2017 (2) TMI 960 - HC - VAT and Sales Tax

Court rules impugned penalty review order barred by limitation under TNGST Act proviso

The court ruled in favor of the petitioner, finding that the impugned order reviewing the penalty for the assessment year 1995-96 was barred by limitation ... Time limitation - Levy of penalty u/s 22(2) of the TNGST Act 1959 - the tax was collected by the petitioner and not paid to the Department - whether the impugned order reviewing the penalty on the petitioner for the assessment year 1995-96 is barred by limitation within the meaning of proviso to sub section 2 of the 22 of the TNGST Act? - Held that: - this Court does not agree with the said argument advanced on behalf of the respondent that the five years limitation would start only from 22.02.2006, where appeal filed by the department was dismissed by the Sales Tax Appellate Tribunal. When section 22(2) is invoked and by which, the present impugned order has been passed levying penalty against the petitioner, certainly, the limitation point raised therein under the proviso, which has been subsequently inserted in the year 2004 shall be taken into account and the same can be treated as a mandatory one - the present order, which is impugned herein, since admittedly, initiated and passed only after the limitation period of five years ie., on 09.03.2010 and ended on 16.07.2010, whereas the limitation was over on 31.03.2011 itself for the purpose of assessment year 1995-96. Therefore, this Court has no hesitation to hold that the impugned order is not sustainable because of the limitation provided as per Section 22(2) proviso. Petition allowed - decided in favor of petitioner. Issues:1. Whether the impugned order reviewing the penalty for the assessment year 1995-96 is barred by limitation under the proviso to sub-section 2 of Section 22 of the TNGST Act.Analysis:The petitioner, engaged in printing works, filed a writ petition seeking to quash an order proposing a penalty of Rs. 2,87,321 for the assessment year 1995-96, issued long after the final assessment order. The petitioner argued that the notice was time-barred as per the five-year limitation prescribed under Section 22(2) of the TNGST Act. The respondent contended that the limitation period started from the dismissal of the appeal by the Sales Tax Appellate Tribunal in 2006, not from the original assessment year. Additionally, the respondent invoked Section 9(2) of the CST Act along with Section 22(2) of the TNGST Act for reassessment and penalty. However, the court held that the limitation period should be calculated from the date of the final assessment order, not the subsequent appeal dismissal, rejecting the respondent's argument.The court also dismissed the respondent's claim that invoking Section 9(2) of the CST Act bypasses the limitation under Section 22(2) of the TNGST Act. Emphasizing that the assessment and penalty procedure was conducted under the TNGST Act, the court deemed the proviso to Section 22(2) mandatory. As the impugned order was initiated and passed after the five-year limitation period expired for the assessment year 1995-96, the court ruled it unsustainable. Consequently, the court quashed the order, allowing the writ petition and making the interim stay absolute. The court highlighted that the impugned order did not comply with the limitation provided in Section 22(2) proviso, leading to its quashing.In conclusion, the court's decision revolved around the interpretation of the limitation period under Section 22(2) of the TNGST Act, rejecting the respondent's attempt to extend the limitation from the date of appeal dismissal. The court emphasized the mandatory nature of the proviso to Section 22(2) and ruled that the impugned order was unsustainable due to exceeding the prescribed limitation period.