Mahindra takes a sigh of relief as Madras High Court quashes penalty for non-declaration on concessional rate of tax in the registration certificate.
The Appellant dealer Mahindra challenged the order which was passed by the Appellant Authority.
The orders of the Assistant Officer levying penalty for the assessment years 2008-09 and 2013-14 were confirmed in the order passed by the first Appellate Authority.
The dealer purchased SAP software at a concessional rate of tax against C Form Declarations and did not include the same in the registration certificates under the Central Sales Tax Act against which the Assessing Officer issued notices proposing to levy penalty under Section 10A(1) of CST Act.
The rationale behind the Assessing Officer’s decision was that he thought that the software was incompetent of being used in manufacturing.
The division bench of Justice T.S. Sivagnanam and R.N. Manjula remarked that the proposal to levy penalty was made by an officer who wasn’t in place to do so as the previous officer was transferred and the new officer had taken over the office.
Further, the Court notes that the Assessing Officer should also have given the opportunity of personal hearing as the officer who proposed to levy penalty was different from the officer who had completed the assessment.
The Court further added, “We are of the considered view that the case of hand having fallen under one of the exceptional circumstances as mentioned above warranting exercise of jurisdiction under Article 226 of The Constitution of India and as the defect, which has occurred by levying penalty without affording an opportunity of personal hearing would go to the root of the very levy itself, we are inclined to interfere with the impugned order, the assessment orders and remand the matters to the Assessing Officer for a fresh consideration.”