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1995 Supreme(Mad) 246
K.A. Thanikkachalam, T. Jayarama Chouta, JJ.
STATE OF TAMIL NADU
Versus
K. M. SULTAN MOHIDEEN.
T.C.P. No. 18 of 1984 (Revision No. 16 of 1984)
Decided On: Decided On : 27-02-1995
Mrs. Chitra Venkataraman, Additional Government Pleader (Taxes), for the petitioner.
The Tribunal has the jurisdiction to entertain an enhancement petition filed by the department to restore a penalty deleted by the Appellate Assistant Commissioner, and when an appeal is filed before the Tribunal, the order of the Appellate Assistant Commissioner merges with the order of the assessing officer, and the Tribunal can consider the correctness of both orders.
Headnote:
TAMIL NADU GENERAL SALES TAX ACT, 1959 - SECTION 12(3), 34, 36(3)(A)(I) - PENALTY - ENHANCEMENT PETITION - JURISDICTION OF TRIBUNAL - REVISION - SCOPE OF - ORDER OF APPELLATE ASSISTANT COMMISSIONER - APPEAL BEFORE TRIBUNAL - EFFECT - RESTORATION OF PENALTY - POWER OF TRIBUNAL.
Fact of the Case:
The assessee, a dealer in hides and skins, had some discrepancy in accounts, leading to addition for suppressed turnover. On appeal, the Appellate Assistant Commissioner reduced the addition equal to the actual suppression. The assessing authority levied a penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act) for willful non-disclosure of turnover. The Appellate Assistant Commissioner deleted the penalty on appeal, following an earlier decision of the Madras High Court. The department filed an enhancement petition before the Tribunal to restore the penalty, which was dismissed.
Finding of the Court:
The Madras High Court held that the Tribunal erred in holding that the department could not file an enhancement petition since the Appellate Assistant Commissioner had deleted the penalty in its entirety. The Court interpreted section 36(3)(a)(i) of the TNGST Act to mean that the Tribunal has the jurisdiction to enhance or restore the penalty imposed by the assessing authority, even if the Appellate Assistant Commissioner had deleted it. The Court also held that when an appeal is filed before the Tribunal, the order of the Appellate Assistant Commissioner is challenged along with the order of the assessing officer, and the Tribunal can consider the correctness of both orders.
Issues: 1. Whether the Tribunal has the jurisdiction to entertain an enhancement petition filed by the department to restore a penalty deleted by the Appellate Assistant Commissioner? 2. Whether the order of the Appellate Assistant Commissioner deleting the penalty merges with the order of the assessing officer, and whether the Tribunal can consider the correctness of both orders when an appeal is filed before it?
Ratio Decidendi: 1. Section 36(3)(a)(i) of the TNGST Act empowers the Tribunal to confirm, reduce, enhance, or annul the assessment or penalty, or both, in an appeal. The word "enhance" includes restoring the assessment or penalty fully or partially. 2. When an appeal is filed before the Tribunal, the order of the Appellate Assistant Commissioner is challenged along with the order of the assessing officer, and the Tribunal can consider the correctness of both orders. The order of the Appellate Assistant Commissioner merges with the order of the assessing officer.
Final Decision: The Court allowed the revision petition filed by the department and set aside the finding of the Tribunal that the department could not file an enhancement petition. The issue relating to the levy of penalty was restored to the file of the Appellate Tribunal for consideration and disposal on merits.
The judgment of the Court was delivered by
THANIKKACHALAM, J. - The department is the revision-petitioner herein. The assessment year involved in this revision is 1981-82. This revision is directed against the order passed by the Tribunal in a petition for enhancement filed by the department to restore the penalty levied by the assessing authority.
2. The assessee is a dealer in hides and skins. Since there was some discrepancy in the accounts, addition was made for suppressed turnover. On appeal, the Appellate Assistant Commissioner reduced the addition equal to the actual suppression. Another item of addition relates to commission sales on behalf of unregistered dealers. The assessing authority has levied the penalty at one and half times of the tax due on the actual stock variation under section 12(3) of the Tamil Nadu General Sales Tax Act (the TNGST Act). On appeal, the Appellate Assistant Commissioner following the earlier decision of this Court in T.C. No. 1191 of 1979 held that the discrepancy in stock though suggestive of sales or purchase, omission warranting rejection of the accounts and for estimation cannot be held to establish willful non-disclosure of a turnover. Since there was no willful non-disclosure of turnover, in the present case, according to the Appellate Assistant Commissioner, he deleted the penalty levied by the assessing officer.
3. Aggrieved by the order passed by the Appellate Assistant Commissioner in respect of certain items in quantum appeal, the assessee filed an appeal before the Tribunal. In the said appeal, the department filed an enhancement petition, requesting the Tribunal to restore the penalty levied by the assessing authority.
4. After hearing learned counsel appearing for the assessee as well as the departmental representative, the Tribunal held that in view of the decision reported in State of Tamil Nadu v. Jakthi Veliyeetakam [1977] 40 STC 466 (Mad.) there is no case for restoring the penalty which was completely deleted by the Appellate Assistant Commissioner.
5. Aggrieved by this order dated July 7, 1983 the department is in revision before this Court.
6. Mrs. Chitra Venkataraman, learned Additional Government Pleader (Taxes) submitted as hereunder : Since there was suppression in sales turnover as well as in commission sales, the assessing authority levied penalty under section 12(3) of the TNGST Act, 1959 (hereinafter referred to as "the Act"). The Tribunal was not correct in stating that when the Appellate Assistant Commissioner deleted the penalty in its entirety, no enhancement petition can be filed by the department. It was further submitted that in view of the proviso contained in section 36(3)(a) of the Act, the department is entitled to file an enhancement petition for restoration of penalty. Again, the learned Additional Government Pleader (Taxes) submitted that since the appeal was filed by the assessee before the Tribunal, the revisional power under section 34 of the Act cannot be exercised by the Joint Commissioner. Under such circumstances, the only course open to the department is to file a petition under section 36(3)(a) of the Act. In order to support this line of argument, learned Additional Government Pleader (Taxes) relied upon the following two decisions in Bhavani Mills Limited v. State of Tamil Nadu [1994] 94 STC 120 (Mad.) and M. Chokkalingam v. State of Tamil Nadu [1994] 94 STC 127 (Mad.)
7. On the other hand, none was present on behalf of the assessee.
8. We have heard the learned Additional Government Pleader (Taxes) and perused the records carefully. The fact remains that since there was suppressed turnover on account of discrepancy in the accounts and suppression in commission sales, penalty was levied under section 12(3) of the Act. The assessing authority levied the penalty at one and half times of the tax due on the actual stock variation of Rs. 1,28,410. This penalty was cancelled by the Appellate Assistant Commissioner on appeal by follo
