2002 (12) TMI 573 - HC - VAT and Sales Tax

Court rules in favor of petitioner, quashes entry tax demand, penalty, and orders set-off.

Kasi and Sethu Versus Deputy Commercial Tax Officer (DG-CTO), Kumbakonam and another

Kasi and Sethu Versus Deputy Commercial Tax Officer (DG-CTO), Kumbakonam and another - [2003] 131 STC 73 (Mad) Issues Involved:1. Jurisdiction and Limitation2. Validity of Entry Tax Demand3. Imposition of Penalty4. Opportunity of HearingSummary:1. Jurisdiction and Limitation:The petitioner argued that the first respondent lacked jurisdiction to serve the proceedings as they were time-barred u/s 8(5) of the Tamil Nadu Act 13 of 1990, which bars assessment beyond three years. However, during the hearing, the petitioner conceded that the plea of limitation was not sustainable in light of the statutory provision.2. Validity of Entry Tax Demand:The petitioner, a dealer in motor vehicles, contended that they had paid sales tax, surcharge, and additional sales tax for the nine vehicles in question, and thus, the entry tax demand was erroneous. They argued that the entry tax should be set off against the sales tax already paid, as per section 4 of the Entry Tax Act. The court found merit in this contention, noting that the petitioner had made a bona fide mistake and there was no deliberate intention to evade tax. The court held that the tax paid under the General Sales Tax Act should be adjusted against the entry tax liability.3. Imposition of Penalty:The first respondent imposed a penalty u/s 15(1) and 15(2)(a) of the Tamil Nadu Act 13 of 1990. The petitioner argued that the imposition of penalty was unwarranted as they had already paid a higher amount of sales tax, which should be adjusted against the entry tax. The court agreed, stating that the petitioner had made a bona fide mistake and there was no material to infer concealment or evasion. The court held that the imposition of penalty was not justified and should be set aside.4. Opportunity of Hearing:The petitioner contended that the imposition of penalty without affording an opportunity of hearing vitiated the penalty proceedings. The court agreed, noting that u/s 15 of the Act, the assessing authority must afford a reasonable opportunity of being heard before imposing a penalty. The court found that the petitioner had not been given such an opportunity, which further invalidated the penalty.Conclusion:The court allowed the writ petition, quashing the impugned proceedings and the imposition of penalty. The first respondent was directed to set off the general sales tax already paid by the petitioner against the entry tax payable for the nine vehicles and issue appropriate orders within four weeks. No costs were awarded, and the connected miscellaneous petition was closed.