L. Palamalai (Administrative Member).
1. This tax revision case is against the order of the Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, in C.T.A. No. 18 of 1988 dated February 14, 1990.
2. The assessment relates to the year 1982-83. The respondent/ assessee was originally assessed by the Deputy Commercial Tax Officer, Perundurai on a total and taxable turnover of Rs. 1,95,782 and Rs. 63,904 respectively for the year 1982-83. On May 11, 1987, based on the recovery of certain slips during inspection on July 6, 1983, the Deputy Commercial Tax Officer, Enforcement-V, Erode, resorted to revision under Section 16(1) of the Tamil Nadu General Sales Tax Act, 1959. Relying on slip No. 3, the total purchase suppression was arrived at Rs. 5,91,425 for the period from March 2, 1983 to March 31, 1983. Adding 10 per cent gross profit, the actual sales suppression was arrived at Rs. 6,50,568. Adding three times for probable omission, the escaped turnover was fixed at Rs. 26,02,272. While referring to the objection, the assessing authority observed that the assessee has not come with proof to show that the purchases did not materialise and therefore, the transactions have to be construed as purchase omissions. He further stated that only the market price has been adopted so as to arrive at the value with reference to the quantities noted in the slip. Penalty was also levied under Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 to the extent of Rs. 48,792 for wilful suppression to the extent of Rs. 6,50,568.
3. In the first appeal, the Appellate Assistant Commissioner, among others, observed that the assessee claimed that the entries in the slip related to orders placed on Ahmedabad sellers from February 21, 1983 to March 31, 1983 whereas the letter from the sellers says that their business was closed from February 15, 1983. Therefore, the Appellate Assistant Commissioner remarked that no one will go on by placing orders with a defunct firm. On that basis, the Appellate Assistant Commissioner sustained the suppression to the extent of Rs. 26,02,272 and distributed the same at rates taxable at various rates. The quantum of penalty was reduced to 100 per cent and the amount of penalty was fixed at Rs. 32,528.
4. In the second appeal, the Appellate Tribunal observed that the only point against the assesses was that the Ahmedabad dealer closed down the business from February 16, 1983 whereas the entries in the slips related to the period March 2, 1983 to March 31, 1983. However, the Appellate Tribunal observed that as it is a revision of assessment, the onus is on the department to prove that there was a definite suppression in the matter. Though the Appellate Tribunal observed that the actual suppression arrived at by the assessing authority and confirmed by the first appellate authority has to be deleted and the question of penalty also does not arise, it was further observed that out of the actual suppression of Rs. 6,50,568, after deducting the turnover determined originally at Rs. 5,81,472, the balance of Rs. 69,096 could be treated as suppression for the year 1982-83. Accordingly, the Appellate Tribunal refixed the suppression at Rs. 69,096 and also imposed a penalty of 50 per cent of tax due on the suppression refixed, namely, Rs. 69,096. Hence, the present revision.
5. Mr. R. Mahadevan, learned Government Advocate, contended that the taxable turnover determined originally was only Rs. 63,903.70 and not Rs. 5,81,472. Further, the assessment made with reference to slip No. 3, which showed an actual suppression of Rs. 6,50,568, has nothing to do with the original assessment made. Therefore, there is no basis for the relief given and for the deletion of the addition on actual suppression. Therefore, the order of the Appellate Tribunal is erroneous in law.
6. Mr. R. Gangadharan, learned counsel for the respondent/ assessee, supported the order of the Appellate Tribunal and contended that no suppression could be inferred from slip No. 3, as it did not indicate any purchase or sales. It was only an order placed, which did not materialise. Even otherwise, having regard to the estimation of suppression in the original assessment, the claim as allowed by the Appellate Tribunal while redetermining the omission, requires no disturbance. In this case, no wilful suppression has been established, warranting penalty.
7. We have considered the contentions carefully and perused the records. It is an admitted fact that an inspection on July 6, 1983 at the place of business of the assessee, resulted in recovery of records. The slip No. 3 indicated date-wise nature of goods in quantity under the caption, “Kumar Traders” from March 2, 1983 to March 31, 1983. The plea of order placed on Ahmedabad sellers was found to be not correct, having regard to the fact that the seller closed his business from February 15, 1983 itself. Thus, the actual suppression, as arrived at to the extent of Rs. 6,50,568, was approved by the Appellate Tribunal ultimately, though the Appellate Tribunal observed that they felt that no actual suppression could be arrived at having regard to the facts of the case. The ultimate fact which remains is that the actual suppression was approved to the extent of Rs. 6,50,568, but the Appellate Tribunal chose to deduct the turnover originally determined at Rs. 5,81,472 from the actual suppression determined under Section 16(1) of the Tamil Nadu General Sales Tax Act, 1959 for the assessment year 1982-83.
8. The point for consideration is whether the Appellate Tribunal is justified in giving deduction from the turnover determined under Section 16(1)(a) of the Tamil Nadu General Sales Tax Act in respect of the turnover originally determined under Section 12(2) of the Act for the same assessment year. It is relevant to refer to the following observations in the order of the Appellate Tribunal :
“The turnover has been determined originally at Rs. 5,81,472. The suppression was arrived at Rs. 6,50,568. If at all, any suppression has to be sustained, it has to be difference of the turnover originally determined and suppression arrived at by the lower authorities (i.e.) Rs. 6,50,568 minus Rs. 5,81,472 = Rs. 69,096.”
