Tvl. Aiswariya Fuels vs. The Commissioner Of

Held

The Court held that Section 22(5) of the TNVAT Act is attracted only when there is a variation between the turnover reported by an assessee and the turnover computed by the assessing officer, and additionally, there must be a finding of concealment by the assessee. In the present case, the tax assessed at Rs. 5,34,673/- was on the basis of the returned turnover, and there were no additions made by the assessing authority. The Explanation to Section 22(5) provides for deductions from the tax assessed under sub-section (4) for certain types of turnover, and in this instance, the tax imposed on the entirety of the returned turnover would stand excluded by virtue of the explanation, leaving nothing upon which penalty could be levied. The Court found that the demand of Rs. 5,34,673/-, which was remitted with interest, could not be the basis for levying penalty under Section 22(5). The Court also noted that the provisions of Section 22 of the TNVAT Act are in pari materia with Section 12 of the erstwhile Tamil Nadu General Sales Tax Act, 1959, and the ratio of decisions under the former Act, which held that penal provisions are not attracted to assessments framed on the basis of returns filed and accounts maintained by the assessee, could be extended. Consequently, the impugned proceedings levying penalty under Section 22(5) were set aside.

Facts

The petitioner, Tvl. Aiswariya Fuels, a sole proprietorship managing a petroleum outlet, filed its returns for the period 2012-13 under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act), reporting a total turnover of Rs. 3,25,40,365/- and taxable turnover of Rs. 36,87,399/-. The petitioner submitted cheques for tax payment, which were returned due to insufficient funds. The petitioner also failed to file an audited statement in Form-WW, citing financial crisis and advanced age. The second respondent issued a notice proposing to reverse input tax credit, assess turnover, and levy penalty under Section 22(5) of the TNVAT Act. The petitioner did not comply with the notice or cooperate with the assessment. The impugned order dated 30.08.2018 confirmed the proposals, assessing tax at Rs. 5,34,673/-, which was later remitted by the petitioner. A penalty of Rs. 10,000/- under Section 63-A for non-filing of Form-WW was also levied and remitted. The challenge in this writ petition is to the penalty levied under Section 22(5) of the TNVAT Act.

Key Issues

1. Whether penalty under Section 22(5) of the TNVAT Act is leviable when there is no difference between the turnover returned and the turnover assessed, and the tax assessed is on the basis of the returned turnover? Petitioner's arguments: The petitioner contended that Section 22(5) of the TNVAT Act is attracted only upon the difference between the returned turnover and the assessed turnover. In this case, there was no such difference, and the tax assessed was on the returned turnover. Therefore, the provisions of Section 22(5) were not attracted. The petitioner relied on decisions in Appollo Saline Pharmaceuticals (P) Ltd. vs. Commercial Tax Officer, Sri Kanchi Steel Pvt. Ltd. vs. The Deputy Commercial Tax Officer, and Thiru.R.Krishnamurthy vs. Special Commissioner of Commercial Tax. Respondents' arguments: The respondents argued that the levy of penalty under Section 22(5) was in order and not liable to be disturbed.