1992 (4) TMI 236 - HC - VAT and Sales Tax

High Court upholds Tribunal decision on tax penalty for co-op milk union, emphasizing assessee's good faith

State of Tamil Nadu Versus Periyar District Co-operative Milk Producers Union Limited

The High Court of Madras dismissed the revision petition, affirming the Tamil Nadu Sales Tax Appellate Tribunal's decision to set aside the penalty ... - Issues:1. Challenge to the order of the Tamil Nadu Sales Tax Appellate Tribunal regarding the levy of penalty under section 12(5)(iii).2. Interpretation of the bona fide belief of the assessee in claiming exemption under the Tamil Nadu General Sales Tax Act, 1959.Analysis:The High Court of Madras heard a revision petition filed by the Revenue against the order of the Tamil Nadu Sales Tax Appellate Tribunal. The case involved a co-operative milk producers union that did not include sales of cattle feed in the taxable turnover for the assessment year 1982-83, based on the exemption granted in previous years. However, the Revenue revised the assessments on June 2, 1983, bringing the sales of cattle feed under taxation. The assessing authority levied a penalty under section 12(5)(iii) for not including the sales turnover of cattle feed in the return. The Tribunal found that the assessee had a bona fide belief in claiming exemption as per government notifications and past exemptions, setting aside the penalty.In a related judgment, the First Bench of the High Court discussed the scope of section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, emphasizing the need to consider the bona fides of the assessee before imposing penalties. Referring to previous legal guidelines, the Court reiterated the importance of analyzing each case to determine if the assessee acted under a bona fide belief or with an intent to evade tax. The High Court, applying these principles, concluded that the assessee genuinely believed in claiming exemption for cattle feed sales and thus rightfully excluded the turnover. The Court upheld the Tribunal's decision to set aside the penalty, aligning with the legal precedent established in the earlier judgment.Ultimately, the High Court dismissed the revision petition, affirming the Tribunal's decision to set aside the penalty imposed on the co-operative milk producers union. The Court found that the assessee had a genuine belief in claiming exemption for cattle feed sales, in accordance with legal provisions and past practices, thus justifying the exclusion of turnover from the taxable amount. The judgment highlighted the importance of considering the bona fides of the assessee while interpreting tax laws and imposing penalties under the relevant statutes.