Tvl. Viking Warehousing vs The Commercial Tax Officer

M. Jaichandren, J.—Mr.R.Mahadevan, learned Additional Government Pleader, takes notice for the respondent.

With the consent of the learned Counsels appearing on either side, the writ petition is taken up for final disposal.

It is submitted that the petitioner concern is an assessee on the file of the respondent both under the Tamil Nadu General Sales Tax Act, 1959,

(in Short `the Act'') and the Central Sales Tax Act, 1956. For the assessment year 2003-2004, the respondent had passed an assessment order,

on 10.04.2005, accepting the total taxable turnover reported by the petitioner concern and based on the books of accounts submitted on its

behalf. However, the respondent by its proceedings, dated 14.03.2007, in CST. No. 819523/2003-2004, had issued a pre-revisional assessment

notice holding that the petitioner had leased out the cranes and collected the lease charges for which it had to pay sales tax. It has been further

submitted that the petitioner was under the bonafide impression that collection of lease charges by leasing out cranes would not fall under the ambit

and scope of the sales tax laws and therefore, it did not pay any tax on the same. When it was pointed out that the petitioner was liable to pay

sales tax on the amount collected as lease charges, it had paid the entire amount of Rs. 60,480/- at 12.6%. Only thereafter, the revisional

assessment notice had been issued proposing to revise the turnover of the petitioner concern. A revisional assessment order had been passed on

29.06.2007 revising the turnover of the petitioner. While revising the turnover of the petitioner, the respondent had also levied penalty, u/s 12(3)(b)

of the Act. Therefore, the petitioner had been constrained to file the present writ petition, under Article 226 of the Constitution of India, challenging

the impugned order of the respondent, dated 29.06.2007, made in CST. No. 819523/2003-04, stating that the said order cannot be sustained in

the eye of law.

It has been submitted on behalf of the petitioner that once the tax had been paid, even before the issuance of the show cause notice, the

respondent does not possess the power to levy the penalty. In case of escaped assessment of tax, the respondent does not possess the power to

levy penalty, unless it is shown that the non-payment of tax is due to wilful non-disclosure of the assessable turnover by the dealer. Unless, the

respondent could show that the assessee had wilfully avoided disclosure of the assessable turnover or avoided the submission of the returns or the

payment of tax, the question of levying of penalty does not arise.

The learned Counsel appearing for the petitioner had relied on a decision of the Division Bench of this Court made in State of Tamil Nadu v.

Mahalakshmi Textile Mills Limited 1996 100 STC 269, wherein the Division Bench by following the decision rendered in State of Tamil Nadu v.

Lucky Rasi Radio House 1996 100 STC 210, had held that where the defects in the original returns were rectified by the dealer by filing a revised

statement and the tax due thereunder had been paid before the completion of the assessment, it could not be said that the original return was

defective so as to attract penalty, u/s 12(5) of the Tamil Nadu General Sales Tax Act, 1959.

The learned Counsel appearing for the petitioner had also relied on a decision of the Apex Court made in Dilip N. Shroff Karta of N.D. Shroff

Vs. Joint Commissioner of Income Tax, Special Range Mumbai and Another, , wherein the Supreme Court, while dealing with Section 55A and

271(1)(C) of the Income Tax Act, 1961, had held that imposition of penalty is not automatic. Levy of penalty is not only discretionary in nature but

such discretion is required to be exercised on the part of the Assessing Officer keeping the relevant factors in mind. Some of those factors apart

from being inherent in the nature of penalty proceedings, as has been noticed in some of the decisions of this Court, inheres on the face of the

statutory provisions. Penalty proceedings are not to be initiated, as has been noticed by the Wanchoo Committee, only to harass the assessee. The

approach of the Assessing Officer in this behalf must be fair and objective. The Supreme Court had further held that for the levying of penalty the

respondent ought to show that there was a deliberate act or omission on the part of the assessee. Such deliberate act must be either for the

purpose of concealment of income or furnishing inaccurate particulars.

Mr.R.Mahadevan, the learned Additional Government Pleader, appearing on behalf of the respondent has not refuted the contentions raised on

behalf of the petitioner.

In view of the submissions made by the learned Counsel appearing for the petitioner and taking note of the decisions referred to in support of his

contentions, the impugned order of the respondent, dated 29.06.2007, made in CST.NO.819523/2003-04, is set aside in so far as it relates to the

levying of penalty of Rs. 75,600/- on the petitioner, u/s 12(3) of the Tamil Nadu General Sales Tax Act, 1959.

Accordingly, the writ petition is allowed. No costs. Consequently, connected M.P. No. 1 of 2007 is closed.