Madras High Court
M/S.Adhithya Polymers vs The State Tax Officer on 29 September, 2021
W.A.No.2409 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 29.09.2021
CORAM
THE HON'BLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HON'BLE MR.JUSTICE SATHI KUMAR SUKUMARA KURUP
W.A.No.2409 of 2021
and
C.M.P.No.15402 of 2021
M/s.Adhithya Polymers,
Rep., by its Partner,
Mr.N.Dhuraiswamy,
No.55/1-A, Anthiyur Road,
Parranchavadi, Ammapettai Post,
Erode District. .. Appellant
-vs-
The State Tax Officer,
Bhavani Assessment Circle,
Bhavani, Erode District. .. Respondent
Appeal under Clause 15 of Letters Patent against the order dated
27.05.2021 made in W.P.No.29156 of 2018 and set aside the same.
For Appellant : Mr.K.Soundara Rajan
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W.A.No.2409 of 2021
For Respondent : Mr.M.Venkateswaran,
Government Counsel
******
JUDGMENT
(Delivered by T.S.Sivagnanam, J.)
The writ petitioner is the appellant before us challenging the
correctness of the order dated 27.05.2021 in W.P.No.29156 of 2018.
2.The appellant challenged the revised assessment order dated
30.06.2018 passed under the provisions of the Tamil Nadu Value Added
Tax Act, 2006 (hereinafter referred to as “the Act”) for the assessment year
2013-14. The writ petition was dismissed largely on the ground that the
appellant, having admitted the tax liability, cannot maintain a writ petition.
However, the Court was of the view that the appellant can avail the statutory
appellate remedy before the first appellate authority.
3.The appellant is before us contending that there was no admission
of tax liability and also that demand of levy of penalty was not tenable and
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W.A.No.2409 of 2021
is without jurisdiction. The correctness of the said submission is to be
tested by us in this appeal.
4.We have heard Mr.K.Soundara Rajan, learned counsel appearing for
the appellant and Mr.M.Venkateswaran learned Government Counsel for
the respondent.
5.The appellant had approached the learned Writ Court on an earlier
occasion by filing W.P.No.7286 of 2017 contending that the revision of
assessment made by order dated 29.09.2016 is not sustainable in law, as it is
solely based on the alleged mismatch found through the system web report
pertaining to the purchase details from other end dealers Annexure-II. The
writ petition was allowed by order dated 24.03.2017 referring to an earlier
order passed by this Court and the matter was remanded back to the
Assessing Officer to redo the assessment after following the
procedures/directions issued in the said order. On remand, the Assessing
Officer issued a pre-revision notice dated 26.02.2018 purported to contain
the relevant details. The appellant had submitted a letter dated 14.03.2018
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W.A.No.2409 of 2021
seeking adjournment. Subsequently, another letter dated 02.05.2018 was
submitted by the appellant, which was received by the Assessing Officer on
07.05.2018. The subject prays for deleting the penalty and granting time.
Apart from these letters, the Assessing Officer while completing the
assessment, vide order dated 30.06.2018, has recorded that one of the
partners of the appellant had appeared before the Assessing Officer and
stated that the omission has occurred due to the lost of purchase bills during
transit period of their factory and they are not willingly done any mistake
and they are ready to pay the estimated taxes as quantified and requested for
dropping the penalty proceedings. After noting the said submission, the
proposal made in the pre-revision notice dated 26.02.2018 has been
confirmed in full, including the levy of penalty.
6.So far as the demand of tax is concerned, the appellant had an
opportunity to go before the Assessing Officer to establish their case by
producing records and they are unable to do so on the alleged ground that
the purchase bills were missing when there was shifting of the place of
business. If such is the case, then obviously, the appellant has not been able
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W.A.No.2409 of 2021
to establish that the allegation made against them is not true. Hence, we
find that there is no error in the order passed by the Assessing Officer
confirming the proposal to levy tax on the enhanced turnover.
7.So far as the levy of penalty is concerned, it is no doubt true that
while issuing the pre-revision notice, the appellant was informed that
penalty under Section 27(3)(ii) at 100% is also proposed to be levied for the
suppression. Section 27 deals with 'assessment of escaped turnover and
wrong availment of input tax credit'. In terms of sub-section (3), in making
an assessment under Clause (a) of sub-section (1), the assessing authority
may, if it is satisfied that the escape from the assessment is due to wilful
non-disclosure of assessable turnover by the dealer, direct the dealer, to pay,
in addition to the tax assessed under Clause (a) of sub-section (1), by way of
penalty, which shall be sum of fifty per cent if the Assessing Authority
chooses to exercise Clause (a) or one hundred per cent under Clause (b) or
one hundred and fifty percent under Clause (c). Thus, for levy of penalty,
under sub-section (3) of Section 27, there should be finding rendered by the
Assessing Authority regarding wilful non-disclosure of assessable turnover.
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The non-disclosure alleged against the appellant is based upon the
mismatch, which was deducted in the web portal, that is, the difference
noticed in the returns filed by the selling and the purchasing dealers.
Despite opportunity, the appellant was not able to reconcile the mismatch
not due to lack of merits, but on the ground that the purchase bills were
missing on account of shifting of the business premises. This allegation has
not been disputed by the Assessing Officer, nor there was any material
available with the Assessing Officer to come to the conclusion that such
statement was false. Nevertheless, while considering the liability to impose
tax, if the appellant is unable to reconcile the mismatch of the details found
in the website, the Assessing Officer has no other option except to conclude
the assessment as proposed in the pre-revision notice. However, the same
yardstick cannot be applied for levy of penalty, where mens rea has to be
established. Even while confirming the proposal in the pre-revision notice
and completing the assessment vide order dated 30.06.2018, the Assessing
Officer does not record any finding that the appellant was guilty of wilful
suppression, but the proposal in the pre-revision notice has been confirmed
because, the partner of the appellant appeared before the Assessing Officer
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W.A.No.2409 of 2021
and submitted that they were unable to produce the records. In fact, the
representation given by the appellant on 02.05.2018 is to the effect that
there is no wilful misstatement or wilful default committed by them, but
only on account of the lost of the purchase bills, they are unable to establish
the genuineness of the transaction. Therefore, the case on hand is a very
peculiar case wherein, there is nothing specifically brought on record by the
Assessing Officer to show that the appellant was wilfully suppressed the
assessable turnover. Further, we note in the representation dated
02.05.2018, the appellant has not admitted the penalty because of their
inability to produce the records, they agreed to pay the tax, but specifically
made request for waiver of penalty on the ground that there was no fault
committed by them. Thus, we are satisfied that in the peculiar facts and
circumstances of the case, the appellant can be granted a limited relief to the
extent of penalty of levy alone.
8.In the result, the writ appeal is partly allowed and the assessment
order dated 30.06.2018, insofar as the levy of tax is concerned, is deleted.
The benefit of this order will enure to the appellant provided, the appellant
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pays the entire remaining tax liability within a period of eight weeks from
the date of receipt of a copy of this judgment failing which, the benefit of
this judgment will not enure to the appellant and the writ appeal will stand
automatically dismissed without any reference to this Court. No costs.
Consequently, connected miscellaneous petition is closed.
(T.S.S., J.) (S.S.K., J.)
29.09.2021
Index: Yes/ No
Speaking Order : Yes/ No
abr
To
The State Tax Officer,
Bhavani Assessment Circle,
Bhavani, Erode District.
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W.A.No.2409 of 2021
T.S.Sivagnanam, J.
and
Sathi Kumar Sukumara Kurup, J.
(abr)
W.A.No.2409 of 2021
29.09.2021
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