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Deputy Commissioner (Ct), Coimbatore Division, Coimbatore Vs. N.C.R. Venkatesan - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case Nos. 288 to 290 of 1978 (Revision Nos. 99 to 101 of 1978 respectively)
Judge
Reported in[1986]63STC86(Mad)
ActsTamil Nadu General Sales Tax Act - Sections 12(3)
AppellantDeputy Commissioner (Ct), Coimbatore Division, Coimbatore
RespondentN.C.R. Venkatesan
Appellant AdvocateK.S. Bakthavatsalam, Additional Government Pleader
Respondent AdvocateN. Inbarajan, Adv.
Cases ReferredState of Tamil Nadu v. Nalla Ibrahim
Excerpt:
.....general sales tax act - tax revision by state against order of tribunal that there is no case of penalty - assessee had not maintained accounts on ground that he was entitled to exemption - such non-maintenance of account cannot be taken as advantage by assessee to get away from clutches of section 12 (3) - assessee was registered dealer and he had maintained proper accounts for his transactions and submitted return within time prescribed by act and rules - on surprise inspection of place of business of assessee various records were recovered showing concealment of income - for exemption assessee had to maintain account regarding all transactions - non maintenance of account attempt to conceal income - tax revision allowed. - - since the books of account maintained by the assessee..........same in all the above three tax cases which relate to the same assessee but for three different assessment years, they are dealt with together. the assessee is a manufacturer of groundnut oil and he is a registered dealer. for the assessment year 1969-70 he claimed exemption on the sale of oil and oil-cakes on the ground that he has been crushing gingelly and groundnut in country chekkus and therefore he is entitled to exemption under g.o. press no. 1963, revenue, dated 21st april, 1960. the assessing authority held that since the exemption under the notification is subject to the terms and conditions set out therein and the petitioner has not complied with some of the relevant terms and conditions, he is not entitled to the exemption under the said notification. similar claim for.....
Judgment:

Ramanujam, J.

