IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 06/09/2007
CORAM
THE HON'BLE MR.JUSTICE M.JAICHANDREN
Writ Petition No.28733 of 2007
and
M.P. No.1 of 2007
Tvl.Viking Warehousing
No.5
G.N.T. Road
Moolakadai
Chennai 600 110
Rep. by its Partner Mr.Yagnesh R.Thakkar ..Petitioner.
Versus
The Commercial Tax Officer
Manali Assessment Circle
Kuralagam Annexure
First Floor
Chennai 600 018. ..Respondent.
Prayer:
Petition filed under Article 226 of the Constitution
of India praying for the issuance of a Writ of Certiorari to
call for the records of the respondent, dated 29.06.2007, in
CST No.819523/2003-2004 and quash the same so far it relates
to levy of penalty of Rs.75600/- under Section 12(3)(b) of
the TNGST Act.
For petitioner : Mr.N.Muralikumaran for Mc.Gan Law Firm
For respondent : Mr.R.Mahadevan, Additional Government Pleader
O R D E R
Mr.R.Mahadevan, learned Additional Government Pleader,
takes notice for the respondent.
2. With the consent of the learned counsels appearing
on either side, the writ petition is taken up for final
disposal.
3. It is submitted that the petitioner concern is an
assessee on the file of the respondent both under the Tamil
Nadu General Sales Tax Act, 1959, (in Short `the Act’) and
the Central Sales Tax Act, 1956. For the assessment year
2003-2004, the respondent had passed an assessment order, on
10.04.2005, accepting the total taxable turnover reported by
the petitioner concern and based on the books of accounts
submitted on its behalf. However, the respondent by its
proceedings, dated 14.03.2007, in CST.No.819523/2003-2004,
had issued a pre-revisional assessment notice holding that
the petitioner had leased out the cranes and collected the
lease charges for which it had to pay sales tax. It has been
further submitted that the petitioner was under the bonafide
impression that collection of lease charges by leasing out
cranes would not fall under the ambit and scope of the sales
tax laws and therefore, it did not pay any tax on the same.
When it was pointed out that the petitioner was liable to
pay sales tax on the amount collected as lease charges, it
had paid the entire amount of Rs.60,480/- at 12.6%. Only
thereafter, the revisional assessment notice had been issued
proposing to revise the turnover of the petitioner concern.
A revisional assessment order had been passed on 29.06.2007
revising the turnover of the petitioner. While revising the
turnover of the petitioner, the respondent had also levied
penalty, under Section 12(3)(b) of the Act. Therefore, the
petitioner had been constrained to file the present writ
petition, under Article 226 of the Constitution of India,
challenging the impugned order of the respondent, dated
29.06.2007, made in CST.No.819523/2003-04, stating that the
said order cannot be sustained in the eye of law.
4. It has been submitted on behalf of the petitioner
that once the tax had been paid, even before the issuance of
the show cause notice, the respondent does not possess the
power to levy the penalty. In case of escaped assessment of
tax, the respondent does not possess the power to levy
penalty, unless it is shown that the non-payment of tax is
due to wilful non-disclosure of the assessable turnover by
the dealer. Unless, the respondent could show that the
assessee had wilfully avoided disclosure of the assessable
turnover or avoided the submission of the returns or the
payment of tax, the question of levying of penalty does not
arise.
5. The learned counsel appearing for the petitioner had
relied on a decision of the Division Bench of this Court
made in State of Tamil Nadu Vs. Mahalakshmi Textile Mills
Limited (1996 100 STC 269), wherein the Division Bench by
following the decision rendered in State of Tamil Nadu Vs.
Lucky Rasi Radio House (1996 100 STC 210 (Mad.), had held
that where the defects in the original returns were
rectified by the dealer by filing a revised statement and
the tax due thereunder had been paid before the completion
of the assessment, it could not be said that the original
return was defective so as to attract penalty, under Section
12(5) of the Tamil Nadu General Sales Tax Act, 1959.
6. The learned counsel appearing for the petitioner had
also relied on a decision of the Apex Court made in Dilip
N.Shroff V. Joint Commissioner of Income Tax and another
(2007 291 ITR 519(SC)), wherein the Supreme Court, while
dealing with Section 55A and 271(1)(C) of the Income Tax
Act, 1961, had held that imposition of penalty is not
automatic. Levy of penalty is not only discretionary in
nature but such discretion is required to be exercised on
the part of the Assessing Officer keeping the relevant
factors in mind. Some of those factors apart from being
inherent in the nature of penalty proceedings, as has been
noticed in some of the decisions of this court, inheres on
the face of the statutory provisions. Penalty proceedings
are not to be initiated, as has been noticed by the Wanchoo
Committee, only to harass the assessee. The approach of the
Assessing Officer in this behalf must be fair and objective.
The Supreme Court had further held that for the levying of
penalty the respondent ought to show that there was a
deliberate act or omission on the part of the assessee. Such
deliberate act must be either for the purpose of concealment
of income or furnishing inaccurate particulars.
7. Mr.R.Mahadevan, the learned Additional Government
Pleader, appearing on behalf of the respondent has not
refuted the contentions raised on behalf of the petitioner.
8. In view of the submissions made by the learned
counsel appearing for the petitioner and taking note of the
decisions referred to in support of his contentions, the
impugned order of the respondent, dated 29.06.2007, made in
CST.NO.819523/2003-04, is set aside in so far as it relates
to the levying of penalty of Rs.75,600/- on the petitioner,
under Section 12(3) of the Tamil Nadu General Sales Tax Act,
1959.
Accordingly, the writ petition is allowed. No costs.
Consequently, connected M.P.No.1 of 2007 is closed.
csh
To
The Commercial Tax Officer
Manali Assessment Circle
Kuralagam Annexure
First Floor
Chennai 600 018.