The Madras High Court quashed the penalty imposed on Mahindra for non-declarations of concessional rate of tax in registration certificate.
The appellant dealer, Mahindra & Mahindra Ltd. challenged the order passed by the first Appellate Authority, who partly confirmed the orders of the Assessing Officer levying penalty respectively for the assessment years 2008-09 and 2013-14.
The Assessing Officer had issued the notices respectively proposing to levy penalty on the ground that the dealer purchased SAP software at concessional rate of tax against C Form Declarations without having included the same in the registration certificate issued under the CST Act.
The Assessing Officer was of the prima facie view that the software was not capable of being used in manufacturing and therefore, had proposed to levy penalty under Section 10A(1) of the CST Act.
The division bench of Justice T.S.Sivagnanam and R.N.Manjula noted that the proposal to levy penalty was made by an officer, who was not the officer, who passed the order, as there has been a transfer of the officer and the new officer took over charge. This is also one more aspect, which should have weighed in the mind of the Assessing Officer to afford an opportunity of personal hearing because the officer, who completed the assessment, was not the officer, who made the proposal to levy penalty.
“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,” the court said.
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