[Tamil Nadu General Sales Tax] Assessee Liable For Tax On Proceeds From Sale Of Unredeemed Articles By Auctioneers: Madras High Court

The Division Bench of Justices Anita Sumanth and G. Arul Murugan observed that “the levy of penalty under Section 12(3)(a), in the case of non-filing of returns, is, automatic. Admittedly, the assessee has not filed the returns and hence, the basis of assessment would be irrelevant.”

Under Section 12(3)(a) of the Tamil Nadu General Sales Tax Act, 1959 if a dealer fails to submit a return, the assessing authority can impose a penalty of 150% of the tax assessed on final assessment, either in the same assessment order or through a separate order. This penalty is in addition to the tax assessed under sub-sections (1) or (2).

In this case, the assessee/petitioner, was assessed for tax in connection with the consideration received from the sale of unredeemed articles by auctioneers for the assessment years 1994-95 through 1998-99.

The issue that arose is the taxability of the consideration received on sale of unredeemed articles by the auctioneers in terms of the Tamil Nadu General Sales Tax Act, 1959.

The assessee argued that the auctioneer, not the Fund itself, should bear the tax liability on the proceeds from these unredeemed articles.

On the question of penalty, the assessee submitted that the levy of penalty under Section 12(3)(a) of the Tamil Nadu General Sales Tax Act, 1959 is possible only in cases of best judgment assessment.

The bench observed that the levy of penalty under Section 12(3)(a), in the case of non-filing of returns, is, automatic. Admittedly, the assessee has not filed the returns and hence, the basis of assessment would be irrelevant.

The bench further stated that “……….in any event, the assessing authority has rightly proceeded to assess the actuals of the sale consideration as obtained from the auctioneers and hence there is no question of best judgment assessment. This argument of the assessee is hence rejected and levy of penalty under Section 12(3)(a) is confirmed.”

Since the assessee had raised a dispute in respect of the period for which the amounts have remained unpaid (relating to the levy of penal interest alone), the bench directed the assessee to submit objections in writing before the assessing authority.

In view of the above, the bench dismissed the petition.

Counsel for Petitioner/ Assessee: C. Subramanian

Counsel for Respondent/ Department: Amirtha Dinakaran

Case Title: The Triplicane Permanent Fund Ltd. v. The Tamil Nadu Sales Tax Appellate Tribunal

Citation: 2024 LiveLaw (Mad) 436

Case Number: W.P.Nos.11208

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