Penalty under Section 22(5) TNVAT Act for tax evasion unearthed during inspection upheld despite post-inspection payment of tax and purported return filing. Tribunal order reversing Appellate Commissioner's penalty waiver was confirmed as authorities have no discretion to drop penalty where evasion is found.
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T.C.Nos.28 and 29 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 17.10.2024
CORAM
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR and THE HONOURABLE MR.JUSTICE C.SARAVANAN
T.C.Nos.28 and 29 of 2022
Tvl.Monisha Enterprises, Represented by its Proprietor C.Subramani, S/o.S.N.Chinnusamy, No.1/520, Kumaravelipalayam, Thodipatti Periyamanali, Trichendgode Taluk, Namakkal - 637 212.
... Petitioner in both T.Cs
-Vs-
The State of Tamil Nadu, Represented by the Joint Commissioner (ST), Salem Division, Salem.
... Respondent in both T.Cs
COMMON PRAYER : Tax Case Revisions filed under Section 60 (1) of TNVAT Act, 2006 to revise the order of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore-18 dated 26.04.2022 passed in C.T.S.A.Nos.15 and 16 of 2021.
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For Petitioner in both T.Cs : Ms.L.Sweety For Respondent in both T.Cs : Ms.Amirtha Poonkodi Dinakaran Government Advocate
C O M M O N O R D E R
(Order of the Court was made by C.SARAVANAN, J )
The petitioner is before this Court in these tax case revisions against the
impugned order dated 26.04.2022 passed by the Tamil Nadu Sales Tax
Appellate Tribunal (Additional Bench), Coimbatore-18 in C.T.S.A.Nos.15 and 16 of 2021.
the provisions of the Tamil Nadu Value Added Tax Act, 2006 but has failed to file return in time. The Department inspected the premises of the petitioner on 15.07.2016 where they found that out of 72 machineries which were imported by the petitioner from China, 30 were used for their own purposes and the remaining 42 were sold to third parties during these assessment years. The petitioner purportedly filed a return on 31.07.2016 and thereafter paid the tax
on the sales effected by the petitioner dealer during these assessment years. This
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has culminated in the assessment order dated 29.12.2017 wherein penalty was imposed under Section 22(5) of the TNVAT Act, 2006. Aggrieved by the same, the petitioner filed an appeal before the Appellate Commissioner. The Appellate Commissioner, by an order dated 18.03.2021 in VAT.AP.Nos.23 and 24 of 2018, has allowed the petitioner's appeals by placing reliance of the decision of the Hon'ble Supreme Court in the case of S.G.Jeyarajnadar & Sons Vs. State of Madras reported in AIR 1971 SCC 2405 which decision stands reversed by the impugned order.
Vs. State of Tamil Nadu reported in 2008 SCC OnLine Mad 1257 wherein this Court had interfered with the imposition of penalty under Section 16 of TNGST Act, 1959.
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of the relevant period to which the return relates. Revised return cannot be filed if the tax payable is unearthed on account of an inspection or audit or receipt of any other information or evidence by the assessing authority. Rule 7(9) of the TNVAT Rules, 2007 is extracted hereunder:
" If a dealer having filed a return, finds any omission or error therein, other than as a result of an inspection or audit or receipt of any other information or evidence by the assessing authority, he shall file a revised return rectifying the omission or error within a period of six months from the last day of the relevant period to which the return relates. Where, as a result of such revised return, the tax payable by the dealer increases, the dealer shall furnish along with such revised return, proof of payment of tax and interest due thereon under subsection(4) of Section 42 of the Act."
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been paid pursuant to the inspection on 15.07.2016. The return that was purportedly filed on 31.07.2016 is not a return recognized under the provisions of TNVAT Rules, 2007. It was not return in the eye of law. The decision rendered by the Hon'ble Supreme Court in the context of Section 16 of TNGST Act, 1959 which was followed by the Division Bench of this Court in Ram Sun Fabi Techs Case cited supra cannot be applied to the facts of these cases as the provisions are different. On the other hand, the decision of the Hon'ble Supreme Court in the case of Union of India Vs. Rajasthan Spinning and Weaving Mills referred above clarified the decision in the Union of India & others Vs. Dharamendra Textile Processors & others is clear that the penalty is impossible. It although rendered in the context of Section 11-AC of the Central Excise Act, 1944, the ratio is applied to the facts of the case. The Hon'ble Supreme Court observed as under:
"34. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11-AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the Authority concerned would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under Sub-section (2) of Section 11-A. That is
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what Dharmendra Textile decides. It must, however, be made clear that what is stated above in regard to the decision in Dharmendra Textile is only insofar as Section 11-AC is concerned. We make no observations (as a matter of fact there is no occasion for it!) with regard to the several other statutory provisions that came up for consideration in that decision."
costs.
(R.S.K., J.) (C.S.N., J.) 17.10.2024
NCC : Yes / No Index : Yes / No Speaking Order : Yes / No vji
To
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R.SURESH KUMAR, J. and C.SARAVANAN, J.
vji
T.C.Nos.28 and 29 of 2022
17.10.2024
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2 issues framed by the court
Whether penalty under Section 22(5) of TNVAT Act could be avoided merely because tax was paid after inspection and before assessment.
Whether a return filed on 31.07.2016 after inspection qualified as a valid self-assessment return under Rule 7(9) of TNVAT Rules.
Colour shows how this judgement treated each authority
S.G.Jeyarajnadar & Sons Vs. State of MadrasDistinguished¶2
AIR 1971 SCC 2405 · Who else cites this
Ram Sun Fabi Techs Vs. State of Tamil NaduDistinguished¶3
2008 SCC OnLine Mad 1257 · Who else cites this
Union of India Vs. Rajasthan Spinning and Weaving MillsApplied¶7
(2009) 13 SCC 448 · Who else cites this
M/s.Gurusamy Agencies Vs. The Deputy Commercial Tax OfficerReferred¶4
W.A.No.1237 of 2017
4 provisions across 3 enactments
Tvl.Monisha Enterprises, represented by its Proprietor C.Subramani
The State of Tamil Nadu, represented by the Joint Commissioner (ST), Salem Division, Salem
R.Suresh Kumar
C.Saravanan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
