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2014 (5) TMI 685 - HC - VAT and Sales TaxRate of Tax – Suppression of turnover - Exemption - Purchase of raw hides and skins from outside the State – Bogus claims - Furnishing of declaration forms - Amendment of Provisions – Hearing of Proceedings - "pending proceeding" – Interpretation of Statutes - Whether there had been any initiation of proceedings u/s 34 of the TNGST Act – Levy of penalty - Submission of incorrect or incomplete return - Section 12(3)(b) of TNGST Act – Held That:- Judgment in State of Tamil Nadu and another V. K.Damodarasamy Naidu & Bros and another [2007 (9) TMI 542 - MADRAS HIGH COURT] followed – The proceedings initiated on 31.3.1998, even though served subsequently, is a "pending proceeding" on the files of the Joint Commissioner – Given the fact that a decision was already taken and a notice had been signed by the Joint Commissioner on 31.3.1998 initiating revisional proceedings, applying the decision of this Court as to the meaning of the phrase 'pending', the proceedings of the Joint Commissioner are saved by the provision u/s 14 of the Amending Act 60 of 1997 - Section 14 of Act 60 of 1997 saves all actions in the present case as one falling u/s 14 of Act 60 of 1997. The mere fact that the turnover was drawn in the books of accounts, by itself, would not save the assessee from the operation of the provisions of Section 12(3)(b), which is concerned about the submission of incorrect or incomplete return - Thus going by the Explanation to Section 12(3)(b) of the Act, estimation of turnover and rejection of claim for exemption or concessional rate, which are subject to the furnishing of declaration forms, would not invite penal provisions and that actual suppressions alone would attract penal provision - Since the explanation to the said provision was inserted under Act 60 of 1997, effective only from 1.4.1998, the benefit of the same could not be extended to assessee herein - Thus, accounts maintained by the assessee is of relevance both on the aspect of the nature of transaction stated therein as well as to the turnover given therein for the purpose of understanding Section 12(3) of TNGST Act. The turnover of ₹ 49,06,107/- treated as local sales in the assessment, was considered by the Appellate Assistant Commissioner - On this, the turnover of ₹ 21,62,834/- was exempted as export turnover on the basis of the materials produced by the assessee - However, in respect of the balance of the turnover, AO pointed out that the assessee had created records that it had purchased raw hides and skins from outside the State - Thus, the Assessing Authority levied tax under TNGST Act. This Court do not find any justification to allow the Revision - However, the Joint Commissioner considered restoring the levy of penalty as given in the order, which means, the relief granted to the assessee on quantum assessment also was taken in for restoring the penalty - As far as the Revenue is concerned, the Appellate Assistant Commissioner's order, granting relief to the turnover of ₹ 36,36,259/-, was not the subject matter of revision - JC should have considered Section 12(3)(b)(i) of TNGST Act, as to the quantum of penalty payable by the assessee - In fairness to the claim of the assessee, the proper course herein would be to set aside the levy of penalty and thereby direct AO to quantify the penalty payable in respect of the turnover - Thus, AO shall re-fix the penalty in tune with the order of the Appellate Assistant Commissioner by granting relief to the assessee on the turnover of ₹ 36,36,259/-, and pass orders on the portion which was upheld by the Appellate Assistant Commissioner – Decided partly in favour of Assessee.
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