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Baluswami Chettiar Vs. State of Tamil Nadu - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case Nos. 164 and 165 of 1978 (Revision Nos. 30 and 31 of 1978)
Judge
Reported in[1986]63STC492(Mad)
ActsTamil Nadu General Sales Tax Act - Sections 16(1), 16(2) and 36(3)
AppellantBaluswami Chettiar
RespondentState of Tamil Nadu
Appellant AdvocateP.R. Ranganathan, Adv.
Respondent AdvocateK.S. Bakthavatsalam, Additional Government Pleader No. I
Cases ReferredIn State of Tamil Nadu v. Jakthi Veliyeetakam
Excerpt:
.....- - not satisfied with this order the assessee filed an appeal to the sales tax appellate tribunal (additional bench),..........representative who, according to the tribunal, finally prayed for leniency in the quantum, levied penalty under section 16(2) of the act, with regard to the quantum, the tribunal held that a penalty equivalent to 50 per cent. of the tax due on the suppressed turnover will be sufficient and on that basis, levied a penalty of rs. 6,211. the present revision is filed by the assessee in respect of the figure arrived at as regards the escaped turnover and in respect of the penalty levied by the tribunal. t.c.no. 164 of 1978 : 4. this tax revision case has also been filed by the petitioner in t.c. no. 165 of 1978 in respect of the assessment for the year 1971-72. originally, the assessee was assessed on the total taxable turnover of rs. 14,58,679.82. on 20th july, 1971, the central.....
Judgment:

Gokulakrishnan, J.

1. The assessee in this case is running a metal oiling mill under the name and style of 'Balu Metal Rolling Mills'. He is also dealing in brass vessels and doing business in Angeripalayam, Tirupur. For the assessment year 1969-70 he was finally assessed on total taxable turnover of Rs. 13,51,129.40 by the Deputy Commercial Tax Officer (Rural), Tirupur. On 20th July, 1971, the intelligence wing of the sales tax department inspected the assessee's business premises at Angeripalayam and recovered certain account books and slips relating to his business. On a scrutiny of the same with the regular accounts maintained by the assessee, the intelligence wing found that the assessee has suppressed a sales turnover of Rs. 7,95,709.72. This escaped assessment was added to the total taxable turnover originally fixed and the total was arrived at Rs. 21,46,839.12. On this assessee was assessed under section 16(1) of the Tamil Nadu General Sales Tax Act (hereinafter referred to as the Act) and a penalty of Rs. 17,821 was levied under section 16(2) of the Act after due notice.

2. The assessee preferred an appeal to the Appellate Assistant Commissioner, Pollachi, who by his order dated 17th June, 1976, sustained the suppression to the extent of Rs. 5,68,037.26 but struck down the levy of penalty of Rs. 17,821 on the ground that the authority has not recorded a finding that there was wilful non-disclosure of assessable turnover. Not satisfied with this order the assessee filed an appeal to the Sales Tax Appellate Tribunal (Additional Bench), Coimbatore. The Tribunal, after perusing the slips in question, found that the assessee had suppressed purchase of raw materials as in slips Nos. 1 to 3 and 8 to 12 and as such the assessing authority was justified in making a revision of the assessment under section 16(1) of the Act. As regards the correct figure of purchase suppression the Tribunal found that it is Rs. 60,067.45. Adding the gross profit of Rs. 54,010.05, the taxable turnover was determined at Rs. 41,14,077.50. Adding this with the turnover originally taken for assessment, the Tribunal found the taxable turnover as Rs. 17,65,207 for the year 1969-70. On this 3 per cent. levy of sales tax was imposed.

3. The Tribunal next took the issue regarding the penalty imposed by the assessing authority, which was ultimately set aside by the Appellate Assistant Commissioner on the ground that there was no specific finding of wilful non-disclosure of the assessable turnover in the order of assessment for levy of penalty under section 16(2) of the Act. The Tribunal, pointing out the word 'suppression' used by the assessing authority in respect of the non-disclosure of taxable turnover, held that it has to interfere with the order of the Appellate Assistant Commissioner setting aside the order of levy of penalty. The Tribunal after hearing the authorised representative who, according to the Tribunal, finally prayed for leniency in the quantum, levied penalty under section 16(2) of the Act, with regard to the quantum, the Tribunal held that a penalty equivalent to 50 per cent. of the tax due on the suppressed turnover will be sufficient and on that basis, levied a penalty of Rs. 6,211. The present revision is filed by the assessee in respect of the figure arrived at as regards the escaped turnover and in respect of the penalty levied by the Tribunal.

