High Court modulated penalty under CST Act from 100% to 50% for petitioner who admitted tax liability but claimed bona fide belief about registration certificate coverage, allowing writ petitions against Tribunal's order.
Tribunal's order modified to restrict penalty to 50% instead of 100%; both writ petitions disposed of.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 08.02.2022
CORAM:
THE HONOURABLE MR.JUSTICE R.MAHADEVAN AND THE HONOURABLE MR.JUSTICE J.SATHYA NARAYANA PRASAD
W.P.NOS.28750 & 28751 OF 2007
M/s.Tirupur Arora Textile Process (P) Ltd., Rep. by its Director Sushil Arora, 699/2, Muthusamy & Bros Industrial Complex, Kamaraj Road, Tirupur - 641 604.
... Petitioner in both Petitions
.Vs.
PRAYER IN W.P.NO.28750 OF 2007:-
Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari to call for the records of the first Respondent in its proceedings in C.T.SA.No.283/00 dated 29.01.2007 and quash the same as illegal and contrary to the principles of assessment.
PRAYER IN W.P.NO.28751 OF 2007:-
Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari to call for the records of the first Respondent in its proceedings in C.T.A.No.125/00 dated 29.01.2007 and quash the same as illegal and contrary to the principles of assessment.
For Petitioner : Mrs.R.Hemalatha (in both Petitions)
For Respondents : Mr.V.Prashanth Kiran Government Advocate (Tax) (in both Petitions)
COMMON ORDER
[Order of the Court was made by R. MAHADEVAN, J.]
Heard Mrs.R.Hemalatha, learned counsel for the Petitioner and Mr.V.Prashanth Kiran, learned Government Advocate (Taxes) appearing for the respondents and also perused the materials placed before this court.
i) The petitioner is engaged in the business of manufacture and export of hosiery garments. For the assessment year 19992000, they had duly filed its return disclosing the total and taxable turnover. While so, the petitioner's place of business was inspected by the Enforcement Wing Officials on 06.03.1999, during the course of which, it was revealed that the petitioner availed tax concession at the reduced rate of Central Sales Tax at 4% by issuing Form 'C' declaration for certain items, which were not covered in the Form 'B' registration certificate issued by the second respondent to them. Hence, the second respondent issued a show cause notice calling upon the petitioner to explain as to why penalty should not be levied under Section 10 (A) of the CST Act, 1956, for the commission of offence under Section 10(b) of the CST Act, to which, the petitioner submitted its reply on 18.01.2000 and 24.02.2000. Without considering the same, the second respondent passed the assessment order on 25.02.2000, besides levied penalty at the rate of 150% to the tune of Rs.87,08,474/-.
ii) Challenging the order of the 2nd Respondent, the petitioner preferred appeal before the Appellate Assistant Commissioner (CT), Pollachi, who partly allowed the appeal and modified the penalty levied by the assessing officer.
iii) Aggrieved by the order of the appellate authority, the petitioner and the State preferred respective appeals in CTA No.125 of 2000 and CTSA No.283 of 2000 before the Tribunal. By a common order dated 29.01.2007, the penalty levied by the assessing officer was modified by restricting to 100%, instead of 150% and accordingly, the petitioner's appeal was dismissed and the State's appeal was modified. Therefore, the petitioner is before this court with these two writ petitions.
penalty imposed on the petitioner has to be reduced by a minimum of Rs.1,000/-.
conclusion that there was mensrea on the part of the petitioner and hence, they were liable to pay penalty. At the same time, the Tribunal observed that the penalty levied by the assessing officer, was too excessive and therefore, the same was modified by restricting to 100% and not 150%.
Sd/-
Assistant Registrar(CS IX)
//True Copy//
Sub Assistant Registrar
sai/dhk
To
W.P.NOS.28750 & 28751 OF 2007
KK(CO)
PBS/28/02/2022
3 issues framed by the court
Whether the levy of penalty under Section 10(A) of the CST Act, 1956 warrants modification to 50% given the petitioner's bona fide impression and admission of tax liability.
Whether the petitioners were liable to pay penalty for claiming concessional tax rates for items not covered under their Form 'B' registration certificate.
Whether the Tribunal correctly modified the penalty rate to 100% instead of the assessed 150% in the absence of malafide intent.
3 provisions across 1 enactments
M/s.Tirupur Arora Textile Process (P) Ltd.
The Secretary, The Tamil Nadu Sales Tax Appellate Tribunal, Additional Bench, Coimbatore
The Commercial Tax Officer, Tirupur (Rural), Tirupur
R.Mahadevan
J.Sathya Narayana Prasad
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
