Madras HC: Criminal Charges Will Be Applicable Just After Tax Evasion

“It is saddening to note that tax evasion has been mushrooming in our State / Country day-by-day, which is purely illegal, and such evasion includes hiding true income and portrayal of false income, not reporting cash flow, etc”

In a recent decision, a Division Bench of the Madras High Court expressed its sadness about the rise in tax evasion cases across the nation and declared that doing so is punishable by law.

The applicant, Tirupur Sree Annapoorna was in the hotel business for numerous years, and for the AY 1995-1996, a total taxable sales turnover of Rs 52.4 lakh was displayed for Tirupur Sree Annapoorna along with that in relation to Sree Annapoorna Sweets under provisions of Section 30) of the TNCST Act. The applicant furnished an appeal to the tribunal which ruled in favour of the tax authorities. The applicant furnished the current appeal.

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The Assessing Authority disputed the petitioner’s reported turnover and return, claiming that no documents had been presented to show that Tirupur Sree Annapoorna Hotel and Sree Annapoorna Sweets are separate establishments with no connection to one another’s business operations. The Assessing Authority determined the total and taxable turnover.

The Justice S Vaidyanathan and Justice C Saravanan-led panel noted that the term “sister concern” would be diluted if the petitioner’s claim that Tirupur Sree Annapoorna Hotel and Sree Annapoorna Sweets are independent entities is upheld. All businesses would then use the same strategy of forming one or more sister concerns below a single platform with different names and claiming the tax benefit. In that case, the true goal of the legislation would be defeated.

The Bench further noted with regret that businesses, corporations, and other entities that avoid paying taxes are subject to criminal prosecution and severe fines. It is important to note that taxes are the government’s main source of income, allowing it to focus on the welfare of the populace and fund a variety of development initiatives.

The Court summed up by paraphrasing Abraham Lincoln’s well-known declaration that “You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time”.

Case Title	M/s.Tirupur Sree Annapoorna vs Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench)
Citation	W.P.Nos.4303 and 4304 of 2008
Date	21.12.2022
Counsel for Appellant	Mrs R.Hemalatha
Counsel for Respondent	Tribunal, Mr V.Prashanth Kiran
Madras HC	Read Order