2019 (1) TMI 1155 - HC - VAT and Sales Tax

High Court affirms Tribunal decision on tax liability dispute over lease agreement. Exemption claim dismissed, penalty upheld.

The High Court upheld the Tamil Nadu Sales Tax Appellate Tribunal's decision in a tax liability dispute involving a lease agreement. The petitioner's ... Principles of natural justice - levy of tax - second sale exemption - TNGST Act - no proper discussion made on documents submitted - Held that:- There is absolutely no finding as to how the First Appellate Authority was satisfied that the assessees are second persons and that they are not liable to tax under the provisions of the TNGST Act. Though the assessee claims that they have placed documents before the First Appellate Authority, there is no discussion as to the effect of those documents which are in the form of invoices, etc. Furthermore, the revenue has specifically contended before the Tribunal that M/s.Ravishankar Films Private Limited though being the registered dealer have not paid tax to the Department for the hire charges. Thus, there is no error in the order passed by the Tribunal and no specific question of law arise for consideration in these tax case revisions. Tax case revision dismissed. Issues:1. Interpretation of lease agreement for tax liability.2. Application of penalty provisions under TNGST Act.Interpretation of Lease Agreement for Tax Liability:The petitioner, a registered dealer under the Tamil Nadu General Sales Tax Act, challenged the order of the Tamil Nadu Sales Tax Appellate Tribunal regarding their status as a second lessor in transactions with M/s. Ravishankar Films. The Tribunal remanded the matter for verification of records, as the petitioner claimed exemption as a second lessor based on a clarification exempting subsequent lessors from tax liability. However, the petitioner failed to produce supporting documents for this claim. The First Appellate Authority initially allowed the petitioner's appeal, but the revenue contended that the dealers were unregistered and had not paid taxes on hire charges. The Tribunal agreed with the revenue, setting aside the Appellate Authority's order and remanding the matter for fresh consideration. The High Court found no error in the Tribunal's decision, as the Appellate Authority failed to provide findings on the petitioner's tax liability status, and there was no evidence of tax payment by M/s. Ravishankar Films. Consequently, the Court dismissed the tax case revisions and confirmed the Tribunal's order for reassessment by the Assessing Officer.Application of Penalty Provisions under TNGST Act:The Tribunal's decision also involved the restoration of penalty levies, which the petitioner contested. The revenue argued that the penalty was justified due to the petitioner's non-disclosure of assessable turnover, as evidenced by the lack of tax payment by M/s. Ravishankar Films. The High Court upheld the Tribunal's decision to restore the penalty, citing the provisions of Section 12(3)(b) and Section 16(2) of the TNGST Act, which allow penalties for specific concealment of turnover and willful non-disclosure by the dealer. The Court found no grounds to question the Tribunal's ruling on penalty restoration, thereby affirming the decision and remanding the matter to the Assessing Officer for further action.