IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 10/12/2002
CORAM
THE HONOURABLE MR.JUSTICE N.V.BALASUBRAMANIAN
AND
THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN
W.P.NO.1364 OF 2001
Tvl. Tamil Nadu Chlorates Limited
17-A, Vallabhai Road
Madurai - 2. ..... Petitioner
-Vs-
1.The Registrar,
Tamil Nadu Taxation Special
Tribunal, Singaravelar Maligai
Chennai
2.The State of Tamil Nadu represented
by the Joint Commissioner (SMR),
Ezilagam, Chepauk,
Chennai-5. .. Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of
India for the relief of writ of certiorarified mandamus as stated therein.
For Petitioner : Mr.V.Sundareswaran
For Respondents: Mr.T.Ayyaswami,
Spl.Govt.Pleader (Taxes)
:ORDER
K.RAVIRAJA PANDIAN,J.
In this writ petition, the order dated 4.12.2000 made in Tax case (
Appeal) No.2455 of 1997 by the Tamil Nadu Taxation Special Tribunal is
challenged.
2. The petitioner is a registered dealer under the Tamil Nadu General
Sales Tax Act, (hereinafter referred to as “the Act”.). For the assessment
year 1985-86, it reported a total and taxable turnover of Rs.2,13,38,399/-.
It is the case of the petitioner that the petitioner purchased Potassium
Chloride for an amount of Rs.69,991-25ps, Rs.1,40 ,325/- and Rs.6,34,900/-
from three registered dealers and used it in the manufacture of Potassium
Chlorate. Since the purchases were made from registered dealers under the
Act, the petitioner was not liable to pay tax. Originally, the Assessing
Officer granted exemption as claimed on such purchases. However, pursuant to
the inspection dated 10.9.1987, the original order was revised on the above
said turnover of purchases of Chloride made from (i) Industrial Chemicals (ii)
Selva agency and (iii) Mani Agency on the ground that the three selling
dealers have not paid tax. The petitioner carried the revised order on appeal
before the first appellate authority and obtained an order of setting aside
the assessment on those transactions. However, the Joint Commissioner by
invoking his suo motu revisional power and after hearing the petitioner’s
objections, modified the order of revisional assessment by fastening the
liability on the petitioner in respect of the purchase turnover from the three
selling dealers at 50:50 basis. As against the order of the Joint
Commissioner, the petitioner filed an appeal before the Special Tribunal under
Section 38 of the Act. The Special Tribunal by its order, which is impugned
in the writ petition, confirmed the order. The correctness of the said order
is now put in issue in the present writ petition.
3. The learned counsel Mr.Sundareswaran appearing for the petitioner
has contended that the purchases made by the petitioner were covered under
valid bills issued by the selling dealers, who were registered under the Act
and hence the question of shifting levy of tax under Section 7-A of the Act is
unjustified. He further contended that by producing the purchase bills, the
petitioner had proved that there were earlier sales by the selling dealers in
favour of the petitioner. Hence, it is for the revenue to collect the tax
from the dealers, who issued the bills. It is also submitted by the learned
counsel that the entire amount has been paid by way of cheque and in such
circumstances, it is for the Department to collect the tax from the selling
dealers and mulcting the liability on the petitioner is not correct.
4. On the other hand, the learned Government Pleader submitted that
the very point has been considered by the authorities as well as the Special
Tribunal in the revision and appeal under the provisions of the Tamil Nadu
General Sales Tax Act. The fact finding authorities ultimately found that the
selling dealers were not in existence and the petitioner has produced only
bills from non-existing dealers. It was also found on fact that the selling
dealers neither carried on business nor handled the goods and the addresses
given were bogus. When the petitioner claims that it is entitled to the
benefit of the second sale and if the initial burden is discharged by the
Department, it is for the petitioner, who claims the benefit to prove that the
dealers are genuine dealers and the purchase turnover for which exemption is
claimed have already suffered tax. In the absence of any such materials, it
is futile to contend that the order impugned is not correct.
