 26.In the light of the above facts and the contentions raised by both sides, this Court is of the view that the petitioner need not be relegated to avail the alternate remedy as it has been held in all cases that necessity to avail the alternative remedy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ground for making best judgment assessment. For the same proposition, reliance has been placed on the decision in the case of COMMISSIONER OF SALES TAX, M.P., VS. H.M.ESUFALI (1973) 2 SCC 137 (supra) and the decision in the case of INDIAN METAL AND METALLURGICAL CORPORATION (supra). 30.The learned Special Government Pleader sought to distinguish the decision by contending that the Hon'ble Supreme Court in the case of S.G.JAYARAJ NADAR (supra) has considered the scope of section 12(2) of the Madras General Sales tax Act, 1959, which is not akin to section 27(1)(a) and the said provision is in paramateria with section 22(4) of the TNVAT Act. Therefore, the learned Special Government sought to distinguish the decision and contended that the power conferred on the Assessing Officer under section 27 (1)(a) of TNVAT Act is a very wide power. 31. To consider the contentions raised, it would be necessary to examine the relevant provisions under the Madras General Sales Tax Act 1959 and the TNVAT Act, 2006. Section 12(2) of the Madras General Tax reads as follows: If no return is submitted by the dealer under sub-section (1) within the prescribed period, or if the return, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (a) of section 27(1) provides for cases where whole or part of the turnover has escaped assessment to Tax and in such event the Assessing Officer is entitled to reopen and determine to the best of its judgement, the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary. 35. Thus, all the three provisions use the expression 'best of its judgement'. Therefore, to state that the decisions of the Hon'ble Supreme Court were rendered in the context of the old Act cannot be applied to the cases on hand, is an incorrect submission since the question decided in all the case is, what is best judgment assessment. 36. Undoubtedly the power under section 27 (1)(a) of the Act, is a wider power with a limitation of six years dealing with assessment of escaped turnover and wrong availment of credit. Even while exercising such power, the authority may determine to the best of its judgement, the turnover which has escaped assessment and assess the tax payable on such turnover. The question is while exercising such power, what is best of judgement assessment? Though the expression is used in all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned assessments in all the cases, the Assessing Officer has invoked his power under section 27(1)(a) of the TNVAT Act and re-determined the total and taxable turnover. The assessment is not a best judgement assessment as the Assessing Officer has not rejected the accounts. The power under section 27(1)(a) has been invoked for reopening the assessments as certain defects were pointed out during the course of audit. Therefore, it cannot be stated that merely because Section 27(1)(a) of the TNVAT Act has been referred to in the impugned assessments, they are best judgment assessments. The Hon'ble Supreme Court in the case of HM ESUFALI, held that what is true of the assessment must also be true of re-assessment because re-assessment is nothing but a fresh assessment. When re-assessment is made under Section 19, the former assessment is completely re-opened and in its place fresh assessment is made. While re-assessing a dealer, the assessing authority does not merely assess him on the escaped turnover but he assess him on his total estimated turnover. While making re-assessment under Section 19, if the assessing authority has no power to make best judgment assessment, all that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, it was proposed to levy penalty under Section 27(3) of the Act. Further, it was stated that though the petitioner had paid the difference of tax belatedly on 06.02.2013, they are liable to pay interest under Section 42(3) of the Act. The petitioner submitted their objection stating that while reconciling the accounts, while preparing for audit, the company had noticed that certain scrap sales from Chennai factory have been inadvertently not included in the monthly VAT/CST returns filed by the company. After realising such mistake, the company suo motu disclosed the said transaction to the audit team and immediately paid the tax amount along with interest. Further, it was submitted that the petitioner had already deposited the tax liability on the scrap sale turnover, which was inadvertently not disclosed in the monthly returns due to clerical error. Therefore it is submitted that an equal addition to the turnover would result in double taxation of the taxable turnover which cannot be done. Further it was stated that equal addition to the turnover cannot be made only based on assumption unless addition materials and facts are available . Further, referring to the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case of willful non-disclosure but the petitioner had suo motu disclosed the same to the audit team, paid tax and interest thereon even before completion of audit. By relying on the decision of this Court in the case of State of Tamil Nadu VS. S.M.Baba Sahib [(1979) Vol 44 STC 299], it is submitted that mere use of the expression suppression is not enough and it is not possible to say merely from the fact that there has been a reassessement on the escaped turnover on the basis of best judgment and therefore, there has been a willful nondisclosure on the assessable turnover. That there must be something to indicate that the turnover did in fact exist and that the assessee had willfully not disclosed that assessable turnover. 43. The learned Special Government Pleader, while seeking to sustain the equal addition, submitted that the dealer is supposed to maintain true accounts as per the Rules, they have not disclosed the same in their monthly returns, and only at the time of inspection, they disclosed and but for the inspection, the same would have gone unnoticed and therefore, the assessing officer was justified in making an order of equal addition. Further, it is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y from the fact that there has been a re-assessment of escaped turnover on the basis of best judgement, that there has been a wilful non-disclosure of assessable turnover and there must be something to indicate that the turnover did in fact exist and the assessee had wilfully not disclosed that assessable turnover. 