ORDER
Thanikkachalam, J.
1. The State is the petitioner. Sivanandam Mills Limited is the assessee. The assessee is a registered dealer under the Central Sales Tax Act, 1956. The Assessee is manufacturing cotton yarn, staple fibre yarn. The assessee sold the cotton to Palaniandavar Mills Limited, Udumalpet, for Rs. 2,11,740 purchased from Bombay on production of C forms. A perusal of the Central sales tax registration filed by the assessee would reveal that cotton fibre, etc., was specified therein as required for use in manufacturing. None of them was shown as required for sale in the registration certificate. Therefore, the assessee by issuing C forms falsely represented that it is covered by registration certificate as resale. It is not in dispute that the cotton purchased by the assessee for the purpose of use in the manufacture has been sold out. The cotton was purchased by issue of C forms declaring that it was for use in their manufacture of cotton yarn as stipulated in the registration certificate issued under the Central Sales Tax Act, 1956 and in selling the cotton yarn so purchased, there is a clear case of misuse of C forms and, therefore, penalty under section 10(d) of the Act was levied to the extent of Rs. 12,705. On appeal the Appellate Assistant Commissioner confirmed the penalty levied by the assessing officer. On further appeal, the Tribunal also confirmed the penalty levied by the authorities below.
2. Thereafter, the assessee filed a review petition under section 36(6)(a) of the Tamil Nadu General Sales Tax Act, 1959, on the basis of a certificate issued by Palaniandavar Mills, Udumalpet, and also on the basis of an amended registration certificate wherein the assessee was permitted to resell the cotton. On considering these two aspects and by taking into consideration that the said Palaniandavar Mills paid tax of Rs. 6,352, the Tribunal allowed the review petition and reduced penalty to Rs. 3,200.
3. It is against this order, the department is in revision before this Court. According to learned Additional Government Pleader (Taxes), the Appellate Tribunal ought not have entertained the review petition filed by the assessee. Learned Additional Government Pleader submitted that the assessee knew that Palaniandavar Mills has already utilised the cotton for making yarn. Therefore, this fact was within the knowledge of the assessee even on the date when the Tribunal passed its original order. It was further submitted that the amended certificate issued subsequently would not entitle the assessee to file a review application before the Tribunal. Therefore, the learned Additional Government Pleader (Taxes) submitted that no new and fresh facts were discovered after the order was passed by the Tribunal which warrants review of the earlier order passed by the Tribunal. For all these reasons it was submitted that the Tribunal was not correct in reviewing the earlier order passed by the Tribunal in confirming the penalty levied by the authorities below.
4. On the other hand, learned counsel for the assessee, submitted that the “cotton” sold by the assessee to the Palaniandavar Mills, Udumalpet was utilised for manufacturing of yarn. The registration certificate was subsequently amended by including the right to resell the cotton purchased by the assessee from the dealers outside the State. Those materials were not available with the assessee at the time when the Tribunal passed its original order. After due diligence the assessee came to know about these facts. Therefore, it was submitted that the Tribunal was correct in reviewing its order for the purpose of reducing the quantum of penalty.
5. We have heard the rival submissions. The facts remain that the assessee is engaged in manufacturing cotton yarn. The assessee purchased cotton from the outside dealers by using C forms. According to the registration certificate the assessee is entitled to utilise the cotton for its own manufacturing or yarn. Instead of that the assessee sold the yarn to the Palaniandavar Mills. Palaniandavar Mills in turn manufactured yarn out of this cotton. A certificate was issued by the said Palaniandavar Mills to the effect that the cotton purchased from the assessee was used for manufacturing the yarn. Subsequently the assessee also applied for amendment of the registration certificate to include right to resell the cotton purchased from outside the State. This amendment also was granted. On the basis of the certificate given by the Palaniandavar Mills, and the amended registration certificate obtained from the department, the assessee sought to review the earlier order passed by the Tribunal. Admittedly, the fact that the said Palaniandavar Mills utilised the cotton purchased from the assessee for the purpose of manufacturing yarn, was known to the assessee even on the day when the original order was passed by the Tribunal. The amended registration certificate was obtained subsequent to the order passed by the Tribunal confirming penalty levied by the authorities below. The fact that Palaniandavar Mills paid tax would have no bearing for reviewing the earlier order. Therefore, no new facts was obtained for the purpose of enabling the assessee to file a review petition. In the case of Tamil Nadu Iron and Steel Co. v. State of Tamil Nadu [1980] 46 STC 293 (Mad.), while considering the provisions to section 36(6)(2) of the Tamil Nadu General Sales Tax Act, 1959, this Court has held that :
“For filling a review petition under section 36(6) of the Tamil Nadu General Sales Tax Act, 1959, the new and important facts discovered must be after the exercise of due diligence and the facts should not have been within the knowledge of the applicant. Further, the facts should be such as could not be produced by the applicant when the order was made. The non-production must also be due to some inability after the exercise of due diligence. Only if after the exercise of due diligence the applicant did not have knowledge of, or was not in a position to produce, the facts, the applicant can avail himself of the remedy of review. In either event, the facts must be such which came to the knowledge of the assessee subsequently and which could not be produced after the exercise of due diligence. The requirement of exercise of due diligence applies to both the limits, viz., knowledge and inability to produce.”
None of these conditions prescribed under section 36(6) of the Tamil Nadu General Sales Tax Act, 1959 was satisfied by the assessee for the purpose of reviewing the earlier order passed by the Tribunal. Hence, the Tribunal was not correct in reviewing the earlier order passed by itself. Accordingly, the order passed by the Tribunal in the review application stands set aside and the original order of the Tribunal in confirming the penalty levied by the authorities below stands restored.
6. Accordingly, the revision stands allowed. No costs.
7. Petition allowed.