Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (10) TMI 601 - MADRAS HIGH COURT

2016 (10) TMI 601 - MADRAS HIGH COURT - TMI - Levy of penalty u/s 27[3] of the TNVAT Act, 2006 - evasion of sales tax on purchase of earth - Held that: - the decision in the case of Commissioner of Income-Tax, West Bengal And Another Versus Anwar Ali [1970 (4) TMI 1 - SUPREME Court] relied upon where it was held that the true nature of penalty is understood to provide for a deterrent element against possible recurrence of default on the part of the assessees and hence, any order imposing penalty .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er. At the first round of assessment, in fact it has escaped the attention of the AO. In other words, no serious exception has been taken thereto at the first instance. But, it is subsequent thereto, the scrutiny has been undertaken. - There should have been a specific finding recorded by the AO that the turnover that has escaped in the first and initial round of assessment, is the result of wilful non-disclosure or suppression by the dealer. There is no such finding recorded in the Revised .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

avor of respondent-assessee. - Tax Case Revision Petition No. 24 of 2016 - Dated:- 14-9-2016 - Nooty Ramamohana Rao And P. Devadass, JJ. For the Petitioner : Mr. S. Kanmani Annamalai For the Respondent : Mr. P. Rajkumar ORDER [ Judgment of the Court was delivered by Nooty Ramamohana Rao, J. ] Tax Case [Revision Petition] No.24 of 2016 is preferred under Section 60 of the Tamil Nadu Value Added Tax Act, 2006 by the State, calling in question the order dated 14.10.2014 passed by the Sales Tax Appe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ok Kumar of Poonamallee for a value of little more than ₹ 1.18Crores for the purpose of supply, filling, spreading, levelling and compacting the project site. The Assessing Officer has levied tax at the rate of 4% on the estimated turnover of ₹ 1,30,81,453/- as the dealer has not paid the tax on the sale value of the goods acquired from Sri.A.Ashok Kumar. A penalty of ₹ 7,84,887/- was also imposed under Section 27[3] of the Tamil Nadu Value Added Tax, 2006 [hereinafter referred .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

question which has engaged our attention was whether the respondent/dealer/assessee, in the given facts and circumstances, is not liable to be imposed the penalty under Sub-section 3 of Section 27 at all or not ? 4. The Assessing Officer by his Pre-Revision Notice dated 08.10.2012 has proposed to levy tax on the sale value of the earth purchased by the respondent /dealer/assessee from Sri.A.Ashok Kumar. While doing so, it was also proposed to levy of penalty under Section 27[4] of the Act. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the Appellate Deputy Commissioner, Commercial Tax. Thus, came to be instituted a further Appeal before the Sales Tax Appellate Tribunal, which by its order dated 14.10.2014, while confirming the levy of the tax amount, has set aside the penalty imposed. Thus, giving rise to the present revision. 5. Heard Mr.S.Kanmani Annamalai, learned Additional Government Pleader for Commercial Tax as well as Mr.P.Rajkumar, learned counsel for the respondent/dealer/assessee. 6. It is mainly contended by th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ection (4) of Section 27 of the Act and the said provision has in fact no application to the present set of facts. It thus reflects the mechanical attitude adopted by the Assessing Officer. It is also further pointed out by the learned counsel for the respondent/dealer/assessee that the Tribunal has sustained the levy of tax for an altogether a different reason than the one adopted by the Assessing Officer for levying the tax. 8. It is apt, therefore, for us to decipher the dynamics behind impos .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in nature or being merely meant for imposition of an additional tax, the liability to pay such tax having been designated as penalty under Section 28. One line of argument which has prevailed particularly with the Allahabad High Court in Lal Chand Gopal Das's case [supra] is that there was no essential difference between tax and penalty because the liability for payment of both was imposed as a part of the machinery of assessment and the penalty was merely an additional tax imposed in certa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on is penal in the sense that its consequences are intended to be an effective deterrent which will put a stop to practices which the Legislature considers to be against the public interest. It is significant that in C.A.Abraham's case [supra] this court was not called upon to determine whether penalty proceedings were penal or of quasi-penal nature and the observations made with regard to penalty being an additional tax were made in a different context and for a different purpose. It appear .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing that the assessee is liable to payment of penalty. As has been rightly observed by Chagla, C.J., in Commissioner of Income-tax, Ahmedabad v. Gokuldas Harivallabhdas the gist of the offence under Section28[1][c] is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and therefore the department must establish that the receipt of the amount in dispute constitutes income of the assessee. ... [ emphasis is played by me ] B .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rrect approach to belittle the importance of the observations in the earlier paragraph in the judgment, by referring to the subsequent paragraph. Both the passages contain very valid reasons for holding that the imposition of penalty was not justified, and they are to have cumulative effect. This does not mean that the earlier reasoning is less important. The observations in the judgment in Ponnusamy Asari v. State of Tamil Nadu [T.C.Nos.451 to 455 of 1969] appeal to us. So also the reasoning in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

