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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether penalty could be sustained under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006 when the assessment order had levied penalty under Section 27(3) and the claim for input tax credit had been rejected only as time barred.
Analysis: Section 27(4) operates only where an order under Section 27(2) records a finding that the assessee has wrongly availed input tax credit or has produced false bills, vouchers, declarations or other supporting documents. The assessment order contained no allegation or finding of wrongful availment of input tax credit and no allegation of false documents. The claim was rejected merely on the technical ground of delay under Section 19(11). In that situation, the factual and legal conditions necessary to attract Section 27(4) were absent, and the Tribunal could not travel beyond the grounds urged before it or remand the matter on a different basis.
Conclusion: Penalty under Section 27(4) could not be sustained and the Tribunal's order was unsustainable.
Final Conclusion: The revision succeeded, the assessee was relieved of the penalty, and the appellate authority's deletion of penalty stood restored.
Ratio Decidendi: Penalty under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006 is attracted only when there is a prior finding under Section 27(2) of wrongful availment of input tax credit or use of false supporting documents; a mere rejection of credit as time barred does not satisfy that precondition.
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