AO has no Jurisdiction to Impose Penalty under TNVAT Act Unless There is A Definite Finding on Wilful Non-disclosure of Taxable Turnover: Madras HC Quashes Assessment Order [Read Order]
The HC held that AO cannot impose penalties under the TNVAT Act unless there is a finding on wilful non-disclosure of taxable turnover.
AO -Penalty – Jurisdiction – TNVAT Act – Assessment Order – Madras HC – Madras HC Quashes Assessment Order – taxscan
AO -Penalty – Jurisdiction – TNVAT Act – Assessment Order – Madras HC – Madras HC Quashes Assessment Order – taxscan
The Madras High Court has held that the Assessing Officer(AO) has no Jurisdiction to Impose Penalty under the Tamil Nadu Value Added Tax Act, 2006 ( 'the TNVAT Act') unless there is a definite finding on wilful non-disclosure of taxable turnover.
M/s. Supreme Trading House, the petitioner challenged the proceedings of the 1st Respondent by which penalty was imposed under Section 27 (3) of the Tamil Nadu Value Added Tax Act, 2006 ( 'the TNVAT Act').
The Petitioner submitted that the 1st Respondent through the impugned orders dated 15.03.2023 has levied a 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.
The revision of assessment for the Assessment Years 2010-11 to 2014-15 was 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.
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 imposition of penalty, which is not permissible under the provisions of the TNVAT Act.
A single-member bench Justice Krishnan Ramasamy observed 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 ('the TNGST Act'). It was viewed 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.
The Court observed 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, the Court is of the considered view that once the Assessment Order is passed, without imposing the penalty, subsequently the 1st Respondent cannot change his view and initiate the fresh penalty proceedings.
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 TN VAT Act as well as Section 16 (2) of the TNGST Act, the Court quashed the impugned proceedings.
To Read the full text of the Order CLICK HERE
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