2023 (8) TMI 1405 - HC - VAT and Sales Tax

Court Upholds 300% Penalty for Failure to File Returns Online Under TNVAT Act; No Discretion Allowed in Amended Provision.

Annai Corporation, Represented by its Partner, S. Mahendran, Versus The Assistant Commissioner (CT) (FAC),

The HC dismissed the writ petition challenging the imposition of a 300% penalty under Section 27(4) of the TNVAT Act, 2006, due to the failure of the ... Levy of penalty under Section 27(4) of the TNVAT Act, 2006 - rejection of application filed under Section 84 of the TNVAT Act - HELD THAT:- The provision of Section 27(4) as stated during the period in dispute reads differently from the provisions as it stood prior to the period in dispute. The decision of this Court in the case of Simran International [2017 (4) TMI 1072 - MADRAS HIGH COURT] compared the Section 16(2) of the TNGST Act, 1959 with Section 27(4) of TNVAT Act, 2006 cannot be applied. The amended provisions in Section 27(4) of the TNVAT Act, 2006 as it stood prior to 2016 read differently. There is no scope for discretion vested with an Assessing Officer while imposing penalty under Section 27(4) with effect from 30.01.2016 by virtue of Section 11 of the second amendment Act, 2016. The decision referred to supra under similar circumstances in the context of unamended Section 27(4) of the Act cannot be applied in the context of 27(4) after amendment. Therefore, there is no merits in this writ petition. The writ petition is dismissed. Issues:The judgment involves the imposition of penalty under Section 27(4) of the TNVAT Act, 2006 based on the failure to comply with tax regulations and the subsequent rejection of a rectification application.Imposition of Penalty under Section 27(4):The impugned order dated 19.01.2022 imposed a penalty on the petitioner under Section 27(4) of the TNVAT Act, 2006. The penalty was calculated at 300% of the tax due in respect of the claim, amounting to Rs.13,98,210.00. The order was based on the failure of the selling dealer to file returns online, leading to the reversal of input tax credit claimed by purchasing dealers. The burden of proof under Section 17(1) of the Act lies on the dealer, and in this case, the dealers failed to establish that the transactions were not liable to tax. The petitioner had previously accepted liability and paid the tax but sought rectification, which was rejected.Comparison with Previous Cases:The petitioner cited a previous case where penalty under Section 27(4) was dropped based on Section 17(4) of the TNVAT Act, 2006. However, the government advocate argued that the provisions had changed since the earlier case, and there was no discretion in imposing the penalty as per the amended Section 27(4) effective from 29.01.2016. The court noted that the amended provision mandated a penalty of 300% of the tax due, leaving no room for discretion.Court Decision:The Court considered the arguments presented by both parties and emphasized that the amended provisions of Section 27(4) left no room for discretion in imposing the penalty. The judgment highlighted the change in penalty calculation post-amendment and dismissed the writ petition, stating that the decision in the previous case could not be applied to the current scenario. The writ petition was dismissed, with no costs awarded, and the connected writ miscellaneous petition was closed.