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2019 (3) TMI 297 - HC - VAT and Sales TaxPenalty u/s 27(4)(1) of TNVAT Act - AO levied penalty u/s.27(3) of the Act - no findings have been given by the officer on "wilful suppression of turnover" - Penalty u/s 16(2) of the TNGST Act - assessment was done at lower rate of tax @ 2% - Held that:- The Assessing Officer by order dated 25.05.2009 rejected the claim under Section 19(11) of the TNVAT Act as the assessee had filed the claim beyond the time limit prescribed. The Assessing Officer went one step further and levied penalty under Section 27(3) of the TNVAT Act. On reading of the assessment order dated 25.05.2009, it is seen that there is no discussion as to how the penalty is leviable under Section 27(3) of the TNVAT Act. In the grounds of appeal, the revenue sought to sustain the penalty levied under Section 27(3) of the TNVAT Act. The Tribunal heard the appeal and came to the conclusion that the Assessing Officer wrongly invoked Section 27(3) of the TNVAT Act instead of Section 27(4) of the TNVAT Act and Section 27(4) of the TNVAT Act being a machinery provision, it would operate automatically and the assessee is liable to pay penalty at 50% on the wrong claim of input tax credit in terms of Section 27(4)(i) of the TNVAT Act. After coming to such a conclusion, the Tribunal remanded the matter to the Assessing Officer with a direction to discuss under which section he proposes penalty either under Section 27(3) or Section 27(4) of the TNVAT Act or both and to what percentage penalty is leviable - the Tribunal committed serious error in holding that Section 27(4) of the TNVAT Act would stand attracted. The Tribunal ought to have considered the vital fact that for Section 27(4) of the TNVAT Act to stand attracted the assessee's case revision brought under Section 27(2) of the TNVAT Act. In otherwords, the Tribunal should record a finding that there has been wrongful availment of ITC or the assessee has produced false bills, vouchers, declaration certificate or any other document with a view to support his claim of input tax credit. Furthermore, the claim made by the assessee was outrightly rejected by the Assessing Officer as time barred and therefore, there is no allegation that the assessee had wrongly availed input tax credit . Thus, both the contingencies contemplated under sub-section (2) of Section 27 of the TNVAT Act do not stand attracted in the assessee's case - In such circumstances, sub-section (4) of Section 27 of the TNVAT Act can never be applied since the said section would apply only if an order has been passed under Section 27(2) of the TNVAT Act holding that either the assessee has wrongly availed input tax credit or he has produced false documents to support his claim of input tax credit. Thus, the Tribunal erred in passing the impugned order and more particularly going beyond the grounds raised by the revenue before it. The tax case revision is allowed and the substantial questions of law are answered in favor of the assessee.
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