State of Tamil Nadu vs Hotel Ashok Bhavan

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

revise the orders of the Tamil Nadu Sales Tax Appellate Tribunal (AB), Madurai, dated December 12, 2003 passed in M.T.S.A. No. 20 of 1999

raising the following questions of law:

(1) Whether, the Tribunal is correct in upholding the order of the Appellate Assistant Commissioner which deleted the assessment made on sales

estimation arrived at inspection?

(2) Whether the Tribunal is correct in deleting the penalty levied u/s 12(3)(i)(b)(v) of the Tamil Nadu General Sales Tax Act, 1959?

The brief facts arising out of the above revision are as under:

The relevant assessment year is 1993-94. The respondent/assessee is a hotelier at Rameswaram. The assessee reported a total and taxable

turnover of Rs. 2,29,789.25. The assessing officer made the best of judgment assessment and determined the total and taxable turnover at Rs.

11,05,170, by making an addition of Rs. 8,75,381 to the turnover reported. Further, the assessing officer levied a penalty of Rs. 70,293 u/s 12(3)

(i)(b)(v) of the Act. Aggrieved by that, the assessee filed an appeal before the Appellate Assistant Commissioner. The Appellate Assistant

Commissioner deleted the entire addition and also penalty levied u/s 12(3)(i)(b)(v) of the Tamil Nadu General Sales Tax Act. Aggrieved by that,

the Revenue filed an appeal before the Appellate Tribunal. The Appellate Tribunal dismissed the appeal, confirming the order of the Appellate

Assistant Commissioner. Aggrieved by that, the Revenue filed the present revision raising the above questions of law.

The learned Special Government Pleader appearing for the petitioner stated that the Tribunal ought to have appreciated that the place of

business of the dealer was inspected on March 21, 1994 and the Revenue detected suppression and also recovered incriminating records, and on

the basis of the same, the assessment was made. Further it is contended that on the basis of omission detected in respect of sales, the assessing

officer arrived at the actual sale value per day for the purpose of making addition for the whole year. Therefore, the assessing officer has correctly

made addition on the basis of material evidence available on record. Under the circumstances, the order of the Tribunal is not in accordance with

law and the same has to be set aside.

Heard the counsel and perused the materials available on record. The assessing officer made an addition of Rs. 8,75,381 on the basis of

inspection conducted by the Enforcement Wing Department at the place of the business of the assessee, and also on verification of the records

from the place of business. It is pertinent to note that the assessing officer estimated the sale omission for the whole year on the basis of omission

detected in respect of sales made on March 21, 1994. They have taken the sales as per the bill used during the two days and arrived that the sales

on March 20, 1994 at Rs. 3,244 and on March 21, 1994 at Rs. 1,523. They have arrived the average and adopted a sale value per day at Rs.

2,383. By adopting this sale per day, the assessing officer calculated the sales for 351 days at Rs. 8,36,433. The method adopted by the assessing

officer is not an acceptable one. The estimate of the turnover or addition cannot be made on the sale of one day. If a particular day happens to be

a holiday or festival day, the sale may be more. On a rainy day, the sale-may be less. In some occasions, there may not be sale at all. So, the

method adopted by the Revenue cannot be accepted. Therefore, both the authorities below correctly took a view and held that it is not a

reasonable method for making addition. Further, the Tribunal also has given a factual finding that even restoring 50 percent of the addition deleted

by the Appellate Assistant Commissioner, the assessee''s turnover would not cross the minimum of taxable limit of Rs. 10 lakhs. Under these

circumstances, we do not find any error, illegality or infirmity in the order of the Tribunal so as to warrant our interference. The order passed by the

Tribunal is based on valid materials and evidence. It is a question of fact and it is not a perverse order. The order passed by the Tribunal is in

conformity with law and no questions of law arise for our consideration. Hence, the order of the Tribunal is confirmed. The tax case revision is

devoid of merits and the same is dismissed. No costs.