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The State of Tamil Nadu Vs. A.L. Francis - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case No. 453 of 1974
Judge
Reported in[1978]41STC133(Mad)
AppellantThe State of Tamil Nadu
RespondentA.L. Francis
Appellant AdvocateAdditional Government Pleader
Respondent AdvocateC.S. Chandrasekara Sastri, ;C. Venkataraman and ;C. Natarajan, Advs.
DispositionPetition allowed
Cases ReferredState of Tamil Nadu v. Sri Swamy and Company
Excerpt:
- - we, therefore, consider that the tribunal did not act properly in giving the assessee the benefit of section 7. 7. coming to the question of levy of penalty, we are not satisfied that in the present case the levy of penalty was in any way unreasonable. 1,515.00 under section 12(3) of the act for failure to submit annual return in form a-l on the actual suppression sales turnover of rs......to the assessing authority to be so assessed. the option so exercised would be valid for the year of assessment and be continued so long as the dealer was found eligible to be assessed under section 7 and had not withdrawn the option. the change-over to that method of assessment was not to be permitted in the course of a year. section 7(2a) substantially incorporated this rule in the statute itself. that runs as follows:the permission granted by the assessing authority under sub-section (2) shall continue in force so long as the dealer is eligible to be assessed under this section and has not withdrawn his option to be so assessed.6. the tribunal has taken the view that the expression 'shall continue in force so long as the dealer is eligible to be assessed under this section'.....
Judgment:

Sethuraman, J.

1. The assessee is running a hotel. He had not registered himself as a dealer till his place of business was inspected on 2nd June, 1972. The assessing authority checked the accounts and found that they were not correctly maintained. The hotel itself had been started on 22nd November, 1971. We are in the present revision dealing with the assessment year 1971-72. Therefore, the turnover between 22nd November, 1971 and 31st March, 1972, is relevant for consideration. The assessing authority fixed the turnover for that period at Rs. 46,986.55 and in addition levied a penalty of Rs. 1,515. On appeal, the Appellate Assistant Commissioner while confirming the assessment reduced the penalty to Rs. 909. Thereafter, there was an appeal to the Sales Tax Appellate Tribunal. Three contentions were taken before the Tribunal. The first was that the addition to the book turnover was not proper. The Tribunal went into this question and found that the defects pointed out by the assessing authority existed so that the addition was liable to be made. The second contention taken before the Tribunal was that the assessee was eligible to be assessed at the compounded rate of tax under Section 7. For this purpose, we have to set out a few more facts.

2. The assessee had not filed the return for the assessment year 1971-72. However, he submitted a return for 1972-73 on 6th June, 1972 and in the said return exercised the option for being assessed under Section 7. The assessment for 1972-73 was completed on 13th June, 1972. The assessing authority levied tax on the assessee in accordance with the provisions of Section 7. However, while assessing for the assessment year 1971-72, the benefit of Section 7 was not given and the objection of the assessee before the Appellate Assistant Commissioner to the denial of the benefit of Section 7 was not successful. The contention that was before the Tribunal was that as the assessment for 1972-73 had been completed on 13th June, 1972, any assessment that was completed subsequent to that date would have to carry the benefit of the provisions of Section 7. It is this contention which found favour with the Tribunal.

3. The assessee challenged also the levy of penalty. The Tribunal held that this being an assessment without the assessee filing the return, the assessment could only be treated as one under Section 16 and that under the provisions of Section 16 the levy of penalty has to be preceded by a finding that there was a wilful non-disclosure of turnover and that in this case there was no such finding. In this view, the entire penalty was cancelled. The State of Tamil Nadu has come forward with the present revision petition challenging the order of the Sales Tax Appellate Tribunal.

