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2010 Supreme(Mad) 1092
IN THE MADRAS HIGH COURT
P.P.S. Janarthana Raja, Prabha Sridevan, JJ.
ARUL CONSTRUCTIONS
Versus
STATE OF TAMIL NADU.
T.C. (R.) Nos. 2228 and 2229 of 2008
Decided On: Decided On : 18-03-2010
R. Senniappan - Petitioner.
K. Radhakrishnan - Respondent.
The nature of assessment and turnover estimation are pivotal in determining the applicability of penalties and statutory provisions.
Headnote:
Sales Tax - Assessment under Tamil Nadu General Sales Tax Act, 1959 - Section 12(2), Section 12(3)(a), Section 12(4), Section 12(5)(iii) - [1993] 89 STC 349 (Mad), [1971] 28 STC 700 (SC) - The court discussed the assessment made under section 12(2) of the Tamil Nadu General Sales Tax Act, 1959, the applicability of penalty under section 12(3)(a), and the scope for invocation of section 12(4) and section 12(5)(iii) based on previous judgments and the assessment method used.
Fact of the Case:
The assessee, engaged in building and flat promotion, contested the penalty imposed under section 12(3)(a) of the Tamil Nadu General Sales Tax Act, 1959, for not filing returns and the assessment made on the basis of 'best judgment assessment'.
Finding of the Court:
The court analyzed the assessment method, previous judgments, and the nature of turnover estimation, ultimately finding in favor of the assessee and against the Revenue, allowing the revisions and answering the questions in favor of the assessee.
Issues: Assessment under section 12(2), applicability of penalty under section 12(3)(a), and scope for invocation of section 12(4) and section 12(5)(iii) based on previous judgments.
Ratio Decidendi: The assessment method and the nature of turnover estimation were crucial in determining the applicability of penalties and statutory provisions, as interpreted from previous judgments.
Final Decision: The revisions were allowed, and the questions were answered in favor of the assessee and against the Revenue.
Mrs. Prabha Sridevan - These revisions are filed by the assessee on the following questions of law :
"1. Whether the Sales Tax Appellate Tribunal was correct in holding that the assessment made by the assessing authority was under section 12(2) of the Tamil Nadu General Sales Tax Act, 1959 ?
2. Whether the Sales Tax Appellate Tribunal was correct in holding that the statement showing consolidated turnover cannot be taken as a return prescribed ?
3. The Sales Tax Appellate Tribunal has held in one place that the turnover was estimated on best judgment by the assessing officer on the basis of particulars available in the books of account, in another place it is held that the turnover was not the estimate directly based on the books of account. Therefore, the order of the Sales Tax Appellate Tribunal is conflict.
4. The order of the Sales Tax Appellate Tribunal was contrary to the principles stated by the honourable Madras High Court reported in [1993] 89 STC 349 (State of Tamil Nadu v. P.S. Srinivasa Iyengar & Sons) and the judgment of the honourable Madras High Court in W.P. No. 10201 of 2000 dated October 1, 2001 (Rajarajeswari Finance, Sivakasi v. State of Tamil Nadu).
5. The order of the Sales Tax Appellate Tribunal was contrary to the principles stated by the honourable Supreme Court reported in [1971] 28 STC 700 (State of Madras v. S.G. Jayaraj Nadar & Sons).
6. The judgment of the Sales Tax Appellate Tribunal was against the statutory provisions of amending section 12(3) of the Tamil Nadu General Sales Tax Act, 1959, since the appellant had paid the entire tax amount before finalisation of the assessment proceedings."
The relevant assessment yeas are 1995-96 and 1996-97. The assessee submitted a statement for three assessment years 1995-96, 1996-97 and 1997-98 on November 4, 1998. The assessee is engaged in the business of building and flat promotion. The original authority held that the assessee is liable to pay penalty under section 12(3)(a) of the Tamil Nadu General Sales Tax Act, 1959, since returns had not been filed declaring the tax liability and therefore, the assessment was made on the basis of "best judgment assessment". On appeal, the appellate authority referred to the words in the original order to show that A1 returns had been filed and only because they had not produced agreements, books of account, balance sheet, etc., in support of the A1 returns, and held that once A1 returns had been filed and on the basis of which, the assessment was made, invocation of section 12(3)(a) of the Act, is not correct. On appeal by the State, the Tribunal set aside the order of the Appellate Assistant Commissioner and therefore, the assessee is before us.
The learned counsel for the assessee relied on [1993] 89 STC 349 (Mad) (State of Tamil Nadu v. P.S. Srinivasa Iyengar and Sons) and the judgment of the Division Bench of this court dated October 1, 2001 passed in Writ Petition No. 10201 of 2000 (Rajarajeswari Finance, Sivakasi v. State of Tamil Nadu) relying on [1971] 28 STC 700 (SC) (State of Madras v. S.G. Jayaraj Nadar & Sons). Learned counsel pointed out that even in the order of the assessing officer, the following words are found : "it was found from A1 returns filed, they have reported their total and taxable turnover for 1996-97 and 1997-98". The learned counsel submitted that if the assessment has been made on the basis of their statement, then relying on [1993] 89 STC 349 (Mad) (State of Tamil Nadu v. P.S. Srinivasa Iyengar and Sons), it can be held that it should be equated to filing of returns from filing of statement and therefore, there is no case for levy of penalty.
The learned Special Government Pleader (Taxes) on the other hand submitted that though for the assessment year 1996-97, returns had been filed, for the assessment year 1995-96, there was no return and the statement cannot be relied on.
It is apt to extract the order passed by the Division Bench of this court dated October 1, 2001 passed in
