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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE THANIKKACHALAM AND THE HONOURABLE MR. JUSTICE JAYARAMA CHOUTA
State of Tamil Nadu - Appellant
Versus
Sri Shanmughananda and Company - Respondents
Tax Case No. 1361 of 1984 (Revision No. 265 of 1984)
Decided On : 25 April 1995
TAMIL NADU GENERAL SALES TAX ACT, 1959 - SECTION 16(2), 36(3) - ENHANCEMENT PETITION - MAINTAINABILITY - AMENDMENT INTRODUCED BY ACT NO. 78 OF 1986 - APPLICABILITY - PENALTY LEVIED UNDER SECTION 16(2) - CANCELLATION BY APPELLATE ASSISTANT COMMISSIONER - RESTORATION - MAINTAINABILITY OF ENHANCEMENT PETITION - MERITS OF THE CASE - PENALTY NOT EXIGIBLE.
Fact of the Case:
The assessee was levied a penalty of Rs. 6,760 under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 (the Act) by the Deputy Commercial Tax Officer (Enforcement). On appeal, the Appellate Assistant Commissioner cancelled the penalty, holding that it was not leviable since the turnover assessed was found in the books of accounts and the accounts were not rejected by the department. The department filed an enhancement petition before the Tribunal to restore the penalty, but the Tribunal dismissed the petition, holding that it was not entertainable since the penalty was cancelled in its entirety.
Finding of the Court:
The court held that the enhancement petition filed by the State for restoration of penalty imposed by the assessing officer which was cancelled by the Appellate Assistant Commissioner in its entirety is maintainable. However, on merits, the court held that penalty under section 16(2) of the Act is not exigible in the case of the assessee since the turnover assessed was found in the books of accounts and the accounts were accepted by the department.
Issues: 1. Whether an enhancement petition under section 36(3) of the Act is maintainable for restoration of penalty levied by the assessing officer and cancelled by the Appellate Assistant Commissioner? 2. Whether penalty under section 16(2) of the Act is exigible in the case of the assessee where the turnover assessed was found in the books of accounts and the accounts were accepted by the department?
Ratio Decidendi: 1. The court held that the word "enhance" in section 36(3) of the Act is wide enough to include restoration of penalty imposed by the assessing officer. The court also held that the amendment introduced by Act No. 78 of 1986, which inserted the expression "restore fully or partially, as the case may be" in section 36(3), is clarificatory in nature and therefore applicable even to the period prior to January 1, 1987. 2. The court held that penalty under section 16(2) of the Act is not exigible in the case of the assessee where the turnover assessed was found in the books of accounts and the accounts were accepted by the department, relying on the decision of the Supreme Court in State of Madras v. S. G. Jayaraj Nadar & Sons.
Final Decision: The court dismissed the revision filed by the department, holding that the enhancement petition was maintainable but the penalty under section 16(2) of the Act was not exigible on merits.
THANIKKACHALAM, J.
The order of the Court was made by THANIKKACHALAM, J.This revision, filed by the State, is directed against the order passed by the Tribunal refusing to entertain an enhancement petition filed for restoration of the penalty levied by the assessing officer. The assessing officer levied a penalty of Rs. 6, 760 under section16(2) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act"). The Deputy Commercial Tax Officer (Enforcement), Namakkal, assessed the turnover of Rs. 1, 12, 664 on the basis of the book turnover. On appeal, the Appellate Assistant Commercial, following a decision of the Supreme Court reported as State of Madras v. S. G. Jayaraj Nadar & Sons 1972 (1) CTR 308, 1971 AIR(SC) 2405, 1971 (28) STC 700, 1972 (3) SCC 300, 1972 (1) SCR 751, 1972 (2) MLJ 14 has held that penalty in this case under section16(2) of the Act cannot be levied. Aggrieved the department filed an enhancement petition before the Tribunal to restore the penalty levied by the assessing officer in the appeal filed by the assessee against certain other findings made by the Appellate Assistant Commissioner. The Tribunal held that enhancement petition is not entertainable since the Appellate Assistant Commissioner cancelled the penalty levied, in its entirety. It is against that order, the present revision has been filed by the State.
2. The learned Additional Government Pleader submitted that an enhancement petition under section36(3) by the Act is maintainable. She further submitted that the word "enhancement" would include restoration of penalty. Again it was submitted that the amendment introduced to section36(3) by Act No. 78 of 1986 with effect from January 1, 1987, by inserting the expression "restore fully or partially" would come to the rescue of the department for filing an enhancement petition for the purpose of restoration of penalty. It was further submitted that the amendment introduced by Act No. 78 of 1986 is clarificatory in nature and therefore it would be applicable even for the period prior to January 1, 1987. In order to support the contention, the learned Additional Government Pleader (Taxes) relied upon a decision reported as Bhavani Mills Limited v. State of Tamil Nadu 1944 (94) STC 120 (Mad.) wherein after considering the decision rendered by this Court in State of Tamil Nadu v. Jakthi Veliyeetakam 1977 (6) CTR 496, 1977 (40) STC 466, it was held that the enhancement petition can be filed even to restore the penalty levied by the assessing officer in a case where the penalty was completely cancelled by the Appellate Assistant Commissioner. It was therefore pleaded that the Tribunal was not correct in dismissing the petition filed by the department at the threshold itself.
3. On the other hand, the learned counsel appearing for the assessee submitted that on merits, since the turnover is found in the books, penalty in not eligible under section 16(2) of the Act. It was further submitted that when the Appellate Assistant Commissioner cancelled the penalty in its entirely, enhancement petition under section16(3) of the Act is not entertainable by the Tribunal. The learned counsel supports this contention by relying upon the decision is State of Tamil Nadu v. Jakthi Veliyeetakam 1977 (6) CTR 496, 1977 (40) STC 466. Therefore, both on merits as well as on jurisdiction, it was submitted that penalty under section16(2) of the Act is not exigible in the case of the assessee.
4. We have heard the rival contentions of the learned counsel on both sides. It is the admitted fact that penalty under section16(2) of the Act to an extent of Rs. 6, 760 was levied by the Deputy Commercial Tax Officer (Enforcement) on the assessed turnover of Rs. 1, 12, 664. On appeal, the Appellate Assistant Commissioner came to the conclusion that penalty under section 16(2) is not leviable in the present case, because the turnover assessed by the assessing officer is found place in the books of accounts a
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