BEFORE THE MADURAI BENCH OF THE MADRAS HIGH COURT
DATED: 18/06/2008
CORAM
THE HONOURABLE MR.JUSTICE P.JYOTHIMANI
W.P.(MD)No.2728 of 2008
and
M.P.(MD).No.1 of 2008
Sanat Product Limited,
Ram Nagar,
K.Rajadhani Kotai
Kodai road,
Dindigul. .. Petitioner
Vs.
Deputy Commercial Tax Officer,
Nilakottai
Dindigul District. .. Respondent
PRAYER
Writ Petition filed under Article 226 of the Constitution of India,
praying for the issuance of a Writ of Certiorari, to call for the records in
TNGST No.5300726/2005-06 dated 25.02.2008 on the file of the Deputy Commercial
Tax Officer, Nilakottai and quash the same as illegal, arbitrary, without
jurisdiction and against the law.
!For Petitioner ...Mr.A.Thiyagarajan, Senior
counsel for Mr.S.Karunahar
^For Respondent ...Mr.V.Rajasekaran, Special
Government Pleader
:ORDER
The Writ petition is directed against the order of revision of assessment
passed by the respondent under Section 16(1)(a) of the Tamil Nadu General Sales
Tax Act.
2. The short facts leading to the passing of the said impugned revision of
assessment order as follows:
(i) The petitioner has submitted accounts for the assessment year 2005-06
with the amount of taxable turnover which was accepted by the respondent as
assessing authority by an order dated 05.03.2007,who passed orders on the basis
of entries in the books of accounts and after verifying the same. However, on
15.03.2007, a revision notice was issued for proposing to levy tax at the rate
of 12.6% under Section 7A (1)(c) on the turnover of Rs.1,55,93,290/-, stating
that the turmeric purchased by the petitioner locally has been despatched to
outside the state as a branch transfer and therefore has not suffered sales tax
within the State of Tamil Nadu.
(ii) The respondent sought to revise the assessment proposing to re-
determine the total and taxable turnover at Rs.1,72,61,077/-. In addition to
that, the respondent has also proposed to levy penalty under Section 16(2) of
TNGST Act.
(iii) The petitioner has filed his various objections on 21.02.2008
including that the proposal of the levy of tax is without jurisdiction and the
proposed levy of 12.6% is without reference to any entry in the schedule, that
the turmeric is exempted from tax under item No.81 of III schedule, that the
turnover did not cross 300 crores in the year, that to attract Sections 3 & 4,
the goods must have been purchased against the form XVII, that the turnover was
reported and verified by the respondent at the time of original assessment and
there was no escapement of turnover, that for the reported turnover no penalty
can be levied, as the same was not an escaped turnover and that branch transfer
is not a sale attracting sales tax.
(iv) The complaint of the petitioner is that by the impugned revised
assessment order dated 25.05.2008, while rejecting the objections of the
petitioner, the respondent has levied tax of Rs.19,64,755/-, surcharge of
Rs.98,238 and a penalty of Rs.30,94,490/-. The case of the petitioner is that
even though, an appeal lies against the said order under Section 31 of the TNGST
Act, the Writ Petition is filed challenging the revised assessment order on the
ground that the same is patently illegal and without jurisdiction and against
the law.
(v) Further, it is the case of the petitioner as contended by the learned
senior counsel that there is no escaped turnover as during the original
assessment itself the turnover has been correctly informed. It is the further
case of the petitioner that the original assessment order was passed by the
respondent based on the books of entries and after verification of the entire
records and therefore, there was no suppression and in such circumstances
question of payment of penalty does not arise. It is also the further case that
there is no provision for levy of tax for turmeric at 12.6% and the same is
without reference to any law and without jurisdiction. It is the further case
of the petitioner as contended by Mr.A.Thiyagarajan, the learned senior counsel
for the petitioner that the petitioner has in fact disclosed the total taxable
turnover and also submitted the relevant branch transfer challans. That apart,
the branch transfer is not a sale within the meaning of sale under the provision
of TNGST Act. Further the respondent’s total turnover does not exceed Rs.300
crores and therefore, the levy of tax is illegal and liable to be set aside.