4. The first objection to the order of the Tribunal is that as regards the benefit of the assessment under Section 7 given by the Tribunal by its order. The learned Additional Government Pleader contended that the provisions of Section 7(2A) relied on by the Tribunal did not justify the granting of the benefit of Section 7 for the year preceding that for which the assessment was made on 13th June, 1972. As mentioned earlier, the assessment was made on 13th June, 1972, for the assessment year 1972-73. According to the Additional Government Pleader, the benefit of Section 7, which was given to the assessee under the said order, could not be taken to enure for the assessment year 1971-72, for which the assessment was made only subsequently in September, 1972.

5. Section 7(2A) was introduced by Act 31 of 1972 with effect from 31st July, 1963, i. e., retrospectively. Prior to the introduction of the said provision the matter was governed by Rule 15(4A) of the Tamil Nadu General Sales Tax Rules. Under that rule, if a dealer who was eligible to pay tax at the compounded rate laid down in Section 7 was desirous of being assessed on a provisional basis from the commencement of any year, at the rates laid down in that section, he should before the 1st May of each year or if the return referred to in Sub-rules (1) to (3) of Rule 15 was submitted earlier along with that return, intimate his desire to the assessing authority to be so assessed. The option so exercised would be valid for the year of assessment and be continued so long as the dealer was found eligible to be assessed under Section 7 and had not withdrawn the option. The change-over to that method of assessment was not to be permitted in the course of a year. Section 7(2A) substantially incorporated this rule in the statute itself. That runs as follows:

The permission granted by the assessing authority under Sub-section (2) shall continue in force so long as the dealer is eligible to be assessed under this section and has not withdrawn his option to be so assessed.

6. The Tribunal has taken the view that the expression 'shall continue in force so long as the dealer is eligible to be assessed under this section' would comprehend all assessments made subsequent to the granting of the permission for any year. It is in this view that though the permission was granted for the assessment year 1972-73 on 13th June, 1972, it was held to enure for the assessment year 1971-72 also for which the assessment was completed subsequently. A careful consideration of Rule 15(4A) and Section 7(2A) would, in our opinion, go to show that the grant of permission by the assessing authority under Section 7(2) would continue to be in force only to assessment years subsequent to that for which the permission was granted. It would not, in our opinion, be proper or reasonable to consider that the benefit of Section 7, when once it is granted for a later year, would enure to govern the assessment completed later for an earlier year. The assessee in the present case has not exercised his option for the assessment year 1971-72 at any time. Section 7(2A) confers an option on the assessee and it is, therefore, for the assessee to exercise the option. Each assessment year is separate and independent and it is only as an exception to this principle that Section 7(2A) and also Rule 15(4A) have been introduced so that the permission once granted need not have to be applied for again and again. This benefit under the provisions of Section 7(2A) or Rule 15(4A) is not intended to affect any earlier assessment year merely because of the accidental event of its later completion. In other words, the concession cannot be applied in reverse gear. We, therefore, consider that the Tribunal did not act properly in giving the assessee the benefit of Section 7.

7. Coming to the question of levy of penalty, we are not satisfied that in the present case the levy of penalty was in any way unreasonable. In the assessment order the Deputy Commercial Tax Officer has stated as follows :

It was also proposed to levy a penalty of Rs. 1,515.00 under Section 12(3) of the Act for failure to submit annual return in form A-l on the actual suppression sales turnover of Rs. 28,846.47 (underlining ours).

8. The significant use of the word 'suppression' has been considered by this court in State of Tamil Nadu v. Sri Swamy and Company [1977] 39 S.T.C. 85 and it has been held that the use of the word 'suppression' as contrasted with the use of the word 'omission' would go to show that the use of the word 'suppression' involves a finding that there was a wilful non-disclosure. We, therefore, hold that the deletion of the penalty by the Tribunal on the footing that there was no finding of wilful non-disclosure is not correct. The Tribunal has not examined the question as to whether the levy of a penalty of Rs. 909 was called for in this case, with reference to the very first year of assessment. We, therefore, direct the Tribunal to go into the question of quantum of penalty and consider whether the levy of Rs. 909 was reasonable on the facts here. The tax revision case is accordingly allowed. No costs.


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