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2014 DIGILAW 3078 (MAD)

State of Tamil Nadu v. Tvl. Afra Car Jewels

2014-09-03

G.M.AKBAR ALI, R.SUDHAKAR

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Judgment R. Sudhakar, J. 1. The above tax revision is preferred by the Department aggrieved against the order passed by the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai in T.A. No.112/2013. 2. This revision is filed questioning the order of the Tribunal declining to interfere with the levy of penalty under Section 27 (3) of the Tamil Nadu Value Added Tax Act in a case of alleged violation of Section 27 (1) (a). 3. It appears that for the assessment year 2011-2012, in the middle of the assessment year, there was a surprise inspection by the officers of the department on 14.7.2011. During the said inspection, it was noticed that there was variation in the stocks to a certain extent and the assessee had not paid taxes due on a specified amount. The assessee, on realising that tax was due on certain turnover for the said period, during the currency of the assessment year, paid the taxes without demur. However, the officer passed an order under Section 27 (3) imposing penalty in terms of Sections 27 (1) (a) and 27 (3) of the Act. According to the department, they were satisfied that the assessee had willfully not disclosed assessable turnover and, therefore, the assessee is liable to penalty in terms of Section 27 (3) of the Act. The said order of penalty was challenged before the Appellate Deputy Commissioner, who held in favour of the assessee against which, the Revenue preferred appeal before the Tribunal. The Tribunal, on considering the case, came to the conclusion that there was no original assessment and, therefore, the question of escapement of assessment would not arise. Since there was no original assessment order passed under Section 22 (2) of the Act, invocation of Section 27 (1) (a) and, consequently, Section 27 (3) does not arise. In coming to the said conclusion, the Tribunal held as follows :- “10. Since there was no original assessment order passed under Section 22 (2) of the Act, invocation of Section 27 (1) (a) and, consequently, Section 27 (3) does not arise. In coming to the said conclusion, the Tribunal held as follows :- “10. It is seen from the order dated 21.3.2013 of the Assistant Commissioner (CT) (FAC), that the Assessing Officer had not specified as to under which section the assessment was made (i.e.) whether he had passed the original assessment order accepting the returns filed by the assessee under Section 22 (2) of the Tamil Nadu Value Added Tax Act, 2006 or under Section 22 (4) of the Act to the best of his judgment or the revision of assessment under Section 27 (1) (a) of the Tamil Nadu Value Added Tax Act, 2006, estimating escaped turnover. From the perusal of assessment file, it is clear that the Assessing Officer had not passed any separate order either under Section 22 (2) of the Tamil Nadu Value Added Tax Act, 2006 accepting the returns filed by the assessee or under Section 22 (4) of the Act. It is also clear from the order dated 21.3.2013 that the order does not speak about any escaped turnover, from assessment, in the original assessment as envisaged under Section 27 (1) (a) of the Act. It is not in dispute that the assessee had admitted and paid the tax due on the actual suppression at the time of inspection itself. By taking into account the fact that the Assessing Officer had levied penalty under Section 27 (3) of the Act which could be levied while making assessment only under Section 27 91) (a), it should be treated that the impugned assessment order is one passed under Section 27 (1) (a)( of the Act. But, it is well settled principle that when there is no original assessment, there is no escapement of assessment. Admittedly, there was no original assessment order passed under Section 22 (2) of the Act as could be seen from the assessment records. Therefore the question of assessing escaped turnover would not arise here. If there is no escaped turnover under Section 27 91) (a) of the Act, the question of slapping penalty under Section 27 (3) of the Act does not arise. Therefore the question of assessing escaped turnover would not arise here. If there is no escaped turnover under Section 27 91) (a) of the Act, the question of slapping penalty under Section 27 (3) of the Act does not arise. If we treat the impugned assessment order as one passed under Section 22 (2) of under Section 22 (4) of the Act, the question of levy of penalty under Section 27 (3) of the Act does not arise. For the order passed under Section 22 (2) of