State Taxation Tribunal - Tamil Nadu
S.P.G. Ramasamy Nadar And Sons vs State Of Tamil Nadu on 5 April, 2002
Equivalent citations: [2004]136STC599(TRIBUNAL)
ORDER
A. Balraj, Vice Chairman
1. This tax case (appeal) is directed against the order dated May 28, 1998 of the Joint Commissioner, SMR II of the Commercial Taxes, Office of the Special Commissioner and Commissioner of Commercial Tax, Chepauk, Chennai-5 (for short, "the JC SMR") and made in Ref. No. f2/63641/95, SMR. No. 288 of 1996 relate to the assessment year 1990-91 under the provisions of the Tamil Nadu General Sales Tax Act, 1959.
2. The appellant/assessee, Tvl. S.P.G. Ramasamy Nadar and Sons, having place of business at 77/1, South Car Street, Virudunagar and deals in cardamom, chillies, etc.
3. The Commercial Tax Officer-III, Virudunagar, the assessing authority, in his order dated March 30, 1992, determined the last purchase turnover of cardamom for Rs. 19,96,006 as taxable turnover at three per cent. Subsequently, the successor, in a revisional order dated November 29, 1994, imposed penalty under Sections 12(6)(iii) and 22(2) of the TNGST Act for Rs. 1,27,875 and Rs. 3,441 respectively after due consideration of the objections filed by the appellant.
The dispute brought before the first appellate authority is the levy of penalty under Sections 12(5)(iii) and 22(2) is unlawful and not warranted.
4. The Appellate Assistant Commissioner considering the appellant's contentions and records available and also considering the ratio of the decisions of the High Court in [1993] 89 STC 349 (State of Tamil Nadu v. P.S. Srinivasa Iyengar & Sons) ; and in the case of Mahasankari Offset Printers v. State of Tamil Nadu in T.C. No. 88 of 1989, dated April 19, 1989 deleted the penalty imposed under Section 12(5)(iii) holding that since the appellant has furnished the correct purchase turnover of cardamom to the assessing authority before the final assessment. He sustained the penalty under Section 22(2) of the Act of Rs. 3,441 the excess tax collected by the appellant.
5. Subsequently the JC SMR-II under Section 34 of the Act issued notice proposing to revise the order of the Appellate Assistant Commissioner as it was incorrect, by relying on the decision of the High Court of Madras reported in [1994] 94 STC 157,,[App.] ; (1992) 1 MTCR 81 (State of Tamil Nadu v. Indian Silk Traders) and to restore the penalty under Section 12(5)(iii)- He confirmed his proposal on May 28, 1998 ; having given proper opportunity to the appellants; giving rise to the present appeal in. T.C. (A) No. 79 of 1999.
6. In the grounds of appeal Mr. R. Gangadharan, the learned counsel for the appellants, contended that, prior to April 1, 1990 cardamom was taxable at multi-point at five per cent ; and the entry 195 of the First Schedule was inserted by Act 29 of 1990 notified in gazette dated May 29, 1990, changing the point of levy at the "last purchase" in the State, with effect from April 1, 1990, and the appellant bona fide, filed their returns disclosing local sales of cardamom as per law existed prior to April 1, 1990, that after became aware that cardamom during the year 1990-91 was assessable at the point of "last purchase", the appellant voluntarily filed a statement of last purchase of cardamom disclosing a turnover of Rs. 18,73,620.61 before the assessing authority at the time of check of accounts and prior to the completion of assessment for the year 1990-91. The learned counsel for the appellant added that the assessing authority after due verification of accounts and several decisions brought to his notice ought to have accepted the contentions and dropped the levy of penalty under Section 12(5)(iii) as rightly deleted by the first appellate authority.
7. Argued further that the Joint Commissioner SMR, failed to appreciate the order of the Appellate Assistant Commissioner in deleting the penalty under Section 12(5)(iii) as there was no illegality or irregularity in the said order, and also erred in law in rejecting the appellant's contention and the ratio of the decisions brought to his notice.
Supporting his argument the learned counsel for the appellant cited the decision of the High Court of Madras in State of Tamil Nadu v. Indian Silk Traders reported in [1994] 94 STC 157 [App.].
8. As against this, Mr. M. Venkateswaran, the learned Senior Standing Counsel, argued that the appellant did not disclose the purchase turnover in their returns and did not pay the tax due thereon before final assessment and therefore it was construed as incomplete and incorrect returns and thus warranted invoking of Section 12(5)(iii) and levy of penalty.
The learned Senior Standing Counsel representing the Revenue, took the support of the decision of this Tribunal in the case of Nalvar Provision Stores v. State of Tamil Nadu reported in [2001] 123 STC 25 wherein, the division Bench justified the levy of penalty under Section 12(5)(iii) if no revised return filed or tax paid before final assessment.
9. From the pith and submissions of Mr. R. Gangadharan, learned counsel for the appellant and Mr. M. Venkateswaran, Senior Standing Counsel (Taxes) representing the Revenue ; the one and only question that arises for consideration in this T.C. (A) is as to :
"Whether the order of the Joint Commissioner SMR on the facts and circumstances of the case restoring the order of the assessing authority imposing the penalty under Section 12(5)(iii) for refraction or violation of provisions under Section 12(4)(iii) (as they stood then) of the Act, during the year 1990-91 is sustainable in law ?"
10. We considered the rival contentions and the records placed before us carefully.
Section 12(4) and 12(5) of Act as they stood then read as follows :
"(4) Notwithstanding anything contained in Sub-sections (1), (2) and (3), the assessing authority may, if it is satisfied that the accounts maintained by a dealer are correct, assess such dealer on the basis of such accounts, if such dealer has,--
(i) failed to submit the prescribed return ; or
(ii) failed to submit the prescribed return within such period as may be prescribed ; or
(iii) if the return submitted is found to be incorrect or incomplete.
