Madras High Court
M/S. Vijay Steels vs The State Of Tamil Nadu on 3 February, 2016
Author: N.Kirubakaran
Bench: V.Ramasubramanian, N.Kirubakaran
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 03.02.2016
CORAM
THE HONBLE MR.JUSTICE V.RAMASUBRAMANIAN
and
THE HON'BLE MR.JUSTICE N.KIRUBAKARAN
Tax Case Revision No.50 of 2015
M/s. Vijay Steels
No.32/304, T.H.Road
New Washermenpet
Chennai 600 081. .. Petitioner
Vs.
The State of Tamil Nadu
rep. by the Joint Commissioner (CT)
Chennai (East) Division
Chennai 600 006. .. Respondent
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Revision under Section 260A of the TNVAT Act, 2006, read with Rule 14 of TNVAT Rules, 2007, against the order of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Chennai in STA No.163/2013 dated 10.12.2014.
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For Petitioner : Mr.C.Baktha Siromoni
For Respondent : Dr.Anita Sumanth
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O R D E R
(Made by V.Ramasubramanian,J.) This tax case revision is filed under Section 60 of the TNVAT Act, 2006, questioning the confirmation of the levy of penalty by the Tamil Nadu Sales Tax Appellate Tribunal.
2. Heard Mr.C.Baktha Siromoni, learned counsel for the petitioner and Dr.Anita Sumanth, learned Special Government Pleader for the respondent.
3. The petitioner is a dealer in iron and steel. They were assessed under Section 22(2) of the TNVAT Act, as per the monthly returns filed.
4. There was an inspection of the premises of the petitioner on 09.7.2010, by the Enforcement Wing. It was found at that time that no stock was available with the assessee. But, as per the returns filed by the assessee, the total purchase made by them for the period from 01.10.2008 to 09.07.2010 was 2060 MT and the total sales they claimed to have made during the said period was 1464 MT. This accounted for a difference in the sales turnover to the tune of 596 MT. This was treated as a suppressed sale and at the agreed rate per MT, the purchase value of this material was calculated and the value of sales suppressed was arrived at as Rs.99,65,120/-. On the said amount, tax at the rate of 4% amounting to Rs.3,98,605/- was levied. The assessee also paid the same.
5. Thereafter, the Assessing Officer passed an order dated 16.4.2012 levying a penalty of Rs.5,97,907/-, in terms of Section 27(3)(c) of the TNVAT Act, 2006. The assessee appealed, and the first Appellate Authority set aside the order of penalty. However, the second appeal filed by the Department in STA No.163 of 2013 was allowed by the Tamil Nadu Sales Tax Appellate Tribunal forcing the assessee to come up with the above revision.
6. The main contention of Mr.C.Baktha Siromoni, learned counsel for the assessee/petitioner is that there was no order of assessment made in the case on hand, so as to enable the Assessing Officer to come to the conclusion that there was wilful non-disclosure of turnover. According to the learned counsel, not even a finding was recorded that there was wilful non disclosure.
7. Relying upon two decisions of this Court, one in State of Tamil Nadu v. Lingam and Co. [(2010) 29 VST 622] and another in State of Tamil Nadu v. Industrial Diesel Engineers [(2014) 73 VST 462], it is contended by the learned counsel for the petitioner that unless the respondent had recorded a finding of mens rea and unless the respondents had other material apart from stock variation, the levy of penalty under Section 27(3) is not warranted.
8. We have carefully considered the above submissions.
9. Under Section 27(1)(a) of the Act, where for any reason, the whole or any part of the turn over of business of a dealer has escaped assessment to tax, the Assessing Authority may within a period of five years from the date of assessment order, determine to the best of his judgment, the turnover which has escaped assessment. But, Section 27(1)(a) is made subject to the provisions of Sub-section (3).
10. Sub-section (3) makes it clear that if the Assessing Authority is satisfied, in making an assessment under Sub-section (1)(a) that the escape from assessment is due to wilful non-disclosure of assessable turnover by the dealer, he may impose a penalty at the rates indicated in clauses (a), (b) or (c).
11. In the case on hand, the assessee has filed monthly returns. In the monthly returns filed, for the period from 01.10.2008 to 09.7.2010, the total quantity of purchases was indicated as 2060 MT and the total quantity of sales was indicated as 1464 MT. Therefore, on the date of the inspection, namely 09.7.2010, the assessee should have had a stock of 596 MT. But, no stock was available on the date of inspection. Therefore, the difference between the purchases and sales was taken to be suppressed sales turnover.
12. In a statement recorded from the Accounts Officer of the petitioner company, by name Rajagopal, he had admitted to the suppression. The relevant portion of the statement of Rajagopal, Accounts Officer of the appellant, reads as follows:
"I accept the above sales suppression and I agree to pay the above tax due of Rs.3,98,605.00, by way of Cheque No.148594, dated 14.07.2010. ....
I accept the above defect and paid 'C' Fees of Rs.2000.00 by way of Cheque No.148595, dated 14.07.2010 in favour of the Deputy Commissioner (CT), Enforcement (East)."
13. Till date, the above statements have not been retracted. There was nothing more needed to show suppression of turnover in this case. There was no variation in the quantity of stock available and the quantity of stock arrived at on the basis of returns. As per the returns, the petitioner ought to have had a stock of 596 MT, but they had none.
14. If we keep the above background in mind and come back to the provisions of Sub-sections (1) and (3) of Section 27, it can be seen easily that this 596 MT had actually escaped assessment. To this extent, there cannot be any dispute or doubt. If this quantum had not escaped assessment, the petitioner would have paid tax on the same.
15. That takes us to the next question as to whether there was wilful non-disclosure. The very fact that the above fact came to light only during an inspection conducted by the Enforcement Wing, speaks for itself. When something is res ipsa loquitur, the Assesing Authority cannot come to a different conclusion than coming to the obvious conclusion.
16. The Tribunal has rightly pointed that there was no equal time addition in this case. If there had been an equal time addition, then it is possible for the assessee to contend that on presumption, the escaped turnover has been arrived at and hence, he should have the benefit of doubt. That is not the case here.
17. The decisions that the assessee has relied upon, arose out of the TNGST Act, 1959. Under the TNGST Act, orders of assessment are supposed to be passed. Under the TNVAT Act, the assessment is self-assessment and the returns are filed monthly.
18. Apart from this distinction, it is found from the facts out of which the aforesaid two decisions arose that there was equal time addition made in those cases. In the case on hand, there was no equal time addition made. Therefore, the ratio laid down therein cannot go to the rescue of the assessee in this case.
19. Lastly, it is contended by the learned counsel for the petitioner that at least the rate of penalty should be reduced. But, unfortunately, clauses (a), (b) and (c) of Sub-section (3) of Section 27 do not vest any discretion either upon the respondent or upon this Court to interfere with the rate of penalty. Therefore, we find that the questions of law raised by the petitioner, are to be answered against him in the facts and circumstances of the case.
In the result, the revision is dismissed. No costs. Consequently, M.P.No.1 of 2015 is also dismissed.
Index : Yes/No (V.R.S.J.) (N.K.K.J.)
Internet : Yes/No 03.02.2016
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V.RAMASUBRAMANIAN,J,
and
N.KIRUBAKARAN,J.
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TCR No.50 of 2015.
03.02.2016.