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1995 DIGILAW 991 (MAD)

State of Tamil Nadu v. Sri Lakshmi Jewellery

1995-12-12

K.A.SWAMI, RAJU

body1995
Judgment :- K. A. SWAMI, C.J. This tax case revision is preferred against the order dated December 18, 1990, of the Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, in Appeal No. 546 of 1989. It relates to the sales tax assessed, and the penalty levied under section 12(3) and 12(5)(iii) of the Tamil Nadu General Sales Tax Act (hereinafter referred to as "the Act") for the assessment year 1986-87. 2. Though the notice is served upon the respondent, it has chosen to remain absent and unrepresented and sent a registered letter dated November 9, 1995 to the Registrar of the High Court submitting a written submission and further stating that it is not availing the personal representation through a counsel. The written submissions submitted by the respondent are also taken into consideration. 3. In this revision petition, the petitioner-State has challenged the correctness of the order of the Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, in so far as it relates to the deletion of penalty levied under section 12(5)(iii) of the Act and reduction of the penalty to 50 per cent levied under section12(3) of the Act. The assessing officer approved the proposal of levying penalty of 150 per cent under section12(3) of the Act and also 100 per cent penalty under section 12(5)(iii) of the Act. In the appeal, the appellate authority reduced the penalty under section12(3) of the Act to 50 per cent and that of the one levied under section 12(5)(iii) of the Act to 50 per cent, whereas the Tribunal has reduced the penalty levied under section12(3) of the Act to 50 per cent and deleted the one levied under section 12(5)(iii) of the Act. 4. For reducing the penalty to 50 per cent under section 12(3) of the Act, the Tribunal has not given any reason. It has simply said, "Anyhow the inspecting officers have detected the suppressions on the basis of the slips recovered from the business premises of the appellant and therefore the penalty under section 12(3) is warranted and therefore we are inclined to sustain the levy of penalty under section12(3) of the Act. But, we are inclined to reduce it to 50 per cent of the tax due on the actual suppression." * Thus, even after approving the levy of penalty under section 12(3) of the Act, for no reason it has been reduced to 50 per cent. But, we are inclined to reduce it to 50 per cent of the tax due on the actual suppression." * Thus, even after approving the levy of penalty under section 12(3) of the Act, for no reason it has been reduced to 50 per cent. No doubt the Tribunal has discretion to reduce the penalty. But, the discretion has to be exercised judicially and it should be based on relevant facts and reasons. The Appellate Assistant Commissioner has considered this aspect elaborately and has held that there was a large scale suppression of sales turnover amounting to Rs. 3, 77, 497 as disclosed from the records. Such large scale suppression could not be said to be without any wilful act on the part of the assessee. Therefore, the appellate authority taking a lenient view of the matter restricted the penalty under section12(3) of the Act to Rs. 8, 784 being equal to the tax due on the suppression of Rs. 1, 75, 686. The assessing officer also has given reasons for imposing penalty under section12(3) of the Act and has held in categorical terms that there was wilful non-disclosure by the assessee in the returns of the sales transactions. There is no doubt that the penalty under section12(3) of the Act as it stood at the relevant point of time will be leviable only when the assessee has wilfully failed to disclose the turnover in his returns. The question as to whether the assessee has not wilfully disclosed the turnover in his returns has to be determined in the facts and circumstances of each case. When there is a large scale suppression of the sales turnover spread over for a considerable period, and such suppression has been noticed during the course of inspection on the basis of the records of the assessee, such suppression cannot but be by way of wilful suppression amounting to not wilfully disclosing the turnover in its returns. The assessee has shown the turnover to the tune of Rs. 72, 69, 908, whereas the turnover came to be determined was Rs. 83, 48, 101.44. The actual suppression noticed was to the tune of Rs. 3, 77, 497. Thus, the suppression was more than 20 per cent of the actual turnover. Under such circumstances, the logical inference is that the assessee had not wilfully disclosed the sale transactions with returns. 72, 69, 908, whereas the turnover came to be determined was Rs. 83, 48, 101.44. The actual suppression noticed was to the tune of Rs. 3, 77, 497. Thus, the suppression was more than 20 per cent of the actual turnover. Under such circumstances, the logical inference is that the assessee had not wilfully disclosed the sale transactions with returns. Such an assessee does not deserve any sympathy. Hence, we are of the view that the Tribunal is not at all justified in reducing the penalty under section12(3) of the Act to 50 per cent without any reason whatsoever. 5. The penalty under section 12(5)(iii) of the Act has been reduced to 50 per cent by the appellate authority. Whereas the Tribunal has deleted the same on the ground that the assessee has not omitted to include the turnover, but claimed exemption on the said turnover as not taxable. This is not correct, inasmuch as at no point of time the assessee included the sale transactions in question in the turnover. On the contrary, it did not include the turnover regarding the sale of synthetic gems and it was only noticed by the inspecting officer. Such being the position, the appellate authority was justified in confirming the penalty under section 12(5)(iii) of the Act and reducing it to 50 per cent, whereas the assessing officer had levied penalty under section 12(5)(iii) of the Act at 150 per cent. Thus the Tribunal has proceeded on a wrong assumption that the assessee had included the turnover relating to sale of synthetic gems in the returns and claimed exemption, which was not a fact. The assessee becomes liable for the penalty under section 12(5)(iii) of the Act, if the return submitted by the assessee is found to be incorrect or incomplete as provided under section 12(4)(iii) of the Act. In the instant case, as the assessee has wilfully or even otherwise omitted to include the turnover relating to the sale of synthetic gems in the returns, it cannot be said that the return submitted by it was correct. It was in fact an incorrect and incomplete return. As such, the assessee was liable for penalty under section 12(5)(iii) of the Act. The Tribunal in one sentence says that the assessee included the turnover relating to synthetic gems in the returns and claimed exemption, even though it had not been included in the returns. It was in fact an incorrect and incomplete return. As such, the assessee was liable for penalty under section 12(5)(iii) of the Act. The Tribunal in one sentence says that the assessee included the turnover relating to synthetic gems in the returns and claimed exemption, even though it had not been included in the returns. In another sentence, it said that under a mistaken belief the assessee claimed exemption. Both the reasons are not valid either on facts or in law. Therefore, we are of the view that the order of the Tribunal so far as it relates to cancellation of penalty under section 12(5)(iii) of the Act is also not sustainable. 6. The contentions raised in the written submission given by the assessee are also not correct. In fact as already pointed out, the turnover relating to sale of synthetic gems was not at all included in the returns. That being so, there was no question of claiming exemption under a wrong impression and in fact no such exemption was claimed. Similarly the contention raised under section12(3) of the Act is also not correct, because the case in Kathiresan Yarn Stores v. State of Tamil Nadu is not on the point. 7. For the reasons stated above, the revision is allowed and the order dated December 18, 1990, passed by the Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, in so far as it cancels the penalty under section 12(5)(iii) of the Act and reduces the penalty to 50 per cent under section 12(3) of the Act, is set aside. The order of the Appellate Assistant Commissioner is restored. There will be no order as to costs.