1997 (12) TMI 625 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to order dated August 22, 1991 in W.P. No. 7650 of 1983.
2. Assessment of taxable turnover for the year 1979-80.
3. Levying of penalty under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959.
4. Interpretation of statutory discretion in imposing penalties under section 22(2) of the Act.

Analysis:
The judgment delivered by the High Court of Madras pertains to an appeal challenging an order dated August 22, 1991, in W.P. No. 7650 of 1983. The case involved writ petitioners who were oil millers assessed by the first respondent for the assessment year 1979-80. The petitioners were assessed on a total taxable turnover, including purchase turnover of groundnut and sales of multipoint goods. The appellate authority ruled in favor of the petitioners, stating that the purchase turnover of groundnut was not taxable and the turnover of multipoint goods was below the taxable limit. Subsequently, the first respondent imposed a penalty under section 22(2) of the Act, which led to the filing of the writ petition.

The respondents justified the penalty by citing section 22(2) of the Act. The learned single Judge allowed the writ petition based on a previous division Bench judgment, emphasizing that there was doubt about the liability to tax at the relevant time. The petitioners had collected tax but promptly passed it on to the State, indicating their compliance. The court considered whether the penalty provision under section 22(2) could be applied and ruled in favor of the petitioners, noting the discretion of the assessing authority in such cases.

During the appeal, the Government Advocate reiterated the position presented before the single Judge, emphasizing the discretionary nature of imposing penalties under section 22(2). The court agreed with the single Judge's assessment that the first respondent had not exercised its statutory discretion properly. It was noted that since the petitioners had passed on the tax collected to the authorities, especially in a situation of doubtful tax collection, the imposition of the penalty was deemed unjust. Consequently, the court upheld the decision of the single Judge and dismissed the writ appeal without costs.

In conclusion, the High Court of Madras upheld the writ petitioners' appeal, emphasizing the importance of the assessing authority's proper exercise of statutory discretion in imposing penalties under section 22(2) of the Act.