IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 20/10/2004
C O R A M
THE HONOURABLE MR.JUSTICE A.K.RAJAN
W.P.No.11681 OF 1997
Tvl.Ascard Spinners (P) Limited,
rep.by its Managing Director,
Manalur, Sivagangai District. .. Petitioner
-vs-
The Commercial Tax Officer,
Sivagangi. .. Respondent
PRAYER : Petition filed under Article 226 of the Constitution of
India praying for the issuance of a writ of certiorari as stated therein.
For petitioner :: Mr.P.Radhakrishnan
For respondent :: Mrs.Rani Selvam, GA (Taxes)
:O R D E R
The prayer in the writ petition is to issue a Writ of
Certiorari, calling for the records on the file of the respondent in CST
No.499319 /94-95, dated 31.12.1996 and quash the same as illegal, without
jurisdiction and without authority of law.
2. The petitioner is a spinning mill manufacturing Cotton and
Cotton Yarn. For the assessment year 1994-95, the petitioner reported the
total and taxable turnover of Rs.1,80,000/- under the Central Sales Tax Act.
The petitioner during that year effected consignment sales to the tune of
Rs.8,30,000/-, but it did not report the same in the monthly statement since
it is not liable to tax. But, the second respondent assessed the said
consignment sales turnover and levied tax on that. The petitioner’s taxable
turnover for the year 1994-95 was determined at Rs.10,10,000/- taxable at 2%
as against the reported taxable turnover of Rs.1,80,000/- by Order dated
30.10.1996. In view of the assessment based on the ‘Best Assessment’, there
is a difference in tax to the tune of Rs.16,600/- between the tax assessed and
the tax paid by the petitioner. For the said difference, the respondent
levied penalty of Rs.24,900/- under Section 12(3)(b)(v) of the TNGST Act read
with Sec.9(2-A) of the Central Sales Tax Act, 1956. Section 12(3)(b) of the
TNGST Act, 1959 was introduced vide Tamil Nadu Act 25 of 1993 with effect from
28.5.1993. The petitioner filed a writ petition before this Court challenging
the provisions of Sec.9(2-A) of the Central Sales Tax Act. The said writ
petition was admitted and the interim stay of recovery of penalty was granted.
While so, the respondent has passed the revised order of assessment, dated
31.12.1 996, by which the respondent assessed consignment sale of Rs.8,30,000
/- at 4% on the ground that in the original order it was wrongly assessed at
2%. Thus, in the revised order of assessment, the respondent levied an
additional tax of Rs.33,200/-, as also the penalty of Rs.4 9,800/-. According
to the petitioner, the consignment sale is not liable to tax. Even against
the original assessment order, dated 30.10 .1996, the petitioner has preferred
an appeal and the same is still pending. Without waiting for the result in
the appeal, the respondent has revised the Order of assessment and levied tax
at 4%, which is illegal.
Further, the penalty under Section 12(3) can be levied only
for an assessment made under Section 12(2), i.e. original order of
assessment. The revised order passed by the respondent is an assessment under
Section 16 of the TNGST act, for which the penalty can be levied under Section
16(2) of the TNGST Act and not under Section 12(3) of the TNGST Act. Under
such circumstances, the penalty cannot be levied. Hence, the respondent has
no jurisdiction or authority to levy penalty for the revised assessment order.
Hence, the revised order of assessment is illegal as also the penalty. An
appeal against that order ought to have been filed on or before 6.2.1997. But
the petitioner was on a mistaken impression that since the appeal has already
been filed against the original order of assessment and the same is pending,
it was not necessary to file an appeal against the impugned order. On
9.7.1997, the respondent sent his agent for collecting the tax and penalty due
under the impugned order, the petitioner contacted his Advocate for necessary
action. There is no power for the Appellate Authority to condone the delay
beyond 30 days. Hence, the present writ petition has been filed.
