BJA can’t be pass when there is no reason to reject returns and BoA of taxpayer

Case Covered:

Audco India Limited

Versus

Commercial Tax Officer

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Facts of the case:

The Assessee has filed this writ petition aggrieved by the order dated 12.11.2007, whereby the learned Tribunal sustained and upheld the penalty imposed on the Assessee under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as ‘TNGST Act’), with the following observations.

Observations of the court:

Learned counsel for the appellant Mr.Parthasarathi has urged before us that, the two grounds on which the imposition of penalty has been sustained by the Tribunal are, that the assessing authority imposed an additional tax on the sales made by the Assessee, which were not supported by a declaration in ‘C’ Forms and secondly on the Cash Incentives received by the Assessee on the Exports made by it was held to be part of taxable turnover, which was not so. The imposition of additional tax, however, has not been done as a result of ‘Best Judgment Assessment’ under Section 12(2) of the TNGST Act, upon which only the penalty under Section 12(3)(b) of the Act is attracted and therefore, the learned Tribunal has erred in upholding the imposition of the said penalty.

Per contra, Mr.Mohammed Shaffiq, learned Special Government Pleader (Taxes) supported the impugned order of the learned Tribunal.

Judgement of the court:

Having heard the learned counsel for the parties, we are of the opinion that the parameters of Section 12(3)(b) of the Act are not satisfied in the present case. Section 12(3)(b) provides for imposition of penalty in case of submission of incorrect or incomplete return by the Assessee. Both the grounds given above for imposition of additional tax on the Assessee did not, in our opinion, result in Best Judgment Assessment against the Assessee and it cannot amount to filing of incorrect or incomplete return by the Assessee. On debatable issues, even if the addition in taxable turnover is made by the Assessing Officer, it does not amount to Best Judgment Assessment, which can be passed, only if the regular books of accounts and the return filed by the Assessee are rejected for given reasons. Therefore, the learned Tribunal has erred in relying upon the insertion of the Explanation in Section 12(3) of the Act at a later date with effect from 01.04.1996 to uphold such penalty in the year 1993-94. In our opinion, the Explanation to Section 12(3) does not get attracted to the facts of the present case at all. 

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