2018 (3) TMI 816 - HC - VAT and Sales Tax

High Court clarifies tax law interpretation, turnover inclusion in taxable calculations, and penalties under specific Acts

The High Court addressed issues related to the interpretation of tax laws, inclusion of turnover in taxable calculations, and imposition of penalties ... Whether in the facts and circumstances of the case, the Tribunal is legally correct in having held that the amendment made by insertion of new Section 2(aa) along with explanation to the TNAST, 1970 from 01.08.1996 cannot be applied for the year 1995 - 96 which such amendment was made to the Act was only declaratory in character in order to clarify the meaning or effect of such provision and that such Acts are always held to be retrospective? Held that: - In Apollo Saline Pharmaceuticals vs. Commercial Tax Officer (Fac) [2001 (10) TMI 1100 - MADRAS HIGH COURT], a Hon'ble Division Bench of this court held that the order of the Tribunal to the extent it upholds levy of penalty for these years namely, 1987-88, 1988-89, 1989-90, 1990-91, 1991-92 and 1992-93 is set aside. The assessing authorities shall now hear the assessee with regard to the question of penalty in relation to assessment for these years and thereafter proceed to make appropriate orders - revision dismissed. Issues:1. Interpretation of the applicability of an amendment to the TNAST Act, 1970 for the year 1995-96.2. Inclusion of turnover of agents in taxable turnover for the purpose of additional sales tax.3. Imposition of penalty under Section 12(3)(b) of the TNGST Act, 1959.Issue 1:The High Court addressed the interpretation of the applicability of an amendment to the TNAST Act, 1970 for the year 1995-96. The Tribunal had held that the amendment, introducing a new Section 2(aa) and explanation, could not be applied retrospectively for the assessment year 1995-96. The petitioner argued that the amendment was declaratory in nature and should be applied retrospectively. The court referred to a previous judgment in Apollo Saline Pharmaceuticals case, where it was held that assessments made based on accounts and not estimation are not subject to penal provisions. The court dismissed the Tax Case Revision, stating that the order of the Tribunal was not erroneous, and the decision in the Apollo Saline Pharmaceuticals case was applicable to the present case.Issue 2:Regarding the inclusion of turnover of agents in the taxable turnover for the purpose of additional sales tax, the respondent had filed an appeal against the assessment order that included the turnover of agents in the taxable turnover. The Appellate Deputy Commissioner partly remanded and partly dismissed the case, stating that the turnover of agents should not have been included for the computation of additional sales tax. The Tribunal set aside the order of the Appellate Deputy Commissioner and remanded the matter back to the assessing authority to determine the taxable turnover excluding the turnover of agents. The High Court upheld the decision of the Tribunal, dismissing the Tax Case Revision.Issue 3:Regarding the imposition of penalty under Section 12(3)(b) of the TNGST Act, 1959, the Tribunal had held that the penalty could not be imposed under this section. However, the Appellate Deputy Commissioner remanded the case for reconsideration of the penalty. The Tribunal found no necessity for remand and held that the penalty could not be imposed under Section 12(3)(b). The High Court agreed with the Tribunal's decision, stating that there was no manifest error in the impugned order, and accordingly dismissed the Tax Case Revision.In conclusion, the High Court addressed various issues related to the interpretation of tax laws, inclusion of turnover in taxable calculations, and imposition of penalties under specific sections of the Acts involved. The court's decisions were based on legal precedents and interpretations of relevant provisions, ultimately upholding the orders of the Tribunal in the respective matters.