2007 (9) TMI 571 - HC - VAT and Sales Tax

Court revokes penalty order under Tamil Nadu Sales Tax Act, emphasizing penalties for deliberate acts.

Viking Warehousing Versus Commercial Tax Officer, Manali Assessment Circle, Chennai

The court set aside the penalty order imposed on the petitioner under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959. The court emphasized ... Levy of penalty - Held that:- In view of the submissions made by the learned counsel appearing for the petitioner and taking note of the decisions referred to in support of his contentions, the impugned order of the respondent, dated June 29, 2007, made in CST. No. 819523/2003-04, is set aside insofar as it relates to the levying of penalty of ₹ 75,600 on the petitioner, under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959. Issues involved: Assessment under Tamil Nadu General Sales Tax Act, 1959 and Central Sales Tax Act, 1956; Pre-revisional assessment notice for lease charges; Levying of penalty under section 12(3)(b) of the Act.Assessment under Tamil Nadu General Sales Tax Act, 1959 and Central Sales Tax Act, 1956:The petitioner, an assessee under both Acts, had an assessment order for the year 2003-04 accepting the reported turnover. However, a pre-revisional assessment notice was issued later regarding lease charges collected on cranes, which the petitioner believed did not fall under sales tax laws. After paying the tax on lease charges, a revisional assessment order was passed revising the turnover and levying a penalty under section 12(3)(b) of the Act.Pre-revisional assessment notice for lease charges:The petitioner argued that once the tax was paid before any show cause notice, the respondent lacked the power to levy a penalty. It was contended that penalty for escaped assessment can only be imposed if there was willful non-disclosure by the dealer. The petitioner cited a Division Bench decision stating that rectifying defects in returns before assessment completion does not warrant a penalty.Levying of penalty under section 12(3)(b) of the Act:The petitioner relied on a Supreme Court decision emphasizing that the imposition of penalty is discretionary and must be based on deliberate acts or omissions by the assessee, either for concealing income or providing inaccurate information. The court noted that the assessing officer's approach should be fair and objective, and penalty proceedings should not be initiated to harass the assessee. The respondent did not contest the petitioner's arguments.The court set aside the impugned order related to the penalty, citing the petitioner's arguments and legal precedents. The penalty of Rs. 75,600 under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959, was revoked. The writ petition was allowed with no costs, and the connected motion petition was closed.