penalty is almost an automatic one whenever an estimate is made when it is found that no return has been filed or that the return filed did not indicate the turnover to the extent fixed on the basis of the best judgment basis. All the circumstances of the case will have to be carefully scrutinised and the question whether penalty should be imposed must be considered on the basis of the judicial determination of the question whether grounds exist for the imposition of such penalty. In order that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y at any time within a period of five years from the date of assessment determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary. Sub-section (2) under Section 27 of the Act dealt with a situation, where input tax credit has been either wrongly levied or availed or where the dealer has produced false bills, vouchers, declaration certificate or other documents with a view to s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the tax due in respect of such claim. Sub-section (4) therefore, can be invoked by the State only in the event, the input tax credit has been wrongly availed by the dealer or the claim of the said credit was the result of production of false bills, vouchers or declaration certificates etc of the dealers. 12. Since in the instant case, it was not the input tax credit, which the dealer never claimed, was the subject matter of consideration leading to reassessment of tax liability, consequently the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Act clearly refers to the proposed revision of the assessment undertaken under Sub-section (1) of Section 27 of the Act and then authorised imposition of a penalty on a graded scale. As the Pre-revision Notice itself refers to the proposed revision under Sub-section (1) of Section 27 of the Act, the penalty that can become leviable in such a scenario is the one provided under Sub-section (3) of Section 27 of the Act, but not under Sub-section (4) of Section 27 of the Act. Hence the error commi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and 150% of the tax due, on such turnover, which has escaped the assessment earlier, depending upon the frequency of delinquency of the dealer. Sub-section (3) of Section 27 of the Act clearly required the Assessing Officer to be satisfied that the escape from the assessment is due to wilful non-disclosure of assessable turnover by the dealer. The provision under Sub-section (3) of Section 27 of the Act, therefore, requires, such a clear finding as a condition precedent for exercise of power av .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ork, where construction of a residential project was undertaken to be developed. It is true that it is the Enforcement Wing officials of the Department who have detected that the dealer/assessee has paid Sri.A.Ashok Kumar, an unregistered dealer, a little more than ₹ 1.18 Crores towards purchase of earth, its spreading, levelling and compacting exercise at the project site, but no tax is paid thereon. It is, therefore, they who brought out that the said amount has not been subjected to tax .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xceeding 300 millimetres depth. Therefore, a substantial portion of the monies paid to Sri.A.Ashok Kumar also go for the labour work, apart from going towards the machinery hiring, needed for levelling and compacting purposes. There is certainly considerable force behind this submission. But, however, if the respondent/dealer/assessee has taken any such plea and made any such attempt before the Assessing Officer to demonstrate as to what percentage of the payment goes towards cost of earth compo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion to subscribe to the view of the Tribunal that the respondent/dealer/assessee is liable to be charged under Section 12 of the Act as he has procured the material from an unregistered dealer. On the other hand, there is much force behind the submission of the respondent dealer that it is a works contract and therefore, Section 5 of the Act is what gets attracted. But, however, we hasten to add that, in the instant case, we are not required to advert to this question inasmuch as this revisio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version