45. Thus, the legal principle that could be culled out from the above decisions is that equal addition being a guess work, based on an estimate, unless there is material, equal addition is not warranted; Stocks not supported by purchase bills cannot be a ground for equal addition. Rejection of assessee's explanation as regards unaccounted purchases which were subsequently accounted for would not justify equal time addition. The assessing officer did not deal with the effect of the three decisions referred above except for quoting the dealer's objection, which referred to these three decisions. Undoubtedly, the decisions were binding on the assessing officer as they are decisions of this Court, which is the jurisdictional court over the respondent. The assessing officer did not make any endeavour to deal with or distinguish those decisions considering the fact. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses then accounted for. On facts the decision does not support the case of the Revenue in any manner. 48. As noticed above the assessing Officer, stated that at the time of audit, the omission was disclosed. However, the assessing officer has failed to advert to the specific stand of the petitioner that the discrepancy was noticed prior to the audit by the Dept and they suo motu disclosed the same to the audit and during the course of the audit, they had paid the entire tax along with interest. This in my view a very relevant factor, which should have weighed in the minds of the assessing officer, that on the date when the audit completed the inspection, the entire tax liability along with interest have been paid. Therefore the Senior counsel for the petitioner is right in his submission that the petitioner is being taxed twice. The equal addition being in the nature of penalty, it does not automatically follow that in every case of non-disclosure, equal addition is warranted. This is precisely a view taken by the three Division Benches of this Court cited supra. Therefore, this Court is of the considered view that there is absolutely no justification for equal addition. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T returns and the export sale has not been disclosed. Therefore, the objection of the dealer was overruled. 52. Learned Senior counsel submitted that the imposition of tax on export sale is blatant violation of Art.286(1)(b) of the Constitution which is expressly reflected in Section 18 of the TNVAT Act which provides that export sale as specified under Section 5 (1) or (3) of the CST Act shall be zero rated sale for the purpose of the TNVAT Act. Further it is submitted that the figure of sale of fixed assets were taken from fixed asset schedule annexed to the balance sheet and tax has been levied thereon treating it as local sale stating that the assessee has not disclosed in the returns. The petitioner, is said to have clarified to the audit team that proceeds from the sale of fixed assets were not taxable to VAT /CST as the assets have been exported out of India. Further, it is stated that it is brought to the knowledge of the respondent that the petitioner has operation in 22 other States and they were all-India figures and they provided the break up details; despite the same, the assessing officer erroneously observed that the petitioner was unable to present State-wise bre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing authority abdicated his power and was purely guided by the opinion of the inspecting team, which obliviously were officers superior in rank to the assessing officer. Therefore, the Assessing Officer should redo the assessment with regards to the tax on sale of assets as the documents produced by the dealer have not been examined by the assessing officer. As such, the consideration is not manifest in the assessment order. The dealer is entitled to reasonable opportunity to produce all records in support of their claim. Therefore, the tax levied on the sale of assets is set aside and the matter is remanded for fresh consideration of the assessing officer after affording an opportunity of personal hearing to the petitioner/dealer. 56. The next issue relates to the non payment of tax on the sale of asset to M/s.NSNPL. This issues arises in the assessment for the year 2007-08. In the pre-revision notice, it was stated that the assessee have made sale of plant and machinery and stock inventory to NSNPL and such sale has not been reported. After referring to Explanation III to Section 2(41) of Act, the assessing officer stated that the petitioner has sold only a part of plant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and only part of the plant machinery and stock inventory were sold and this also being a question of fact, cannot be agitated in a writ petition. In support of such contention, reliance was placed on the decision in the case of THE DEPUTY COMMISSIONER OF SALES v. DAT PATHE [1985 (59) STC) 374]. Further by referring to Section 2(42C) of the Income Tax Act, it is submitted that there is morked difference in the manner in which the provision has been worded and the petitioner cannot take umbrage under the assessment under the Income Tax Act, to qualify the transaction under Explanation III in Section 2(41) of the Act. 61. Section 2(41) of the TNVAT Act defines turnover to mean the aggregate amount for which goods are brought or sold or delivered and supplied or otherwise disposed of in any of the ways referred to in Clauses (i) to (iii) by a dealer either directly or through another, on his own account or on account of others whether for cash or for deferred payment or other valuable consideration. Explanation III to Section 2(41) states that any amount realised by a dealer by way of sale of his business as a whole, shall not be included in the turnover. 62. The petitioner seeks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra), held that when a person is carrying on business sells the entire business or a branch of the business, he sells the same as a running business or a going concern and the sale proceeds of such a transaction cannot constitute turnover as defined under the Act. Similar view was taken by the Hon'ble Full Bench of Kerala High Court in the case of DAT PATHE (supra). 