2012 (1) TMI 142 - HC - VAT and Sales Tax

Whether in the facts and circumstances of the case the Appellate Tribunal is right in deleting the penalty imposed over a transaction of the REP licence when the transaction has not been disclosed in the returns? Held that - While considering the appeal the Appellate Assistant Commissioner had not gone into the question of bona fides of the assessee. Nevertheless by placing reliance on the judgment of this court in P.S. Apparel s case 1994 (4) TMI 366 - MADRAS HIGH COURT while affirming the levy of penalty had reduced the penalty from 150 per cent to 50 per cent which according to the assessee was not in accordance with the said judgment. Since the claim of the assessee was that they were under the bona fide belief that the sale of REP licences/exim scrips was not goods they did not disclose the same in the returns and they preferred appeal to the Tribunal. The Tribunal also upheld their contention and allowed the appeal. In our opinion as the issue has been settled by this court in the abovesaid judgment we are unable to take a different view on the facts and circumstances of this case. Accordingly we are of the view that the Tribunal is correct in deleting the penalty and we confirm the order of the Tribunal and dismiss the tax case (revision).

Summary

Issues:
1. Whether the Appellate Tribunal was correct in deleting the penalty imposed over a transaction of the REP license when the transaction was not disclosed in the returns?

Analysis:
The case involved an appeal by the Revenue against the deletion of a penalty imposed on an assessee engaged in the manufacture and export of hosiery garments for not disclosing the turnover from the sale of REP license and exim scrip in the assessment year 1992-93. The assessing officer proposed a penalty of 150% of the tax assessed due to non-disclosure, which was later reduced to 50% by the Appellate Assistant Commissioner based on the assessee's claim of bona fide belief. The Tribunal further deleted the penalty, citing the assessee's belief that they were not liable to show the turnover. The Revenue contended that the penalty should not have been deleted as the turnover was not disclosed in the returns. The assessee argued that they acted under a bona fide belief and relied on precedents to support their stance.

The High Court considered the legal position regarding the imposition of penalties under the Tamil Nadu General Sales Tax Act. Referring to previous judgments, the Court highlighted the importance of assessing the bona fides of the assessee before imposing penalties for non-disclosure of turnover. The Court noted that while the Appellate Assistant Commissioner had not considered the bona fides of the assessee, the Tribunal had upheld the appeal based on the assessee's belief that the turnover need not be disclosed. The Court emphasized that the issue had been settled in previous judgments and upheld the Tribunal's decision to delete the penalty. The Court confirmed the order of the Tribunal and dismissed the tax case revision, with no costs awarded.

In conclusion, the High Court held that the Tribunal was correct in deleting the penalty imposed on the assessee for non-disclosure of turnover from the sale of REP license and exim scrip. The Court emphasized the importance of assessing the bona fides of the assessee before imposing penalties and confirmed the Tribunal's decision based on settled legal principles and precedents.