3. The respondent in counter affidavit has stated that the Writ Petition
is not maintainable for the reason that there is an alternative remedy of appeal
before the Appellate Assistant Commissioner available as per Section 31 of the
TNGST Act. Further, the revision made by the respondent is well within the
power under Section 16 of the TNGST Act. It is also stated that turmeric is
exempted as per item 16 of Part B of III schedule which reads as chillies,
tamarind, coriander, turmeric and shikakai sold by any dealer whose total
turnover in respect of the said items does not exceed Rs.300 crores in a year.
4. According to the respondent, the said provision does not mean that
there is a general exemption and the same is conditional. It is also further
stated that even when the goods are despatched outside the State other than by
way of sale is liable to be assessed for tax under Section 7(A)(1)(c) of the
TNGST Act 1959. The respondent would rely upon the order of the Tribunal
reported in (2005)139 STC 294(TNTST). It is further stated that turmeric being
not enumerated specifically in the Ist schedule of TNGST Act, it falls under the
residuary entry item No.40 of Part D of Ist schedule and therefore taxable at
12.5%.
5. The contention of the learned counsel for the respondent is that an
alternative remedy against the impugned order of assessment is available under
Section 31 of the TNGST Act to the Appellate Assistant Commissioner which is not
denied by the petitioner even in this Writ Petition. It is the case of the
petitioner as submitted by the learned senior counsel that here is a case
wherein there is absolutely no jurisdiction on the part of the respondent in
passing the impugned assessment order, especially, in the circumstances that in
the original assessment order itself, the total turnover as per the accounts in
respect of turmeric has been found by the respondent as Rs.1,55,93,289/-. When
that is the case, there is no absolutely question of suppression on the part of
the petitioner and there is no reason for the purpose of revising the same.
6. A reference to Section 16(2) of the Tamil Nadu General Sales Tax Act,
which is as follows:
In making an assessment under clause (a) of sub-section (1) the assessing
authority may, if it is satisfied that the escape from the assessment is due to
wilful non-disclosure of assessable turnover by the dealer, direct the dealer,
to pay, in addition to the tax assessed under clause (a) of sub-section (a) by
way of penalty a sum which shall be-
(a) fifty per cent of the tax due on the turnover that was wilfully not
disclosed if the tax due on such turnover is not more than ten per cent of the
tax paid as per the return;
(b) one hundred per cent of the tax due on the turnover that was wilfully
not disclosed if the tax due on such turnover is more than ten per cent but not
more than fifty per cent of the tax paid as per the return;
(c) one hundred and fifty per cent of the tax due on the assessable
turnover that was wilfully not disclosed, if the tax due on such turnover is
more than fifty per cent of the tax paid as per the return;
(d)one hundred and fifty per cent of the tax due on the assessable
turnover that was wilfully not disclosed, in the case of self-assessment
referred to in sub-section (1) of Section 12:
Provided that no penalty under this sub-section shall be imposed unless
the dealer affected has had a reasonable opportunity of showing cause against
such imposition.
7. The above provision shows that the assessing authority can re-assess if
there is a wilful non disclosure of assessable turnover by the dealer. In the
present case, as it is seen in the original order of assessment passed by the
respondent dated 05.03.2007, the assessing authority, the respondent himself has
explained the turnover as per the account book in respect of turmeric as
Rs.1,55,93,289/-/ However, in the pre-revision notice dated 15.03.2007, the
respondent has chosen to presume as if the said turnover in respect of turmeric
as escaped assessment since it was sold in other state as branch sale.
8. As it is seen, the said Section 16(1) of the Act, which is subject to
Section 16(2) of the Act is based on the circumstances where there are wilful
non disclosure of assessable turnover by the dealer. Inasmuch as on the
original assessment, the said turnover has been considered by the respondent
himself as per the accounts and the said order itself shows that the petitioner
has produced the documents and filed form ‘F’ to prove that the petitioner has
actually transferred the goods to their branch office in other state for
effecting the branch sale there and having satisfied about the entire fact, the
original assessment order came to be passed.
9. In the light of the said factual position as found on record, I am of
the considered view that no useful purpose will be served in driving the
petitioner to file an appeal to the appellate authority under Section 31 of the
TNGST Act. The facts of the case would categorically show that there is prima
facie reason to believe that the respondent’s assessment order is without
jurisdiction. By applying the judgment of the Supreme Court reported in Harbans
lal Sahnia and Another Vs. Indian Oil Corporation Limited reported in 2003(1)
CTC 189 (SC), it cannot be stated that availability of alternative remedy is a
bar for approaching this Court under Article 226 of the Constitution of India.
