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2022 (11) TMI 789 - HC - VAT and Sales TaxLevy of penalty u/s 23 of the Tamil Nadu General Sales Tax Act, 1959 - Process amounting to manufacture or not - activity undertaken by the petitioner on job work basis for dyeing fabrics - eligibility to procure furnace oil against Form XVII under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 - HELD THAT:- The penalty under Section 23 of the Act is attracted where if any person purchasing goods is guilty of an offence under Section 45(2)(e) of the Act. As per said Section 23, the authority can impose penalty for a maximum amount not exceeding one and a half times (150%) the tax payable on the turnover relating to the sale of such goods at a rate which is equal to the rate prescribed in the First Schedule less three percent - As per Section 45(2)(e) of the Act, if any person who after purchasing any goods in respect of which he has made a declaration under the second proviso to Sub-Section (3) or Sub-Section (5) of Section 3 fails without reasonable excuse to make use of the goods for the declared purpose, such person is a guilty of such offence and penalty may be imposed on him. On going through the Circulars of the Principal Commissioner and Commissioner of Commercial Taxes and the instructions therein are no doubt binding on the officers of the Department. However, they are not binding either on the Higher Jurisdiction Forum such as Tribunal, High Court or the Supreme Court in terms of the decision of the Hon'ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING & WIRE INDUSTRIES [2008 (10) TMI 5 - SUPREME COURT]. Section 23 of the Act is elastic in nature. Discretion of power is vested with the Authority to impose penalty which is a maximum penalty. Discretion vested with a quasi jurisdictional authority cannot be taken away by a Circular. Therefore, Circular / Clarification of the Principal Commissioner and Commissioner of Commercial Taxes which is contrary to the provisions of the Act is not binding on the Court - The activity undertaken by the petitioner would have amounted to manufacture within the meaning of Central Excise Act, 1944 with introduction of Section 3A of the Central Excise Act, 1944 with effect from 14.05.1997 which was later omitted by Finance Act, 2001. The dispute pertains to the Assessment Year 2000-2001. Though the order of the second respondent Appellate Assistant Commissioner has placed reliance on the Circular / Instruction of the Principal Commissioner and Commissioner of Commercial Taxes dated 27.02.2002 which was reversed by the Appellate Tribunal, considering the fact that the petitioner has also paid back the tax and concessional availed, the reduced penalty imposed by the second respondent Appellate Assistant Commissioner in the peculiar facts of the case is to be upheld and the impugned order of the Appellate Tribunal dated 05.10.2004 is quashed - Petition allowed.
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