TMI Blog2002 (12) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... lso assessees on the file of the first respondent for the purpose of the said Act 13 of 1990 as well as sales tax. 3.. On August 1, 1990, the petitioners addressed the first respondent, Deputy Commercial Tax Officer, Kumbakonam, as to whether an entry tax has to be paid for vehicles in stock and also the method of payment. During the interview the petitioner was informed that for dealers who pay sales tax, there is no need to pay entry tax since levy is in lieu of the other. Between August 1, 1990 and February 16, 1991, the petitioner effected sales of nine motor vehicles in respect of which the petitioner collected appropriate sales tax and surcharge and submitted the returns and paid the said taxes. The petitioner has neither collected nor paid entry tax. The petitioner paid the sales tax levied under the Tamil Nadu Additional Sales Tax Act, 1970, out of the profits of the dealership transaction. The return so filed was accepted by the first respondent and assessment was completed by proceedings dated January 31, 1992. The first respondent accepted the returns as well as the sales tax paid and adjusted the remittance towards tax. 4.. The petitioner was informed during the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrong assessment or loss of revenue. 9.. It is contended that the impugned demand is vitiated by error apparent and non-application of mind, in that the respondents having noticed that the entry tax has been determined at 5 per cent, whereas tax demand was calculated at 8 per cent, when penalty demanded, which is erroneous and illegal, and should have taken steps to rectify the demand. 10.. The imposition of penalty is an abuse of process. Under section 15 of the Tamil Nadu Act 13 of 1990, there could be no imposition of penalty for error or misconstruction or for bona fide conduct. When once the petitioner has paid the sales tax, surcharge and additional sales tax for the transaction, it will automatically exclude the liability towards entry tax as per the statutory provision. 11.. Mr. Natarajan, learned Senior Counsel, further contended that in any event the first respondent should have first set aside all the sales tax erroneously assessed and paid, for which steps for refund were allegedly made before serving the impugned demand and if such steps have been taken there would have been no demand towards entry tax and in fact a refund has to be ordered. It is contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not sustainable as set-off would arise only if the tax is paid under the entry tax in terms of section 4 of the said Act, which the petitioner failed to pay. Therefore, the plea of set-off is a misconception. The legal contentions advanced by the petitioner are devoid of merits and no interference is called for with the assessment proceedings as well as the levy of penalty. The learned Government Advocate prayed for dismissal of the writ petition. 15.. Heard Mr. C. Natarajan, learned Senior Counsel appearing for the petitioner and Mr. Nedunchezhian, learned Government Advocate appearing for the respondents. 16.. As regards the plea of limitation, during the hearing Mr. Natarajan, learned Senior Counsel, fairly stated that such a plea is not sustainable in the light of the statutory provision and, therefore, he is not pressing the plea of limitation. The validity of the Tamil Nadu Act 13 of 1990 is no longer res integra as a division Bench of this Court and the Supreme Court have upheld the validity. 17.. The following points arise for consideration in this writ petition: "(i) Whether payment of sales tax by the petitioner in respect of the transactions in question is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evy of entry tax is compensatory in nature and it cannot be described as a purchase tax. The same view has been followed by the Supreme Court in State of Bihar v. Bihar Chamber of Commerce reported in [1996] 103 STC 1; (1996) 9 SCC 136. 22.. In the present case, it is admitted that the petitioner has filed a return under the Sales Tax Act in respect of the very same vehicle transaction and sales tax has been paid. The authority, who assessed the sales tax is the same authority, who is also the assessing authority under the Entry Tax Act. It is rightly pointed out by Mr. Natarajan, learned Senior Counsel, that it is not a case of suppression or concealment or failure to pay the tax with the intention, much less deliberate intention of concealing the transaction or evading to pay the tax payable, but it is a case of bona fide mistake committed by the petitioner and the respondents have also contributed for the same. There is not only merit but also substance in this contention advanced by the counsel for the petitioner, as seen from the correspondence exchanged between the petitioner and the Commercial Tax Officer concerned. 23.. The petitioner in respect of the nine vehicles has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same towards the entry tax. In fact, there will be an excess payment, if such an adjustment is made. As stated by the Senior Counsel, the petitioner is not anxious to get refund of the excess payment made. This would demonstrate that the petitioner has not suppressed the import of vehicles, but there was a doubt, which prompted him to approach the Commercial Tax Officer for clarification, but the said authority kept silent and, therefore, the petitioner has filed a return as if it is a local sales. At any rate, the tax actually paid is higher than the rate of tax payable under the Entry Tax Act. 26.. It may be that section 4 of the Act provides for a converse case, but there is no rule or statutory provision, which bars the respondent from adjusting the amount already remitted towards general sales tax when import or the sales of vehicles in question are not liable to be assessed under the Tamil Nadu General Sales Tax Act and setting it off towards levy of entry tax. The levy, which is not authorised by law cannot be enforced nor the respondents could contend that they will keep the collection of tax, though they are not authorised to levy and collect. In the present case, levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faulter as it is a deemed remittance. As a result, such arbitrary levy of penalty cannot be sustained. 29.. One other technical contention advanced by Mr. Natarajan, learned Senior Counsel being, before levying penalty, an opportunity of hearing should have been afforded, though a notice was served and an objection has been submitted. Section 15 of the Act provides for imposition of penalty. The said section also provides that before imposing penalty, the assessing authority shall afford a reasonable opportunity of being heard apart from a notice in writing. In the present case, no opportunity of hearing has been afforded, but only a notice has been served on the petitioner, to which the petitioner has submitted his objection. There is force in the contention advanced by Mr. Natarajan, in that the respondent has imposed the penalty without affording reasonable opportunity of being heard. 30.. In this respect, Mr. Natarajan, learned Senior Counsel relied upon the following pronouncements of this Court and the Karnataka High Court in support of his contention: "(1) Rajam Offset Printers v. Commercial Tax Officer, Madras (1995) 8 MTCR 55 (Mad.); (2) Azhagappa Cotton Mills v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is contumacious or dishonest, or acted in conscious disregard of its obligations, penalty is not liable to be imposed. In this context, the Supreme Court held thus: "Under the Act penalty may be imposed for failure to register as a dealer: section 9(1) read with section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial bre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him of the necessary refund where there had been excess realisations, or adjustment as the case may be. In the counter-affidavit of the department in these writ petitions, there is an averment for the purpose of meeting this complaint, that the assessment under the Madras General Sales Tax Act in respect of the turnover involved in these years will be 'revised' by the appropriate authority suitably after the present assessment proceedings are finalised. It is not clear to me what is meant by the statement about 'suitable revision'. It is a vague statement, and the petitioner feels apprehension about his relief. It will be much better for the assessing authorities to give credit to the amounts collected from the assessee under the assessment made under the Madras General Sales Tax Act when making a demand for the assessment at the higher rate levied under the Central Sales Tax Act so that the assessee is not compelled to pay over any part of the sum twice. But if he had already paid any and twice over the simplest way is to give credit to what has already been paid twice over and collect only the balance and make the necessary adjustment between the amounts due to be collected u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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