10. Now going to the next contention of the learned senior counsel for the
petitioner as submitted by him, subsequent to the pre-revision notice, the
petitioner has sent a detailed objection stating that the purchase tax under
Section 7A of the Act is leviable only when the turnover of the dealer exceed
Rs.300 crores in a year and it is stated that the purchase made by the
petitioner from M/s.Aditya Trading Company, Erode, having TNGST Regn. No.775923
dated 25.04.2000 worth Rs.1,55,93,290/- as against their proper bills and
turnover for the year 2005-2006 being Rs.715/- lakhs which is well within the
limit of Rs.300 crores for the year. In respect of the re-assessment and
imposing of penalty under Section 16(2) of the TNGST Act, the petitioner has
filed his objection, wherein he has clearly referred to the order of the TNGST
Tribunal reported in (2005)139 CTC 294 (RUchi Soya Industries Limited V.
Commercial Tax Officer, Harbour-III Assessment Circle, Chennai and another) to
substantiate its case that the petitioner is not liable for payment of penalty.
11.In fact, the said judgment in Paragraph 12, it is stated that at the
time of revising the assessment, the facts and figures were before the
assessment authority and only based on the said particulars furnished which are
correct, assessment order passed, and there was no wilful suppression so as to
warrant a levy under Section 16(2) of the TNGST Act. It was held that for the
purpose of imposing penalty under Section 16(2) of the TNGST Act, there should
be an element of wilful non disclosure which is an essential aspect.
Paragragraph 12 of the said judgment is as follows:
Para 12. With regard to penalty levied under Section16(2) of the Tamil
Nadu General Sales Tax Act, 1959 in all the cases, the learned Additional
Advocate-General failrly concedes that penalty under section 16(2) won’t be
attracted. On considering the records, I could see that while the first
respondent was revising the assessment by levying purchase tax in the impugned
orders, he says that the dealer has wilfully not declared the turnover liable to
tax under section 7-A(1)(c) of the Act in the monthly returns and paid tax due
thereon. Thus, for suppressing the relevant turnover, he has levied penalty
under Section 16(2) read with section 12(3) of the Act. The levy is not
acceptable, since the facts and figures were already before the authorities even
at the time of original assessment and the petitioner was allowed exemption on
the sales turnover of edible oil for all the years. Only on noticing the
exemption given to the seller and the provisions in section 7-A, the first
respondent has revised the assessments. Thus, there was no wilful suppression
so as to warrant levy under section 16(2) of the Act. For levying penalty under
section 16(2), the element of wilful non-disclosure is essential, which is
absent in these cases. Therefore, in all the cases, the levy of penalty is
deleted.
12. In view of the above said factual position as found on record and the
same has been raised as objections by the petitioner in the objections
exhaustively, it was the duty on the part of the second respondent to consider
the said objections. However a reference to the impugned assessment order shows
that the objections were not at all taken in to consideration, even though, it
is stated that the objections have been filed by the petitioner even in respect
of imposing of penalty.
13. In the absence of dealing with the said objections in their proper
perspective, I am of the considered view that the respondent should be directed
to consider the said legal as well as factual aspects in a proper manner and
pass appropriate orders. In view of the same, the impugned order of the
revision of assessment passed by the respondent dated 25.02.2008 in
T.N.G.S.T.No.5300726/05-06 is set aside and the same is remanded back to the
respondent for fresh consideration of the entire aspect raised in the objections
by the petitioner in their communication dated 25.02.2008 and pass appropriate
orders independently on merits and in accordance with law without being
influenced by any observations made herein. Such order shall be passed by the
respondent expeditiously, in any event, within a period of 12 weeks from the
date of receipt of the copy of this order.
14. The Writ petition is ordered accordingly. No costs. Consequently,
connected M.P. is closed.
arul/dp
To
1.The Competent Authority and
Additional Commissioner
(Cinema and Irrigation),
Land Administration Dept,
Chepauk, Chennai – 5.
2.The District Collector,
Salem District.
3.The Revenue Divisional Officer,
Salem,
Salem District.
4.The Inspector of Police,
Economic Offence – II
Salem.