2009 (12) TMI 877 - HC - VAT and Sales Tax

High Court upholds penalty for tax non-remittance, deems dealer's actions a violation of Sales Tax Act

State of Tamil Nadu Versus A. SHANTHI

The High Court overturned the decisions of the Appellate Assistant Commissioner and the Tribunal, upholding the imposition of a penalty under section ... - Issues:1. Whether the Tribunal was right in confirming the deletion of penalty under section 22(2) of the Tamil Nadu General Sales Tax Act by the Appellate Assistant Commissioner.Analysis:1. The case involved the assessment of a dealer in tin containers for the year 1996-97, where the turnover reported was below the minimum taxable turnover. The assessing officer levied a penalty under section 22(2) of the Act for collecting tax and surcharge despite not reaching the taxable turnover threshold.2. The Appellate Assistant Commissioner held that the dealer had collected tax in anticipation of exceeding the turnover limit, thus not in contravention of the Act. Consequently, the penalty was deleted based on the belief that the tax collection was in accordance with the law.3. The Revenue challenged this decision, leading to the Tribunal's observation that the Appellate Assistant Commissioner's order was proper based on the records and no further interference was necessary. The Tribunal upheld the decision to delete the penalty.4. However, the High Court found that the tax amount collected had not been remitted to the Government, indicating a violation of the Act. The Court emphasized that the penalty under section 22(2) was justified as the dealer retained the collected amounts, which were supposed to be paid to the Government.5. The Court disagreed with the lower authorities' findings and concluded that the penalty imposition was appropriate in this case. Therefore, the Court allowed the appeal, overturning the decisions of the Appellate Assistant Commissioner and the Tribunal, without imposing any costs.