1991 (8) TMI 297 - HC - VAT and Sales Tax

High Court upholds Tribunal's decision to delete penalty under section 12(3) of Sales Tax Act.

The High Court upheld the Tamil Nadu Sales Tax Appellate Tribunal's decision to delete the penalty imposed under section 12(3) of the Tamil Nadu General ... - Issues:1. Deletion of penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 by the Tamil Nadu Sales Tax Appellate Tribunal.2. Suppression of sales and levy of penalty based on best judgment assessment.Analysis:The case involved the deletion of a penalty levied under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 by the Tamil Nadu Sales Tax Appellate Tribunal. The dispute arose when the assessing authority added an amount to the taxable turnover due to alleged suppression of sales and levied a penalty of Rs. 19,239 under section 12(3) of the Act. The Appellate Assistant Commissioner reduced the addition to Rs. 58,110 and the penalty to Rs. 5,000, based on the actual suppressed turnover. The Tribunal upheld the addition to the turnover but deleted the penalty, leading to a revision before the High Court.The High Court analyzed the facts, noting the recovery of a pocket note book with entries of premium received by the assessee, which was not included in the turnover. The Court emphasized that the levy of penalty under section 12(3) is not automatic with best judgment assessment and requires proper exercise of discretion by the assessing authority. Referring to precedent, the Court highlighted that inability to explain certain documents does not automatically imply wilful suppression. The Court considered the explanation provided by the assessee, which was not accepted by the authorities, but deemed relevant for assessing the discretion exercised by the Tribunal in deleting the penalty.Ultimately, the High Court found that the Tribunal had properly and judiciously exercised its discretion in deleting the penalty, considering the facts and circumstances of the case. The Court observed that the Tribunal's decision was not perverse and did not warrant interference. Consequently, the High Court dismissed the revision, affirming the Tribunal's order to delete the penalty under section 12(3) of the Act. The Court concluded that in the absence of wilful suppression of turnover by the assessee, the Tribunal's decision was upheld, and no costs were awarded.