1990 (10) TMI 346 - HC - VAT and Sales Tax

High Court reinstates penalty under Tamil Nadu Sales Tax Act, emphasizing deliberate non-disclosure of turnover

State of Tamil Nadu Versus MS Venkatasamy Raja

State of Tamil Nadu Versus MS Venkatasamy Raja - [1992] 86 STC 521 (Mad) Issues:1. Appeal against the order of the Tamil Nadu Sales Tax Appellate Tribunal setting aside the penalty under section 16(2) of the Tamil Nadu General Sales Tax Act.2. Dispute regarding sales transactions and non-disclosure of turnover for the assessment year 1972-73.3. Interpretation of the applicability of the judgment in Kathiresan Yarn Stores v. State of Tamil Nadu [1978] 42 STC 121 (Mad.) [FB] to the present case.4. Determination of whether the penalty under section 16(2) of the Act is warranted based on the facts and circumstances of the case.Analysis:The High Court of Madras heard an appeal filed by the Revenue challenging the order of the Tamil Nadu Sales Tax Appellate Tribunal, which had set aside the penalty imposed under section 16(2) of the Tamil Nadu General Sales Tax Act. The case revolved around the assessment year 1972-73, where the respondent was involved in the manufacturing and sale of sugarcane crushers and electrical motors to agriculturists. The turnover from these sales was not initially disclosed in the return submitted by the assessee. Upon discovering the sales through bank transactions, the assessment was reopened under section 16 of the Act. The respondent contended that there were no actual sales, claiming to have only manufactured machinery or issued bills for loan purposes. However, the assessing authorities did not accept these contentions. The Tribunal, after thorough evaluation, found that the sales made by the respondent were not disproved and upheld the reassessment of the escaped turnover, leading to the penalty being set aside due to lack of clear evidence and doubts regarding the transactions.The Additional Government Pleader argued that the Tribunal's decision to set aside the penalty was erroneous as all authorities had confirmed the existence of sales transactions and the willful non-disclosure of turnover. The court agreed with the government's position, emphasizing that the respondent failed to provide sufficient evidence to support their claims, and the non-disclosed turnover would have escaped assessment without inspection. Contrary to the Tribunal's reasoning, the court held that the judgment in Kathiresan Yarn Stores case did not apply to the present scenario, as the facts indicated a deliberate omission of turnover, warranting the penalty under section 16(2) of the Act. Therefore, the court allowed the appeal, reinstating the penalty while specifying no costs to be awarded in the matter.