2024-VIL-279-MAD
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VAT High Court Cases

Tamil Nadu VAT Act, 2006 – Works Contract - Petitioner adopted the method suggested by the Enforcement Wing Officers while discharging the liability in respect of the works contract on the basis of deemed sales value basis under Section 5 of the TNVAT Act – petitioner challenge levy of penalty under Section 27(3) of the TNVAT Act, 2006 for alleged wilful non-disclosure of assessable turnover – HELD - the pre-requisite for invoking Section 27(3) of the TNVAT Act is that there exist wilful non-disclosure of assessable turnover by the dealer - There is no finding of wilful non-disclosure of assessable turnover for levy of penalty, independent of the fact, that the turnover was found to have been suppressed resulting in best judgment assessment and levy of tax - Though there may be reasons for making a best judgment assessment, penalty does not automatically follow in all cases of best judgment. In the impugned orders of assessment, there is no finding of wilful non-disclosure of assessable turnover while invoking penalty under Section 27(3) of the Act. Thus, the levy of penalty is without jurisdiction - The petitioner had discharged the liability only on the basis of the instructions of the Enforcement Wing Officers made during the course of inspection. The petitioner having acted on the basis of the instructions of the Enforcement Wing authorities, cannot be imputed with motives - Mere rejection of reasons for the difference of turnover reported by the petitioner and its purchaser may not necessarily result in concluding that there was wilful non-disclosure of assessable turnover - the impugned orders insofar as the levy of penalty under Section 27(3) of the TNVAT Act are set aside and the remaining portions of the impugned orders of assessment remains undisturbed – the writ petition is disposed of
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