65. Taking note of the legal principle, it is to be stated that the test applied by the assessing officer in the instant case to hold that the transfer is not a transfer of a business as a whole is incorrect. The assessing officer was to examine whether the network division was a separate business, a distinct entity and was it transferred lock stock and barrel in favour of NSNLP. Unless that issue has been addressed and a fact finding exercise made, the Assessing Officer could not have straightaway held that the transfer was only partial and not the whole business. Further more, the effect of the assessment under the Income Tax Act with respect to this very transaction treating the same as a slump sale should have also been gone into, as it cannot be stated that the facts which were taken note of during the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5% instead of 14.5% for the accessories of mobile phone, therefore, they are liable to pay difference of tax. Petitioner in their objections submitted that they are effecting sale of headsets, speakers, memory cards and wireless kit found to be placed under item number 68 of Part B of the First Schedule which are Information Technology Products and they can be used in radio, T.V., MP3 player, computer etc and hence they are to termed as products under Information Technology Products and tax has to be charged at 5% only which was earlier 4%. Further, they have charged rate of tax applicable to cell phone for all the spares and accessories of cell phone i.e, at 14.5% (earlier 4%). The petitioner placed reliance on Section 3(2) of the Act to justify their stand. The assessing officer, rejected the contention and confirmed the proposal. 68. The assessing officer, while considering the objections filed, held that the products sold by the petitioner as accessories along with mobile phones does not come under the category of Information Technology products. Parts and accessories of cellular telephone (mobile phone) specifically finds place vide Entry 13-A(f) under Part C of the First ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported correct turnover in monthly returns; deliberately suppressed turnover and failed to pay tax on the taxable turnover of scrap sales and disclosed sale of scrap at the time of inspection which is willful non-disclosure, warranting levy of penalty. Thus, the imposition of penalty was on the alleged suppression of turn over of scrap sales, on which equal addition was also made. 70. The learned Senior counsel appearing for the petitioner submitted that liability to pay penalty does not arise merely upon proof or default and penalty will not be imposed unless the party either acted deliberately in defiance of law or was guilty of contumacious or dishonest conduct or acted in conscious disregard of his obligations. Penalty will not be imposed in cases of technical or venial breach of the provisions of the Act. The words willful and suppression signify cautious, deliberate, intentional withholding of information mala fide and intentional failure of information due to inadvertence. In support of such contention, reliance was placed on the decisions Hindustan Steel Ltd vs State Of Orissa reported in AIR 1970 SC 253; Tamil Nadu Housing Board vs Collector Of Central Excise, repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Hindustan Steel Ltd., Vs. State of Orissa, AIR 1970 SC 253 (supra), while considering imposition of penalty on the assessee under the provisions of Orissa Sales Tax Act, 1947, pointed out, an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not be ordinarily imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest, or acted in conscious disregard of its obligation and penalty will not be imposed unless it is lawful to do so. Where penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. In the instant case, except for observing that there was willful non disclosure on the part of the petitioner, and but for the audit, the matter would not have come to light, the assessing authority did not examine as to whether the conduct of the petitioner/dealer was willful. Further, the Assessing Officer has not assigned independent reasons as to the imposition of penalty on the entire d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its actions, which is an indication of one's state of mind. Referring to the meaning of word wilful' in Black's Law Dictionary which states Wilful to mean Proceeding from a conscious motion of the will; voluntary; knowingly; deliberate. Intending the result which actually comes to pass..... An act or omission is willfully done, if done voluntarily and intentionally and with the specific intent to do something the law forbids, or with the specific intent to fail to do something the law requires to be done ........ 74.In the case of ABANLOYD CHILES OFFSHORE LTD., V. COMMISSIONER OF CUSTOMS [2006 (6) SCC 482], the Hon'ble Supreme Court considered the proviso to section 28 (1) of the Customs Act, which could be invoked when any duty has not been levied or has been short levied by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter or his agent or his employee. While considering the effect of said proviso, it was pointed out that so far as mis-statement or suppression of facts are concerned, they are qualified by the word 'wilful'. The word 'wilful' preceding the words 'mis-statement or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the writ petitions are maintainable as the impugned orders of assessment are vitiated on the ground of serious infirmities in the decision making process; failure to take into consideration relevant particulars and details, not having assigned reasons and based on irrelevant considerations and in violation of the principles of natural justice. Therefore, this Court is justified in exercising its jurisdiction under Article 226 of the Constitution. (2) As regards issue No.(ii), it is held that power under section 27(1)(a) of the Act is a power to revise an assessment, where the assessing officer is empowered, to assess escaped turnover and wrong availment of input tax credit giving wider power with extended period of limitation for reopening of assessment and hence power given under 27(1)(a) is quite distinct from the power conferred under Section 22(4) of the Act, which deals with deemed assessment and procedure to be followed by the assessing authority which is in paramateria of Section 12(2) of Madras Sales Tax Act 1959 and the power exercised by the Assessing Officer in the instant case is a re-assessment or re-opening of assessment in contra distinction with the power exerci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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