Madras High Court
Tvl.Indira Industries vs The State Of Tamil Nadu on 19 November, 2013
Author: T.S.Sivagnanam
Bench: Chitra Venkataraman, T.S.Sivagnanam
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 19.11.2013
Coram
The Honourable Mrs.Justice CHITRA VENKATARAMAN
and
The Honourable Mr.Justice T.S.SIVAGNANAM
T.C.(R).No.56 of 2013
Tvl.Indira Industries
No.6, SIPCOT Industrial Estate
Ranipet .. Petitioner
-vs-
The State of Tamil Nadu
rep.by its Deputy Commissioner
(CT), Vellore ... Respondent
Tax Case (Revision) filed under Section Section 38 of the Tamil Nadu General Sales Tax Act, 1959 to revise the order of the Sales Tax Appellate Tribunal (Main Bench) Chennai dated 21.01.2013 in STA No.382 of 2007 for the assessment year 2002-2003.
For Petitioner : Mr.Thiyagarajan, Senior Counsel for Mr.S.Ramesh Kumar
For Respondent : Mr.A.R.Jayaprathap
Government Advocate (Taxes)
ORDER
(Order of the Court was made by CHITRA VENKATARAMAN ,J) The assessee has filed this Tax Case (Revision) as against the order passed by the Sales Tax Appellate Tribunal (Main Bench) Chennai dated 05.07.2012 in STA No.242 of 2008, relating to the assessment year 2005-2006, raising the following substantial question of law:
"Whether on the facts and in the circumstances of the case, the Honourable Tribunal was right in upholding the levy of penalty under Section 12(3)(b) of the TNGST Act, 1959 without considering the proviso to Section 12(3) of the TNGST Act is correct in law?"
2. The only question raised by the assessee is as to whether the levy of penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 was justifiable particularly when there was no suppression pointed out by the Revenue that the claim of the assessee related only to concessional rate of tax.
3. The assessee herein, is a manufacturer of Industrial Noise Control Machineries and Components. Based on the inspection conducted on 12.09.2002, the Assessing Officer found that the petitioner has effected first sales of machineries to BHEL, Hyderabad, and delivered the same to Tamil Nadu Electricity Board, Courtallam within Tamil Nadu and the assessee claimed concessional rate of tax at 4% based on the Notification No.II(i)/CT/19(b-10)/02 dated 27.03.2002. The claim was rejected on the ground that the assessee had not produced necessary Certificate from the Tamil Nadu Electricity Board for claiming concessional rate of tax. The Sales Tax Appellate Tribunal further pointed out that there were corrections made in the invoices and in the delivery challan and there was no evidence to prove movement of goods from within the State to other State with reference to the claim of inter-state sale. Thus, based on the records, the Sales Tax Appellate Tribunal confirmed the assessment holding that there was no recorded evidence to establish that the transfer of goods were from Ranipet to Hyderabad and Hyderabad to Courtallam. While confirming the order of assessment, as regards levy of penalty, the Sales Tax Appellate Tribunal held that the provisions of Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 stood attracted since there was difference between the tax assessed and tax paid.
4. Learned Senior Counsel appearing for the assessee pointed out that when the turnover in question is very much available in the books of accounts and that the assessment on the assessee was as per the details available in the books of accounts, the question of levy of penalty was unsustainable. Thus when the assessment is based on the turnover disclosed in books of accounts, the Sales Tax Appellate Tribunal failed to take note of the Explanation to Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 introduced in Act 22 of 2002 effective from 01.07.2002.
5. We have heard Mr.Thiyagarajan, learned Senior counsel for the petitioner and Mr.A.R.Jayaprathap, learned Government Advocate (Taxes) for the respondent.
6. As rightly submitted by learned Senior Counsel for the assessee, the only issue before the Authorities was as to whether the turnover in question attracted concessional rate of tax or to be assessed at 12%.
7. Based on the materials, the Sales Tax Appellate Tribunal confirmed the view of the Assessing Officer that the dealer sold the goods to BHEL, Hyderabad to deliver the same to Courtallam as per the directions of the buyer. Thus, taking into account the documentary evidence filed and available, the Sales Tax Appellate Tribunal confirmed the assessment. However, as regards the levy of penalty Explanation to Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, is relevant, which reads as under:
"Section 12. Procedure to be followed by the Assessing Authority (1)(a) ..........
(1)(b) ...........
