Allowing writ petitions by Nokia India, the Madras High Court has quashed orders of the Tamil Nadu Commercial tax department that sought to raise revised demands for seven assessment years, from 2006 to 2013. The court also set aside the order that imposed a Rs 66-crore penalty on the company for delayed payments.
The commercial tax department had slapped fresh tax demands on the company alleging that it had resorted to non-disclosure of certain revenues accrued from activities such as sale of scrap and some assets. The total amount involved in the dispute was to the tune of Rs 131 crore.
The department had pointed out it had unearthed issues, such as suppression of sale of taxable scrap for all the seven years, non-payment of tax on sale of assets and incorrect rate of tax on sale of accessories and parts of mobile phone for two years.
Subsequently, the tax department had issued notices proposing to revise assessments for all the seven years and levy penalty, besides demanding interest for belated payment of taxes.
Justice Sivagnanam said: “The writ petitions are maintainable as the impugned orders of assessment are vitiated on the ground of serious infirmities in the decision making process, failure to take into consideration relevant particulars and details, not having assigned reasons and based on irrelevant considerations and in violation of the principles of natural justice. Therefore, this court is justified in exercising its jurisdiction under Article 226 of the Constitution.”
Nokia has argued that the assessments were based on its own books of accounts and the imposition of huge penalty of Rs 66.02 crore under section 27(3) of the Act was not valid and equal time addition of probable omission and suppression of scrap sales was unwarranted. The company said that there was no wilful non-disclosure, that its conduct was not contumacious and there was no justification for levy of penalty and the authority mechanically imposed penalty in utter disregard to the settled law with regard to the circumstances which should be taken into consideration while imposing the penalty.