(5) The assessing authority may, in the order of assessment or by a separate order, direct that the dealer shall, in addition to the tax assessed under Sub-section (4), pay by way of penalty, a sum--
(i) which, in the case referred to in clause (i) of Sub-section (4), shall not be less than fifty per cent but which shall not be more than one hundred and fifty per cent of the amount of tax payable ;
(ii) which, in the case referred to in clause (ii) of Sub-section (4), shall be equal to two per cent of the tax payable for every month or part thereof during which the default in the submission of the return continued, subject to a maximum of fifty per cent of the tax ; and
(iii) which, in the case referred to in clause (iii) of Sub-section (4), shall not be less than fifty per cent but which shall not be more than one hundred and fifty per cent of the difference in tax payable on the turnover disclosed in the return and that determined by the assessing authority.
A plain reading of the Sub-section (4) of Section 12 would indicate that it would come into play when the returns filed by the assessee which are found to be incorrect or incomplete, are inconsistent with the entries found in the accounts which are accepted as correct. Thus Sub-section (4) of Section 12 covers a difficult situation and is intended to apply to a case where there is discrepancy between the returns submitted, which are found to be incorrect or incomplete and the entries made in the books of account, which are found to be correct.
11. In the instant case, the original assessment was made on March 30, 1991; subsequently a revisional order imposing the penalty under Section 12(5)(iii) and Section 22(2) was issued by the succeeding assessing authority on November 29, 1994.
12. The revisional authority (Joint Commissioner, SMR) concur with the lower authorities that the appellants filed a form of statement at the time of final assessment which disclosed the last purchase turnover of cardamom. However, he found that the appellants failed to pay the tax due thereon at the time of filing statements. Therefore, it shall be construed as "incorrect and incomplete" returns.
13. The crucial point to decide in this case is whether the statements of purchase details of cardamom, filed by the appellants at the time of final assessment are to be determined as "incorrect or incomplete" or not.
14. The arguments and the decisions urged before us are mostly connected with filing of returns or revised returns. In view of the various decisions brought before us, we have no hesitation to accept the statement of purchase details of cardamom filed at the time of final assessment before the assessing authority shall be construed as "revised returns".
15. But to decide the correctness and completeness of the revised return/returns, we took the support of the decision of the honourable High Court reported in State of Tamil Nadu v. Indian Silk Traders [1994] 94 STC 157, page 163 which gives us a key to unlock, observed as follows :
"Any attempt to define the limits of Section 12(4) and 12(5) of the Act and lay down a universal formula for the imposition of the penalty would, in our attempt be improper and would not be adequate to meet the diverse situations which may arise on the facts of the particular case. We have already noticed a few cases under the Madhya Pradesh Act. We may also notice in this connection that, in several cases, this Court has taken the view that where an assessee files a revised return and pays the tax on such revised return, before the assessment is completed, penalty cannot be levied under Section 12(5) of the Act. In this connection, reference may be made to the recent judgment of this Court in Bhavani Mills Ltd. v. State of Tamil Nadu [T.C. (R) No. 1297 of 1982 dated October 3, 1991 Reported in [1994] 94 STC 120], Kalyani Agencies v. State of Tamil Nadu (1984) 10 STL 151 (Mad.) and State of Tamil Nadu v. P.S. Srinivasa Iyengar & Sons [1993] 89 STC 349 (Mad.) ; [1989] 10 SISTC 155 (Mad.) (T.C. No. 77 of 1989 dated April 19, 1989). The exceptions, we have noticed where the assessee can escape the penal consequences of Section 12(5) of the Act are only illustrative and not exhaustive."
16. A conjoint reading of Sub-rules (2), (3) and (4) of Rule 18 under the TNGST Rules, would indicate that, a complete return shall accompany the proof of payment of tax, (i.e.), if the proof of payment of tax is not accompanied, then the return shall be construed as "incomplete". In the instant case the monthwise details of last purchase of cardamom, the details of tax arrears paid and form No. 29, levying penalty under Section 24(3) for the assessment year 1990-91 filed by the learned counsel for the appellant clearly show that the tax due on the last purchase turnover of cardamom was not paid along with the statement of purchase details filed at the time of final assessment but paid on a later date.
17. Further we would like to point out the observation of the honourable High Court in State of Tamil Nadu v. Indian Silk Traders [1994] 94 STC 157, page 164 :
".........we reiterate that the facts of each case have to be carefully analysed before coming to the conclusion whether a particular return is incorrect or incomplete and whether the assessee returned an incomplete or incorrect return, more with a view to postpone the tax legitimately due to the Government, or under a bona fide belief that his return was in accordance with law."
18. Considering all the circumstances and facts stated supra, we are of the opinion that, the question of bona fide, deliberateness, wilfulness will not stand before us but the word "incomplete" return. From the order of the assessment dated March 30, 1992, we find that the assessing authority determined the turnover only based on the accounts. Even if we accept that the statement filed at the time of final assessment as "revised returns", we are unable to accept it as a "complete return" since there was no proof of payment of tax due accompanied the return.
19. Therefore, we have no hesitation to hold that the original assessment dated March 30, 1992 made by the assessing authority squarely falls under Section 12(4)(iii) of the Act as it stood then and the order of the Joint Commissioner (SMR) in confirming the penalty does not warrant any interference.
20. The tax case (appeal) is accordingly dismissed.
And this Tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned.
Issued under my hand and the seal of this Tribunal on the 5th day of April, 2002.