(1)(c) ............
12(1-A)...........
12(1-B)...........
12(2) ................
Section 12 (3) In addition to the tax assessed [under Section (1) or (2)], the Assessing Authority shall, in the same order of assessment passed [under Sub-Section (1) or (2) or by a separate order, direct the dealer to pay by way of penalty, a sum -
(a) ..........
(b) which shall be, in the case of submission of incorrect or incomplete return, -
(i) twenty-five per cent of the difference of the tax assessed and the tax paid as per return, if the tax paid as per the return fall short of tax assessed on final assessment by not more than five per cent (i-a) fifty percent of the difference of the tax assessed and the tax paid as per return, if the tax paid as per the return falls short of the tax assessed on final assessment by more than five per cent but not more than fifteen per cent;
(ii)seventy five percent of the difference of the tax assessed and the tax paid as per return, if the tax paid as per the return falls short of the tax assessed on final assessment by more than fifteen per cent but not more than twenty five per cent;
(iii) one hundred percent of the difference of the tax assessed and the tax paid as per return, if the tax paid as per the return falls short of the tax assessed on final assessment by more than twenty five per cent but not more than fifty per cent;
(iv) one hundred and twenty five percent of the difference of the tax assessed and the tax paid as per the return, if the tax paid as per the return falls short of the tax assessed on the final assessment by more than fifty per cent, but not more than seventy five per cent;
(v)one hundred and fifty percent of the difference of the tax assessed and the tax paid as per the return, if the tax paid as per the return falls short of the tax assessed on the final assessment by more than seventy five per cent;
(c ) ....
Provided that no penalty under this sub-section shall be imposed after the period of five years from the date of the order of the final assessment under this section and unless the dealer affected has had a reasonable opportunity of showing cause against such imposition;
Provided further that no penalty under this sub-section or the interest under sub-section (3) of section 24 of the Act, shall be imposed on the oil companies as explained in the Explanation II of the Eleventh Schedule if the difference of tax due as per accounts and the tax paid as per the returns is less than five per cent and revised return is filed along with the difference of tax due within a period of three months from the due date for filling the monthly return.
Explanation For the purposes of levy of penalty under clause (b) above, the tax assessed on the following kinds of turnover shall be deducted from the tax assessed on final assessment:-
(i) Turnover representing additions to the turnover as per books made by the assessing authority without any reference to any specific concealment of turnover from the accounts;
(ii) Any turnover estimated by the Assessing Authority with reference to any specific concealment of any turnover from the accounts;
(iii) Any turnover on which tax is paid at the concessional rate subject to the condition of furnishing any declaration but where such declaration could not be furnished at the time of assessment."
8. Thus when the turnover assessed under the assessment order is drawn from the books of accounts itself, and there being no reference to any specific concealment of the turnover in the accounts, the question of invoking Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 would not arise. The Explanation to Section 12(3)(b) of the Act specifies the turnover which merited to be excluded for the purpose of levy of penalty, one such being the turnover representing addition related to book turnover itself. Thus, even while calculating the turnover for the purpose of levy of penalty, the turnover, which are already available in the books of accounts are to be excluded and only those turnover which are estimated having reference to a specific concealment alone, the purpose of addition, invite the penal provisions under the Tamil Nadu General Sales Tax Act, 1959. In the decision reported in (2002) 125 STC 505 [Apollo Saline Pharmaceuticals (P) Ltd., vs. Commercial Tax Officer, (FAC) and others] this Court pointed out that when the assessment is based on the accounts turnover, the question of levy of penalty does not arise.
9. In the circumstances, applying the said decision reported in (2002) 125 STC 505 [cited supra] and the explanation to Section12(3)(b) of the Tamil Nadu General Sales Tax Act, the order of the Sales Tax Appellate Tribunal in levying penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 is set aside and the Tax Case (Revision) is allowed. No costs.
(C.V.,J.) (T.S.S.,J.)
19.11.2013
Index:Yes/No
Internet:Yes
vj2
To
1. The Tamil Nadu Sales Tax Appellate Tribunal
(Main Bench), Chennai 600 104.
2. The Appellate Assistant Commissioner (CT) FAC
Vellore.
3. The Deputy Commercial Tax Officer
Gudiyattam (East)
CHITRA VENKATARAMAN, J.
and
T.S.SIVAGNANAM, J.
vj2
T.C.(R).No.56 of 2013
19.11.2013