Rainbow Foundations Ltd. vs Assistant Commissioner (CT) (FAC)

Chitra Venkataraman, J.—The Petitioner has challenged the order dated July 30, 2009, which is made in exercise u/s 16(2)(d) of the Tamil

Nadu General Sales Tax Act, 1959 (hereinafter referred to as ""the Act"") levying penalty in respect of the assessment year 2005-06. Originally the

assessment was made on April 20, 2009 in exercise of powers u/s 16 of the Act as an escaped assessment. The Petitioner offered the turnover in

entirety under self-assessment scheme provided u/s 12C of the Act and claimed nil turnover. Subsequently, the assessment order sought to be

made to fix the liability u/s 7C of the Act in respect of turnover of Rs. 5,75,34,540. Admittedly, no order of penalty was made under this

proceeding. However, notice was issued on April 20, 2009 proposing to levy penalty u/s 16(2)(d) of the TNGST Act. The Petitioner objected to

the same having regard to the provisions of Section 16(2) of the Act that a penalty could be levied only when there is a wilful non-disclosure and

the assessment itself based on the book turnover, there could be no ground for treating it as a wilful nondisclosure to attract levy of penalty u/s

16(2) of the Act.

Quite apart from that the Petitioner has relied on a decision of this Court in Deputy Commissioner (C. T.) Coimbatore v. V.S.R. Ramaswami

Chettiar and Bros. (1976) 38 STC 382 and stated that there could be no separate or independent order u/s 16(2) of the Act. Consequently, the

assessing authority has no jurisdiction to levy penalty by a separate and independent order. However, by order dated July 30, 2009, the

Respondent confirmed the proposal on the view that Section 12C of the Act was inserted by Act 37 of 2006, consequently, the decision of this

Court is passed prior to the insertion of section, which is not applicable to the facts of the case.

Heard the learned Counsel for the Petitioner and the learned Additional Government Pleader (Taxes) appearing for the Respondent.

The decision of this Court clearly holds that u/s 16(2) of the Act, the assessing authority has no jurisdiction to impose penalty by a separate and

independent order. Even if a statute has brought in a new section by way of Section 12C, given the fact that Section 16(2) of the Act remains as it

is, the view of the officer that by introduction of 12C, Section 16(2) will lose its vitality, hence, the decision has no relevance, cannot be accepted

by any standards of reasoning.

In the circumstances, even though the writ petition is as against the penalty order, I have no hesitation in setting aside the order of the

Respondent, having regard to the law declared by this Court in the case of and on the admitted fact that the order passed by the Respondent

levying penalty is through an independent order u/s 16(2) of the Act. Accordingly, the writ petition is allowed. No costs. Consequently, M. P. No.

1 of 2009 is closed.