Apparently, the view of the Appellate Tribunal is contrary to the ratio of the decision of the Madras High Court in the case of Joint Commercial Tax Officer II, Tuticorin v. Ekambareeswarar Coffee and Tea Works reported in  83 STC 457. In that case, while completing original assessment, exemption was granted on packing charges. Subsequently, the assessing authority brought to assessment the packing charges by treating it as escaped turnover. The assessee claimed that the subsequent assessment obliterated the original assessment. Therefore, the tax paid under the original assessment has to be refunded. It was contended that after the reassessment, the original assessment order no longer survived and therefore, the assessing authority ought to have granted refund. This plea of the assessee was allowed by a single Judge of the Madras High Court. In the appeal, the Division Bench referred to Section 16(1) of the Tamil Nadu General Sales Tax Act, 1959 and observed as follows :
“A mere glance at Section 16(1)(a) shows that it empowers an assessing authority subject to the provisions of Sub-section (2), at any time within a period of five years from the expiry of the year to which the tax relates, to determine to the best of its judgment the turnover which had escaped assessment and assess the tax payable on ‘such’ turnover after making such enquiry as may be considered necessary and after giving the assessee a reasonable opportunity to show cause against such assessment. The power which the assessing authority thus exercises under Section 16(1)(a) of the Act is neither the power of revision nor the power of review. The power is exercised by the assessing authority in his original jurisdiction and relates to assessment in regard to the escaped turnover. The use of the expression ‘determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover’ makes it abundantly clear that the jurisdiction under Section 16(1)(a) of the Act is limited to determining, to the best of judgment, the turnover which had escaped assessment and then to assess the tax payable on that escaped turnover. The use of the word ‘such’ turnover is only relatable to the preceding expression, viz., ‘escaped’ assessment. The term ‘reassessment’ or ‘reassess’ has not been used by the Legislature in its wisdom anywhere in Section 16(1)(a), obviously for the reason that the escaped turnover is brought to assessment for the first time and not on any ‘reassessment’.”
The High Court further observed as follows :
“Even in Sub-section (2), the Legislature has used the expression ‘assessment’ for the purpose of Clause (a) of Sub-section (1) and not ‘reassessment’, while considering the question of levy of penalty, which also goes to show that the distinction between assessment and reassessment was clearly present to the mind of the Legislature.”
Continuing further, the High Court observed as follows :
“While making an assessment in respect of escaped turnover, the assessing authority does not at all ‘reassess’ the entire taxable turnover but confines itself only to assessing the escaped turnover. An order under Section 16(1)(a) of the Act has to be confined, after proper enquiry within the stipulated period, and giving an opportunity to the dealer to show cause, to an assessment of the escaped turnover only. An assessment which had been completed in proceedings under Section 12 of the Act is not reopened or revised in the proceedings relating to assessment of escaped turnover under Section 16(1)(a) of the Act.”
9. The Madras High Court has approved the observations of a Division Bench of the Madras High Court in State of Tamil Nadu v. CM. Tiles reported in  38 STC 440, wherein, the High Court made the following observations :
“………….This Court has held in that decision that in the reassessment proceedings under Section 16 the subject-matter is only the escaped turnover and no part of the turnover which was assessed in the original assessment forms part of the proceedings under Section 16 and that, therefore, the appeal and a further appeal before the Tribunal could only relate to the escaped turnover and not to the original turnover which was assessed. If the assessee had not disputed the original taxable turnover determined, he could not dispute the same in the reassessment proceedings.”
Finally, the High Court made the following observations :
“The orders under Section 16(1)(a), therefore, did not wipe off or take away the characteristic or operative force of the orders of original assessment. Therefore, it would be a travesty of law to hold that the orders made under Section 16(1)(a) of the Act had set aside the original orders of assessment, which were not even under consideration referred to or included in the order under Section 16(1)(a) of the Act.”
10. Thus, the decision of the Madras High Court in Joint Commercial Tax Officer-II, Tuticorin v. Ekambareeswarar Coffee and Tea Works  83 STC 457 as cited supra, clearly shows that the assessment under Section 16(1) of the Tamil Nadu General Sales Tax Act, 1959, is independent of the assessment made under Section 12 of the Tamil Nadu General Sales Tax Act, 1959. In such circumstances, the set-off to be granted by the Appellate Tribunal in respect of turnover determined in the original assessment from out of the escaped turnover assessed under Section 16 of the Act, is totally unwarranted. Once a conclusion is reached, it is not relevant whether the set-off to be granted is Rs. 5,81,472, as has been done by the Appellate Tribunal or Rs. 63,903.70, as stated in the grounds of revision. The approach of the Appellate Tribunal to grant set-off from actual suppression of Rs. 6,50,568 sustained by the Appellate Tribunal, is totally erroneous in law and therefore, the relief granted on a turnover of Rs. 5,81,472 is set aside. Apparently, we find that there is no case for further addition over and above the actual suppression of Rs. 6,50,568. In fine, the actual suppression is fixed at Rs. 6,50,568 as against Rs. 69,096 determined by the Appellate Tribunal. Surcharge and additional sales tax would be levied on the turnover determined as above. Similarly, the quantum of penalty at 50 per cent of tax due on the suppression, is fixed on the turnover of Rs. 6,50,568.
11. In fine, the tax revision case is partly allowed as indicated above.
And this tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned.
Issued under my hand and the seal of this Tribunal on the 29th day of September, 2000.