Madras High Court

M/S.Supreme Trading House vs The Assistant Commissioner (St) on 8 December, 2023

Author: Krishnan Ramasamy

Bench: Krishnan Ramasamy

                                                                                     W.P.Nos.16607, 16610, 16613,
                                                                                          16614 and 16616 of 2023

                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                      Dated    : 08.12.2023

                                                              CORAM

                                  THE HON'BLE Mr. JUSTICE KRISHNAN RAMASAMY

                                  W.P.Nos. 16607, 16610, 16613,16614 and 16616 of 2023
                                                          and
                                  WMP.Nos.15904, 15910, 15912, 15915 and 15916 of 2023



                        M/s.Supreme Trading House,
                        Represented by its Proprietor
                        Mr.A.Ibrahimkaleel
                        No.86, Kariya Gounder Street,
                        Khaderpet, Tirupur-641 601.                  ...       Petitioner in all W.P.'s


                                                                    ...Vs...

                        1. The Assistant Commissioner (ST)
                           Tiruppur Central-II Assessment Circle,
                           Tiruppur-2.

                        2. The Commercial Tax Officer,
                           (Enforcement) Group-1,
                           Coimbatore.                               ...       Respondents in all W.P.'s


                        Prayer in all W.P.'s :         Writ Petitions filed under Article 226 of the

                        Constitution of India to issue a Writ of Certiorari to call                    for the

                        impugned        proceedings     of    the      first     respondent in TIN Nos.


                        1/11
https://www.mhc.tn.gov.in/judis
                                                                               W.P.Nos.16607, 16610, 16613,
                                                                                    16614 and 16616 of 2023

                        33262463506/2010-2011,33262463506/2011-2012,

                        33262463506/2012-2013,                             33262463506/2013-2014,

                        33262463506/2014-2015 dated 15.03.2023 and quash the same                       as

                        without authority of law and contrary to Section 27 (3) of the

                        TNVAT Act, 2006.



                                        For Petitioner        : Mr.P.Rajkumar
                                        (in all W.P.'s)

                                        For Respondents       : Mrs.E.Ranganayaki
                                        (in all W.P.'s)         Additional Government Pleader

                                                           ***

                                                 COMMON             ORDER

Since the issue involved in all these Writ Petitions are one and the

same, they are taken up together and disposed of by a common order.

2. These writ petitions have been filed challenging the proceedings

of the 1st Respondent in TIN Nos.33262463506/2010-2011,

33262463506/2011-2012, 33262463506/2012-2013,

33262463506/2013-2014, 33262463506/2014-2015 dated

15.03.2023 , in and by which penalty was imposed under Section 27 (3)

https://www.mhc.tn.gov.in/judis W.P.Nos.16607, 16610, 16613, 16614 and 16616 of 2023

of the Tamil Nadu Value Added Tax Act, 2006 (for brevity 'the TNVAT

Act').

2. The learned counsel for the Petitioner submitted that the 1st

Respondent through the impugned orders dated 15.03.2023 has levied

penalty under Section 27 (3) of the TNVAT Act, which is contrary to the

said Act, for the reason that penalty under Section 27 (3) of the TNVAT

Act can be levied only in an Assessment Order passed under Section 27

(1)(a) of the TNVAT ACT and in other words, penalty under Section 27

(3) of the TNVAT Act cannot be levied by way of a separate order but

should form part of the order made under Section 27 (1)(a) of the

TNVAT Act. He further submitted that in these cases, the revision of

assessment for the Assessment Years 2010-11 to 2014-15 were passed

on 18.03.2020 and in those orders no penalty under Section 27 (3) of the

TNVAT Act was levied, but only through the notice dated 5.12.2022, the

1st Respondent proposed to levy penalty under Section 27 (3) of the

TNVAT Act. He therefore submitted that the 1st Respondent having

passed the Assessment Orders without imposing penalty, at a later point

of time cannot change his view and initiate independent proceedings for

https://www.mhc.tn.gov.in/judis W.P.Nos.16607, 16610, 16613, 16614 and 16616 of 2023

imposition of penalty, which is not permissible under the provisions of

the TNVAT Act. In support of his contentions, he relied upon the

Judgment of Division Bench of this Court in the case of The Deputy

Commissioner (C.T.) Coimbatore Vs. V.S.R.Ramaswami Chettiar and

Bros. reported in [1976] 38 STC 382 (Mad) and also the Judgment of

learned Single Judge of this Court in the case of Rainbow Foundations

Ltd. Vs. Assistant Commissioner (CT) (FAC) reported in [2011] 37

VST 592.

3. Despite opportunities being granted to the Respondents to file

counter, the Respondents have not chosen to file the counter till date

and even today when the matter was taken up for hearing, the learned

Additional Government Pleader requested time to file counter and simply

submitted that the judgments which are contra to the judgments relied on

by the learned counsel for the Petitioner were also available and sought

time to produce the same, but she fairly submitted that in the judgments

relied on by the learned counsel for the Petitioner, it is held that

independent penalty proceedings cannot be initiated, the same has to be

passed along with the assessment order. She further submitted that the

https://www.mhc.tn.gov.in/judis W.P.Nos.16607, 16610, 16613, 16614 and 16616 of 2023

learned Single Judge of this Court in similar circumstances has passed an

order on 03.08.2023, dismissing the Writ Petition in W.P.No.4202 of

2022 and as against which Writ Appeal has been preferred by the

Petitioner therein and the same is pending.

4. Heard the submissions made by learned counsel appearing on

either side and perused the materials available on record.

