State of Tamil Nadu vs Esmath Rubber Corporation

P.P.S. Janarthanaraja, J.—The above tax case revision is preferred by the Revenue u/s 38 of the Tamil Nadu General Sales Tax Act, 1959

against the order of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench) passed in STA. No. 261 of 2000 dated February 5, 2003

seeking admission on the following questions of law:

(1) Whether, in the facts and circumstances of the case, the Appellate Tribunal is right in law in modifying the taxable turnover to Rs. 3,02,641

being the 50 per cent difference of turnover arrived by the assessing officer as against the reported taxable turnover?

(2) Whether, in the facts and circumstances of the case, the Appellate Tribunal is right in law in having set aside the order of the Appellate

Assistant Commissioner and restore the order of the assessing officer does have any valid materials to sustain the turnover of 50 per cent of the

difference of the turnover arrived at by the assessing officer as against the reported taxable turnover?

(3) Whether, in the facts and circumstances of the case, the Appellate Tribunal is right in law in deleting the penalty of Rs. 1,04,069 u/s 12(3)(b) of

the Tamil Nadu General Sales Tax Act, 1959 even though the assessee has not reported the turnover as taxable and paid tax which amounts to

filing of incorrect and incomplete return?

The respondent/assessee is a dealer in rubber hoses and carrying on business at No. 108, Angappa Naicken Street, Chennai 1. They had reported

a total and taxable turnover of Rs. 39,25,254.33 and Rs. 9,90,194.76, respectively in their annual returns in form A1 for the year 1996-97 under

the Tamil Nadu General Sales Tax Act, 1959. The assessing officer verified the accounts and found certain defects, viz., no day-today stock-cum

manufacturing account is maintained and produced for verification; being the inter-State purchases, no separate day-to-day stock account is

maintained; no separate sale bills for the manufactured item and no separate stock book and sales details for the first sales and second sales goods

maintained with closing stock separate inventory is maintained and produced. Therefore, the assessing officer determined the total and taxable

turnover at Rs. 36,16,621 and Rs. 15,95,477 and also levied penalty u/s 12(3)(b) of the Tamil Nadu General Sales Tax Act at 150 per cent.

Aggrieved by the order of the assessing officer, the assessee filed an appeal before the Appellate Assistant Commissioner. The Appellate Assistant

Commissioner set aside the assessment made by the assessing officer observing that estimation was based upon mere presumptions and the

Appellate Assistant Commissioner refixed the taxable turnover at Rs. 9,94,478. Aggrieved by that order, the Revenue filed appeal before the

Sales Tax Appellate Tribunal. The Tribunal even though justified the assessment made by the assessing officer sustained the taxable turnover to 50

per cent at Rs. 3,02,641 as against Rs. 6,05,283. Aggrieved by that order, the Revenue filed the present tax case revision seeking admission on

the above-stated questions of law.

The learned Government Pleader appearing for the Revenue submitted that when the Tribunal set aside the order of the Appellate Assistant

Commissioner and held that the order of assessment is correct ought not to have reduced the turnover to 50 per cent. He further contended that

the Tribunal was wrong in setting aside the penalty. Therefore, the order passed by the Tribunal is not in accordance with law and the same should

be set aside.

The Tribunal in paragraph 10 of its order held that the order of the assessing officer is in accordance with law and set aside the order of the

Appellate Assistant Commissioner in respect of the turnover. The Tribunal was of the view that adopting the entire inter-State purchase basis for

arriving at the taxable turnover is little harsh and excessive and accordingly reduced 50 per cent of the taxable turnover and arrived at Rs.

3,02,641 (Rs. 15,95,477 - Rs. 9,90,194 = Rs. 6,05,283) to be taxed proportionately for the period from April 1, 1996 to July 15, 1996 at eight

per cent and from July 17, 1996 to March 31, 1997 at 11 per cent. The Tribunal had correctly exercised its discretion in sustaining the turnover

since the assessing officer himself estimated the taxable turnover. While estimating the taxable turnover, restricted the second sales turnover and

determined the inter-State purchases at Rs. 13,18,576 and added 21 per cent towards gross profit as per accounts at Rs. 2,76,901. Therefore,

the Tribunal correctly applied its mind and has come to the conclusion that the estimate made by the assessing officer is excessive. In view of the

same, the Tribunal even though accepted the order of the assessing officer, correctly reduced the turnover and deleted the penalty on the ground

that there is no specific concealment of any turnover. Under these circumstances, we are of the view that the order of the Tribunal is based on valid

material. It is a question of fact. It is not a perverse order. We find no illegality or error in the order of the Tribunal that warrants interference by

this court. Therefore, we are also of the view that no question of law arises for consideration in admitting this tax case revision. The tax case

revision is devoid of merits and accordingly, the same stands dismissed. No costs.