3. No counter has been filed in this matter.
4. The learned counsel for the petitioner submitted that it
is not the case of assessment on escaped turn over. The turn over has been
intimated to the authorities, but it was claimed as consignment sale and hence
exempted from tax. Theref ovisions of the Act for assessment based on best
judgment cannot be invoked in this case. Only, under such circumstances, when
the return was not submitted or when tax is imposed on the basis of best
judgment, penalty can be levied under the provisions of Sec.12(3)(b) of the
TNGST Act. At the most, in the present case, since the turnover has been
shown in the return, only a tax can be levied on the turn over disclosed.
Under those circumstances, penalty cannot be levied. Since imposition of
penalty is not in accordance with law, the impugned order is liable to be set
aside.
5. Further, amendment to Sec.12(3)(b) of the TNGST Act, 1959
came into force only on 01.07.2002. Therefore that provision cannot be
invoked for imposing penalty on an assessment for the period prior to that.
Hence, the impugned order imposing penalty is not legal and the writ petition
is to be allowed.
6. Heard the learned counsel for the respondent on this
aspect.
7. From the facts referred to in the affidavit and the
arguments thereon, the impugned order has to be challenged only by way of
appeal. But, the petitioner did not file an appeal. In fact he has stated
the reasons or the circumstances for non-filing of the appeal against the
revised order of assessment. Since the authorities have no power to condone
the delay in filing the appeal, the present writ petition has been filed, as
there is no other remedy. The learned counsel for the petitioner also
submitted that the revised order of assessment itself is an illegal order not
supported by any valid law, hence there is no prohibition for filing the writ
petition challenging the same. This argument of the counsel for the
petitioner is acceptable. For the reasons that the validity of the order is
challenged, and also that there is no other remedy available, the writ
petition is maintainable.
8. In this case, the petitioner has not concealed any
turn-over. He has only claimed that for certain turn over he is entitled for
exemption from levy of tax. Therefore, when that is rejected, it is only a
tax levied on the turn over disclosed. It is not tantamount to tax on escaped
assessment. Therefore, it cannot be considered as ‘ best judgment’. It is
not a case of mere filing no returns or incomplete or incorrect return. Under
Section 12(2) of the TNGST Act, “If no return is submitted by the dealer under
sub-section (1) within the prescribed period, or if the return submitted by
him appears to the assessing authority to be incomplete or incorrect, the
assessing authority shall, after making such enquiry as it may consider
necessary, assess the dealer to the best of its judgment”. When such an
assessment is made under sub-Section (2), the Assessing Authority shall, in
addition to the tax assessed, direct the dealer to pay penalty in the same
order of assessment as per the Act. This provision was amended on 1.7.2002,
where penalty could be levied even when the assessment order is passed under
sub-Section (1) to Section 12. Under Section 12 (1), regular assessment is
made on the basis of the return filed. After, 2002, even when the assessment
is made on the basis of the return filed under Section 12(1) or on the basis
of ‘Best Assessment’ under Section 12(2), penalty is leviable under Section
12(3). This amended provision can be invoked only for any return submitted
after 1.7.2002. In case of return filed prior to 1.7.2002, the penalty can be
imposed only if assessment is made under Section 12(2). No penalty can be
made when assessment is made under sub-Section (1) of Section 12. In this
case, admittedly, the assessment is made on the return submitted prior to
1.7.2002. Therefore, when the exemption is claimed bona fide and that was
rejected, it is an assessment made under sub-Section (1). Therefore, on the
date when the return has been filed, the penalty cannot be levied under
Section 12(3). In this case, penalty has been levied even for assessment of
the tax on the basis of return filed, which is not a assessment by ‘Best
judgment’ under Section 12(2). Therefore, the imposition of penalty is not
legal. Hence, the impugned order imposing penalty alone is set aside. The
writ petition is allowed as prayed for. No costs.
Index: Yes
Internet: Yes
pb
To
The Commercial Tax Officer,
Sivagangai.