T.C.No. 164 of 1978 :

4. This tax revision case has also been filed by the petitioner in T.C. No. 165 of 1978 in respect of the assessment for the year 1971-72. Originally, the assessee was assessed on the total taxable turnover of Rs. 14,58,679.82. On 20th July, 1971, the Central Intelligence Wing of the Sales Tax Department inspected the business premises. On verification of certain slips and account books recovered the assessing authority found that the assessee had suppressed a sales turnover of Rs. 27,65,324.05. Adding this amount with the turnover originally assessed, the assessing authority found the total taxable turnover at Rs. 42,22,003.87. On this figure, tax was levied under section 16(1) of the Act and penalty of Rs. 1,45,180 was also levied under section 16(2) of the Act after issue of notice. Aggrieved by this order of the assessing authority, the assessee preferred an appeal to the Appellate Assistant Commissioner, Pollachi, who after verifying the accounts and slips recovered, held that the assessee had suppressed a sales turnover of Rs. 6,90,988 and ordered assessment on this turnover at 3 1/2 per cent. but struck dowm the penalty imposed by the assessing authority for want of a finding that there was a wilful non-disclosure for the assessable turnover by the assessee. Aggrieved by this order, the assessee preferred an appeal before the Sales Tax Appellate Tribunal (Additional Bench), Coimbatore. The Tribunal, after hearing the arguments and going through the recovered slips and accounts, confirmed the suppressed turnover arrived at by the Appellate Assistant Commissioner. The Tribunal held that the turnover up to 18th June, 1971, was liable for assessment at 3 per cent. while the turnover from 19th June, 1971, was liable for assessment at 3 1/2 per cent. Finally, the Tribunal determined the total taxable turnover at Rs. 21,47,668 and levied tax both at 3 per cent. and at 3 1/2 per cent.

5. The Tribunal next took up the question as to whether the Appellate Assistant Commissioner was justified in setting aside the levy of penalty. For the same reasons as set out in the prior appeal, which is the subject-matter of T.C. No. 165 of 1978, the Tribunal held that penalty is leviable and such a penalty will be equivalent to 50 per cent. of the tax due on the suppressed turnover of Rs. 6,90,998 and calculating the penalty, the Tribunal levied a sum of Rs. 10,797, and the very same questions that were raised in T.C. No. 165 of 1978 were raised in this revision also.

6. Mr. P. R. Ranganathan, learned counsel appearing for the assessee in both these cases, stresses his argument only on the question of penalty and submitted that the Tribunal has no power to levy the penalty when especially the Appellate Assistant Commissioner has deleted the penalty. It is clear from the facts of the case that the penalty originally levied had been deleted by the Appellate Assistant Commissioner. According to Mr. P. R. Ranganathan, learned counsel for the assessee in both the cases, the Tribunal cannot impose penalty when especially the penalty levied by the assessing authority has been set aside by the Appellate Assistant Commissioner. Mr. P. R. Ranganathan contended that the Tribunal, on the facts of the present cases has no power to levy penalty under section 36(3)(a)(i) of the Act.

7. In State of Tamil Nadu v. Jakthi Veliyeetakam [1977] 40 STC 466 a Division Bench of this Court, while dealing with similar facts, observed as follows :

'For the word 'enhance' to apply, there must be something to be increased. In this case, since the Appellate Assistant Commissioner has set aside the very order of penalty, there was no penalty to be increased. To enhance the penalty already imposed is different from restoring the penalty which was imposed by the original authority but set aside by the Appellate Assistant Commissioner since the subject-matter of the appeal before the Tribunal is the order of the appellate authority only and not the order of the original authority. Consequently, an application for restoration of the penalty in the present case will not come within the scope of section 36(3)(a)(i) of the Act and, therefore, the Tribunal was right in not restoring the order of penalty though the reasons given by the Tribunal for doing so are different. Hence the tax revision case is dismissed.'

8. As far as the present cases are concerned, it is the assessee who has filed the revision petitions both on the ground that the determination of the taxable turnover is erroneous and on the ground that the Tribunal has no power to restore the penalty when especially the Appellate Assistant Commissioner has completely set aside the penalty levied under section 16(2) of the Act. It is clear from the facts of the case that the State has not preferred any appeal to the Tribunal against the order of the Appellate Assistant Commissioner setting aside the penalty levied by the assessing authority. The provision of section 36(3)(a)(i) of the Act can be exercised to confirm, reduce, enhance or annual the assessment or penality. Inasmuch as the Appellate Assistant Commissioner has completely set aside the penalty there is nothing for the Tribunal to enhance. Thus, the decision cited above applies on all fours to the facts of the present case. Hence we are of the view that the levy of penalty by the Tribunal cannot bu sustained. Accordingly, both the revisions have to be allowed in respect of teh penalty levied by teh Tribunal. We do not find any warrant to interfere with the rest of the finding of the Tribunal and further, no argument was advanced by the learned counsel for the assessee in regard to the rest of the finding of the Tribunal.

9. For the foregoing reasons, the order of the Tribunal in so far as it relates to the imposition of penalty is concerned, is set aside and confirmed in other respects, costs one set. Counsel's fee Rs. 250.

10. Petition allowed.


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