5. We heard the arguments of the learned counsel on either side and perused
the materials on record.
6. Mr.Sundareswaran, learned counsel appearing for the petitioner has
vehemently contended that when the purchasing dealers are registered dealers,
and the petitioner has produced the relevant purchase bills before the
authorities, it is for the revenue to collect the amount from the selling
dealers and it is not for the petitioner to prove the selling dealers were
genuine dealers or the dealers were in existence, particularly when the
selling dealers issued with registration certificates from the Department. He
concentrated much only on this issue and for that matter, he relied on the
judgment of this Court in LAKSHMI STEEL TRADERS VS. BOARD OF REVENUE
(COMMERCIAL TAXES) reported in (1991) 82 STC 409, wherein this Court has held
thus:
“If a dealer establishes that a particular turnover represents second sales of
goods taxable at the point of first sale and the first sale was by a dealer
liable to pay tax, then the revenue cannot deny the exemption on the second
sales merely on the ground that the registration certificate of the first
dealer was cancelled during the assessment year in question or immediately
before the purchase by the dealer, namely the second seller. However, the
dealer (second seller) must establish that the first sale was a taxable sale;
whether the tax had been paid by the first seller or not is not the concern of
the dealer (second seller). The Revenue cannot take advantage of the fact of
cancellation of the registration certificate of the first seller either on his
application or otherwise, without further investing as to whether the bills
issued by such seller were real or bogus bills. In the event of the Revenue
establishing that the bills produced by the dealer (second seller) are bogus
and were not really issued by the first seller, then the dealer cannot claim
exemption on the alleged second sales.”
7. We fail to conceive as to how this judgment is applicable to the facts of
the present case. In fact, in our opinion, the said judgment instead of
advancing the case of the petitioner, it demolishes the petitioner’s case. As
ruled by the Judgment, in the present case, the Assessing Officer, the Joint
Commissioner as well as the Special Tribunal recorded a very clear finding
that the three selling dealers were non-existing and never carried on any
business. The addresses, both business address and residential address given
in the Registration Certificates are bogus. The summons sent to the addresses
were returned with postal endorsement “No such addressee”. On physical
verification also, it was found that the three dealers never carried on any
business. The cheques issued by the petitioner were realized by one Raja, who
is nothing to do with the three dealers. By recording the above findings, the
revenue established that the bills produced by the petitioner are bogus. The
decision of this Court in the case of GOVINDAN & CO. VS. STATE OF TAMIL NADU
(1975) 35 STC 50, which has been subsequently confirmed by the Supreme Court
in STATE OF TAMIL NADU VS. RAMAN & CO. reported in (1994) 93 STC 1994 is
also to the same effect. In the absence of any materials placed by the
petitioner to prove the contrary either before the authorities or even before
this Court, there is no scope for interference by this Court.
8. The learned counsel Mr.Sundareswaran has submitted that in the order of
the Special Tribunal, there is a finding to the effect that the Raja Agency is
also another bogus dealer and the said finding is unwarranted in the facts and
circumstances of the case as it would adversely affect the petitioner in other
cases pending before the authorities. The facts in issue in the present case
related only to the three agencies viz., Industrial Chemicals, Selva Agency
and Many Agency from whom the said purchases were said to have been made by
the petitioner. In the circumstances of the case, we are of the view that the
said finding is unnecessary. Hence, the finding is vacated.
For the reasons stated above, we are of the view that there is
absolutely no error apparent on the face of the record in the order of the
Special Tribunal so as to interfere with the same in the present writ
petition. Hence, the writ petition is dismissed. However, there is no order
as to costs.
Index :Yes
Website: Yes
To:
1.The Registrar
Tamil Nadu Taxation Special
Tribunal, Singaravelar Maligai
Second Floor, Chennai
2.The Joint Commissioner (SMR),
State of Tamil Nadu,
Ezilagam, Chepauk,
Chennai-5.