5.In the present case on hand, preliminary proceedings were

initiated by the Respondents by virtue of issuing notice on 05.12.2022

and thereafter Assessment Orders were passed on 18.03.2020 and

subsequently, impugned orders, dated 15.03.2023, imposing penalty

under Section 27 (3) of the TNVAT Act came to be passed on

15.03.2023. The Division Bench of this Court in the case of The Deputy

Commissioner (C.T.), Coimbatore Vs. V.S.R.Ramaswami Chettiar and

Bros reported in [1976] 38 STC 382 has held as follows.

"....But, on the other hand, in cases falling under Section 16(2) unless there is a definite finding as to the wilful non-disclosure of taxable

https://www.mhc.tn.gov.in/judis W.P.Nos.16607, 16610, 16613, 16614 and 16616 of 2023

turnover, the assessing officer will have no jurisdiction to impose the penalty. Except for this difference, we do not find any other difference between section 12(3), as it stood at the relevant period, and section 16(2). As we have already seen, this Court in State of Madras V. Ramulu Naidu (1) held that the levy of penalty should form part of the assessment order itself. Thus, no separate order is also contemplated under section 16(2). Thiru S.V.Subramaniam, whom we required to argue the case in the absence of the respondent brought to our notice section 31 relating to the appeal to the Appellate Assistant Commissioner where, while section 12 is referred to without any reference to the sub-sections in that section, sub- sections (1) and (2) of section 16 is specifically referred to. It was so mentioned because two separate orders were contemplated under section 16(1) and (2). On the other hand, only a consolidated order was expected to be made in section 12 and, therefore, section 12 is referred to without any reference to the sub-sections therein. We are unable to accept this argument of the learned counsel also. Section 16 has two more sub-sections [sub-sections (3) and (4)], which do not contemplate making of any orders under that provision; whereas in section 12, each one of the sub-section deals with orders and, instead of mentioning each one of the sub-sections, the totality of that section is mentioned in the appeal provision. Further, section 12 contemplates two different types of orders, one accepting the return under section 12(1) and another a best judgment assessment under section 12(2). But section 31 did not make any specific reference because every one of the orders made under section 12 is appealable.

https://www.mhc.tn.gov.in/judis W.P.Nos.16607, 16610, 16613, 16614 and 16616 of 2023

We are, therefore, unable to hold that separate orders were contemplated under section 16(2). In fact, it was not even the case of the Government Pleader that only separate orders could be made under section 16(2). On the other hand, he contended that it was open to the assessing officer either to make a consolidated order or separate orders under section 16(2). We are, therefore, of the opinion that the Tribunal was right in holding that no separate order of penalty could be made under section 16(2)."

5. A mere reading of the aforesaid judgment would make it clear

that no penalty proceedings can be initiated independently in terms of

provisions of Section 16 (2) of the Tamil Nadu General Sales Tax Act,

1959 (in short 'the TNGST Act'). In the present case on hand, the

penalty proceedings were initiated under Section 27 (3) of the TNVAT

Act and the provisions of Section 27 (3) of the TNVAT Act and Section

16(2) of the TNGST Act are similar. For the sake of convenience, the

same are extracted hereunder:

"Section 27 (3) of the TNVAT ACT:

(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 willful non-disclosure of assessable turnover by a dealer,direct the dealer, to pay, in addition to the tax assessed under clause (a) of sub-section (1), by way of penalty a sum which shall be.

https://www.mhc.tn.gov.in/judis W.P.Nos.16607, 16610, 16613, 16614 and 16616 of 2023

(a) fifty percent on the tax due on the turnover that was willfully not disclosed if the tax due on such turnover is not more than ten percent of the tax paid as per the return.

(b) one hundred per cent of the tax due on the turnover that was wilfully not disclosed if the tax due on such turnover is more than ten per cent of the tax paid as per the return.

(c) one hundred and fifty per cent of the tax due on the assessible turnover that was wilfully not disclosed, if the tax due on such turnover is more than fifty per cent of the tax paid as per the return."

"Section 16(2) of the TNGST Act.

(2) 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 additional to the tax assessed under clause (a) of sub-section (1), by way of penalty a sum which shall be-

(a) fifty per cent of the tax due on the turnover that was willfully not disclosed if the tax due on such turnover is not more than ten per cent of the tax paid as per the return;

(b) one hundred per cent of the tax due on the turnover that was willfully not disclosed if the tax due on such turnover is more than per cent but not more than fifty percent of the tax paid as per the return;

(c) one hundred and fifty per cent of the tax

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due on the assessable turnover that was willfully not disclosed, if the tax due on such turnover is more than fifty percent of the tax paid as per the return;

(d) one hundred and fifty per cent of the tax due on the assessable turnover that was wilfully not disclosed, in the case of self-assessment referred to in sub-section (1) of section 12:

Provided that no penalty under this sub- section shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause against such imposition."

6. A reading of the aforesaid provisions would make it very clear

that unless there is a definite finding as to the wilful non-disclosure of

taxable turnover, the assessing officer will have no jurisdiction to impose

the penalty. Therefore, this Court is of the considered view that once the

Assessment Order is passed, without imposing penalty, subsequently the

1st Respondent cannot change his view and initiate the fresh penalty

proceedings.

7. Considering the facts and circumstances of the case and also in

the light of the judgments referred to supra, as well the provisions of

Section 27 (3) of the TNVAT Act as well as Section 16 (2) of the

TNGST Act, this Court is inclined to quash the impugned proceedings of

https://www.mhc.tn.gov.in/judis W.P.Nos.16607, 16610, 16613, 16614 and 16616 of 2023