the Act, there is no provision for levy of penalty inasmuch as, the Assessing Officer, under Section 22 (2) has to accept the returns filed by the dealer/assessee and every such dealer shall be deemed to have been assessed for that year. Only in case where if there is no return submitted by the dealer of the return filed is incomplete or incorrect, the Assessing Officer shall pass order to the best of judgment under Section 22 (4) of the Act and for that assessment, only penalty is leviable under Section 22 (5) of the Act. Even if we treat the impugned original assessment order as one passed under Section 22 (4) (i.e.) best of judgment assessment, the levy of penalty in this case does not arise inasmuch as the assessee had admitted the stock variation and paid the tax due on the stock variation at the time of inspection itself and therefore there was no balance of tax for levying penalty under Section 22 (5) of the Act. In view of the foregoing discussions, we are of the considered view that penalty under Section 27 (3) of Tamil Nadu Value Added Tax Act, 2006 is not sustainable and therefore, we hold that the order of the first appellate authority setting aside the penalty levied under Section 27 (3) is in order and hence no interference is called for. Accordingly, the point is answered against the appellant/State.” As against the said order of the Tribunal, which held in favour of the assessee, the present revision has been filed by the Revenue. 4. Heard Mr.Jaya Prathap, learned Addl. Government Pleader (Taxes) appearing for the petitioner and perused the provisions of the law on which the order has been passed. 5. Accordingly, the point is answered against the appellant/State.” As against the said order of the Tribunal, which held in favour of the assessee, the present revision has been filed by the Revenue. 4. Heard Mr.Jaya Prathap, learned Addl. Government Pleader (Taxes) appearing for the petitioner and perused the provisions of the law on which the order has been passed. 5. To decide the issue as to whether the order passed by the Tribunal is sustainable, it is relevant to look at Section 27 (1) (a) and Section 27 (3) of the Act, which are extracted as hereunder :- “27. (1) (a) Where, for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax, the assessing authority may, subject to the provisions of subsection (3), at any time within a period of five years from the date of assessment order by the assessing authority, determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary. * * * * * * * * * (3) In making an assessment under clause (a) of sub-section (1), the assessing authority may, if it is satisfied that the escape from the assessment is due to wilful non-disclosure of assessable turnover by the dealer, direct the dealer, to pay, in addition to the tax assessed under clause (a) of sub-section (1), by way of penalty a sum which shall be – (a) fifty per cent of the tax due on the turnover that was wilfully not disclosed if the tax due on such turnover is not more than ten per cent of the tax paid as per the return; (b) one hundred per cent of the tax due on the turnover that was wilfully not disclosed if the tax due on such turnover is more than ten per cent but not more than fifty per cent of the tax paid as per the return. (c) one hundred and fifty per cent of the tax due on the assessable turnover that was willfully not disclosed, if the tax due on such turnover is more than fifty per cent of the tax paid as per the return.” 6. (c) one hundred and fifty per cent of the tax due on the assessable turnover that was willfully not disclosed, if the tax due on such turnover is more than fifty per cent of the tax paid as per the return.” 6. Admittedly, in the present case, we find, on facts, there is no return of assessment under Section 22 (2) of the Act by the assessee. Further, as is evident from Section 27 (1) (a) and (3) of the Act, there is no escaped turnover with regard to any assessment, as no return has been filed by the assessee under Section 22 (2). In any event, the inspection was done in the middle of the assessment year and, therefore, there being no assessment as contemplated under Section 22 (2), the said act of the assessee will not fall under the case of escaped turnover as has been rightly held by the Tribunal. The Tribunal has given a detailed analysis and arrived at the reasoning as above and we find no ground to interfere with the said decision of the Tribunal. 7. There is no question of law, much less substantial question of law arising for consideration in this revision. There being no merits, this revision fails and, accordingly, the same is dismissed.