TMI Blog2018 (4) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner : Mr.V.Hari Babu Addl. Government Pleader (Taxes) ORDER ( Order of the Court was made by S. Manikumar, J ) Instant Tax Case Revision is filed to revise the order dated 18.10.2001, passed in Coimbatore Tribunal State Appeal No.484/2000, on the file of the Sales Tax Appellate Tribunal (Additional Bench), Coimbatore. 2. Facts as deduced from the material on record are that Tvl.Divyar Garments, were finally assessed, on a total and taxable turnover of ₹ 12,05,759.00 and ₹ 4,30,759.00 respectively, for the assessment year 1997 98, under Tamil Nadu General Sales Tax Act, 1959, and levied penalty of ₹ 70,452.00, under Section 12(3)(b) of the Act. Aggrieved over the assessment, the dealer, filed an appeal before the Appellate Assistant Commissioner (CT), Pollachi, which deleted the penalty and remand the matter back to the assessing officer. Relevant portion of the appellate authority's order, dated 09.06.2000, is extracted hereunder:- I heard the arguments of both the Representatives and also verified the records produced before me. The only issue to be decided in these appeals is the levy of penalty under sec.16 (2) of the TNGST Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment should have been made only under CST Act. The Assessment made under TNGST Act are not sustainable. For the year 1998-99, the appellants have claimed that they receive the money only in April 1999. They have also claimed that this turnover was reported to the Department in the monthly return for April 1999 and paid the tax due there on during the month of April 1999. In view of the above, I set aside the penalty levied for the year 1998-99 and remand the case back to the assessing authority for fresh verification of the reporting of this turnover in the monthly returns for April 1999 during the year 1999-2000 and for passing appropriate orders. 7. To conclude the appeals relating to years 1996-97, 97-98 are allowed. The appeal relating to the year 1998-99 is remanded. 3. Being aggrieved by the same, State has preferred C.T.S.A.No.484 of 2000, before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, disputing the deletion of penalty of ₹ 1,30,993/-, under Section 16(2) r/w. Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959, for the year 1993 94. Vide Order, dated 18.10.2001, the Tamil Nadu Sales Tax Appellate Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which case it was held that for imposition of penalty wilful non-disclosure of assessable turnover must be proved beyond doubt. It should be proved that there is a deliberate intention to suppress the assessable turnovr. In the case on hand, the respondent have disclosed the turnover in the profit and loss account and they have paid the entire tax due on the premium receipts at the time of inspection itself. The authority should give reasons before proceedings to levy penalty and without a finding of wilful non-disclosured by the authority, the order to levy penalty cannot be held proper according to the decision in the High Court of Chennai in the case of R.E.M.Ranukutty Nadar v. The State of Madras reported in 31 STc 48 and 49. The Supreme Court in the case of Hindustan Steel Ltd v. State of Orissa reported in 25 STC 211 has held that unless there is a definite finding as to the wilful non-disclosure of the taxable turnover, the Assessing Authority will have no jurisdiction to impose the penalty. The respondent have produced the accounts which was seen and sealed by authority, the turnover was very much available in the books of accounts. In the case of Vikas Sales Corporation re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the sales tax authorities were justified in levying it. Till the judgment of the Madras High Court, on July 15, 1991, in Perambalur Sugar Mills Ltd v. State of Tamil Nadu (1992) 86 STC 17, the correct portion of law within the state of Tamil Nadu was not free from doubt. Even thereafter, the Sales Tax Tribunal had in subsequent orders held that transport subsidy was not includible in the taxable turnover. Such a view was held by the Tribunal in March, 19, 1993. It appears that on bonafide belief that planting and transport subsidies were not includible in the taxable turnover, the appellants had not include those amount in their turnover and for that reason non-inclusion of these two items in the turnover do not seem to be intentional. Though we have now held that the appellants were not right in not including the amounts of planting subsidy and transport subsidy in the taxable turnover, considering the facts and circumstances of the case, it would not be correct to say that they had acted deliberately in defiance of law or that their conduct was dishonest or they had acted in conscious disregard of their obligation under the Sales Tax Act. The Sales Tax authorities were, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 01.04.1992 onwards. 7. Learned Additional Government Pleader (Taxes), contended that in the assessment year 1997-1998, the dealers did not disclose the turnover, relating to REP sales in their returns filed and that they had failed to disclose the turnover even at the time of check of accounts, but disclosed the turnover, only after issue of pre-assessment notice, proposing to assess the turnover relating to REP licence. Therefore, he submitted that the said act cannot be taken as an act of voluntary discharge of an obligation by the dealer, under Section 13(2) of the TNGST Act, 1959 and hence, levy of penalty under Section 16(2) read with Section 12(3)(B) by the Assessing Officer, is in order. 8. He further contended that when the dealer had not filed any revised return and paid the tax before the final assessment, the Tribunal ought not to have interfered with the order of the Assessing Officer, who has rightly levied penalty under Section 12(3) of the Act. The Tribunal ought to have seen that the assessing officer imposed the penalty, inasmuch as the dealers have not reported the above turnover and paid tax as prescribed under the Act, which amounts to filing of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served thus:- The question is whether penalty can be levied while making the assessment under sub-Section (2) of the above Section merely because an incorrect return has been filed. The High Court was of the view that it is only if the assessment has to be made to the best of the judgment of the assessing authority that penalty can be levied. It seems to us that the High Court came to the correct conclusion because sub-sections (2) and (3) have to be read together. Sub-Section (2) empowers the assessing authority to assess the dealer to the best of its judgment in two events: (i). if no return has been submitted by the dealer under sub-section (1) within the prescribed period, and (ii). If the return submitted by him appears to be incomplete or incorrect. Sub-Section (3) empowers the assessing authority to levy the penalty only when it makes an assessment under sub-Section (2). In other words, when the assessing authority has made the assessment to the best of its judgment, it can levy a penalty. It is well known that the best judgment assessment has to be on an estimate which the assessing authority has to make not capriciously but on settled and recognised principles of jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e such being the turnover representing addition related to book turnover itself. Thus, even while calculating the turnover for the purpose of levy of penalty, the turnover, which are already available in the books of accounts are to be excluded and only those turnover which are estimated having reference to a specific concealment alone, the purpose of addition, invite the penal provisions under the Tamil Nadu General Sales Tax Act, 1959. In the decision reported in [2002] 125 STC 505 (Mad) (Appollo Saline Pharmaceuticals (P) Limited v. Commercial Tax Officer (FAC)) this court pointed out that when the assessment is based on the accounts turnover, the question of levy of penalty does not arise. 9. In the circumstances, applying the said decision reported in [2002] 125 STC 505 (Mad) (Appollo Saline Pharmaceuticals (P) Limited v. Commercial Tax Officer (FAC)) and the Explanation to section12(3)(b) of the Tamil Nadu General Sales Tax Act, the order of the Sales Tax Appellate Tribunal in levying penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 is set aside and the tax case (revision) is allowed. No costs. 18. In Tax Case Revision No.186 of 2009, da ..... X X X X Extracts X X X X X X X X Extracts X X X X
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