1. These tax revision cases have been filed by the State against the decision of the Tribunal in T.A. Nos. 1010, 1011 and 1012 of 1976. Since the point involved is the same in all the above three tax cases which relate to the same assessee but for three different assessment years, they are dealt with together. The assessee is a manufacturer of groundnut oil and he is a registered dealer. For the assessment year 1969-70 he claimed exemption on the sale of oil and oil-cakes on the ground that he has been crushing gingelly and groundnut in country chekkus and therefore he is entitled to exemption under G.O. Press No. 1963, Revenue, dated 21st April, 1960. The assessing authority held that since the exemption under the notification is subject to the terms and conditions set out therein and the petitioner has not complied with some of the relevant terms and conditions, he is not entitled to the exemption under the said notification. Similar claim for exemption was also made in respect of the assessment years 1979-71 and 1972-73, and the claim was rejected on the same ground. After rejecting the claim for exemption the assessing authority proceeded to make the assessments on the basis of certain records recovered from the assessee's place of business on 1st March, 1973, in the course of a surprise inspection. From the said records recovered from the place of business of the assessee and in the business place of sister concerns, it was found that the assessee has not brought into his regular accounts a large number of transactions of purchase of gingelly and groundnut seeds and also the sale of oil and oil-cakes. Since the books of account maintained by the assessee for these three assessment years, did not disclose the turnover culled out from the records recovered from the assessee's place of business, the assessments came to be made on a best judgment basis for all the three assessment years. The best judgment assessments for all the three assessment years also resulted in the levy of penalty under section 12(3) of the Tamil Nadu General Sales Tax Act. The assessee challenged the assessments as also the order levying penalty before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner dismissed the appeals filed in respect of all the three assessment years holding that the assessee who is a registered dealer had not maintained regular accounts in the course of the business, that he had not produced any documentary evidence to show that he had been maintaining country oil chekku, that in fact he has been dealing in rotary gingelly oil-cakes and thereby he had not dealt exclusively in the products of country oil chekku, that the assessee is a partner in Sri Krishna Rice and Oil Mills of N. C. R. Masilamani Chettiar & Bros., Kaveripattinam, and thereby he had interest in rotary or expeller, that he has not taken out any permits with reference to oil chekkus as contemplated in the exemption notification dated 1st November, 1969, and he has not conformed to the conditions set out therein. On the basis of these findings, the appellate authority held that the best judgment assessment was justified on facts and that the assessee is not entitled to claim exemption under the notification stated above. The Appellate Assistant Commissioner also sustained the order levying penalty. However, when the matter reached the Tribunal by way of further appeal by the assessee, the Tribunal had chosen to give some relief to the assessee not only in elation to the assessed turnover but also in cancelling the entire penalty levied by the assessing authority. A perusal of the order of the Tribunal shows that it agreed with the lower authorities that the case is a fit one for making a best judgment assessment, that but for the surprise inspection in the course of which certain records were recovered, the assessee would not have disclosed the turnover found from the records in his regular accounts, that in fact the assessee did not maintain regular books of account disclosing his entire turnover and therefore the assessing authority was justified in resorting to an estimate. However, as regards the quantum of the estimate adopted by the assessing authority, the Tribunal felt that the estimate made by the assessing authority is somewhat excessive and it calls for reduction. As regards the assessment year 1969-70 the Tribunal did not give any relief in the turnover. In respect of the assessment year 1970-71, the relief was given by the Tribunal on a turnover of Rs. 3,89,368.50. In respect of the assessment year 1972-73 the relief was given on a turnover of Rs. 5,05,110. We are not now on the question as to whether the Tribunal was justified in granting relief in relation to the taxable turnover for the assessee has succeeded before the Tribunal in that aspect and that is not the subject-matter before us. As already stated, normally one would have though that the Tribunal while giving relief in the turnover would give relief in relation to the penalty proportionately. But the Tribunal in this case has chosen to cancel the penalties levied in respect of all the three years without giving sufficient reasons. The reason given by the Tribunal for setting aside the order of penalty is that there is no scope or justification for the levy of penalty in all these cases. As the assessee did not maintain accounts, the question of sales suppression does not arise and the assessee cannot be said to have avoided tax. We are not in a position to agree with the Tribunal that there is no scope or justification for the levy of penalty in this case. The mere fact that the assessee had not maintained accounts at all cannot be taken advantage of by the assessee to get away from the clutches of section 12(3). Admittedly, the assessee is a registered dealer and he has to maintain proper accounts for his transactions and submit a return by the time prescribed by the Act and the Rules. In this case, admittedly, the assessee did not submit any return and when after the surprise inspection of the place of business of the assessee and after the scrutiny of the various records recovered in the course of the surprise inspection, he was directed to produce the books of account, he did not produce the books of account on the ground that he did not maintain accounts. The assessee's only explanation for not maintaining accounts was that he is entitled to claim exemption under the notification above referred to, as he is owning country chekkus and producing oil only by the use of country chekkus. Even if the assessee is entitled to exemption, he has to maintain books of account regarding all his transactions, purchases and sales, and submit a return disclosing the turnover but at the same time claiming exemption under the notification. But to say because he is entitled to exemption he is not maintaining books of account, is an attempt to conceal the turnover. It is not for him to decide whether he will be ultimately granted exemption as per the notification. In the event of his not being granted exemption, naturally his purchase and sales turnovers have to be scrutinised for the purpose of assessment. Therefore, as a matter of fact, the Tribunal itself in the earlier portion of its order says that but for the surprise inspection, the turnover covered by these records would not have come to light. We do not see now the same Tribunal while dealing with penalty says that there is no question of any suppression as the assessee has not maintained the accounts of his business. On the finding of the Tribunal that but for the surprise inspection the turnover would not have been disclosed, the legal inference is that there was in fact suppression by the assessee and it is only with a view to suppress the turnover he has failed to maintain the books of account for his business. On the facts of this case, the Tribunal is not right in holding that there has been no sales suppression and therefore there is no case for levy of penalty. As already stated, in the earlier portion of the order of the Tribunal, the estimate of sales suppressions in all the three years has been sustained by the Tribunal. At least, to the extent of sales suppressions upheld by the Tribunal, the penalty has to be sustained. In this case, the Tribunal has set aside the penalty levied in all the three years in entirety ignoring its own finding that there has been suppression in all the three years. The Tribunal has in fact given inconsistent findings in its order. While dealing with the suppressed turnover, the Tribunal says that the assessee is guilty of suppression, but while dealing with the question of penalty the Tribunal would say that the assessee is not guilty of suppression and therefore there is no question of levy of penalty. Once it is found by the Tribunal that the assessee has not disclosed the turnover found in the records recovered from the assessee's place of business in the course of surprise inspection in his books of account or in the returns, he is taken to be guilty of suppression. In a recent decision rendered by a Division Bench of this Court in State of Tamil Nadu v. Nalla Ibrahim [1984] 56 STC 110 this Court while setting aside a similar order of the Tribunal has observed that the Tribunal having upheld the addition to the book turnover or the returned turnover towards the estimated suppression, the Tribunal could not say that section 12(3) of the Act was not attracted and that once the return submitted by the assessee is not accepted and best judgment assessment is made, after making certain additions to the turnover returned, then section 12(3) stands attracted. Here, we have a fortiori case where the assessee maintains no books of account, nor submits a return to the assessing authority as enjoined by the Act and the Rules, and the extent of the transactions carried on by him has to be estimated from the materials recovered from the assessee's place of b

2. usiness as a result of surprise inspection. These materials clearly indicate that the assessee intended to suppress the transactions found in the said records recovered from the assessee's place of business. On the facts, the Tribunal also has specifically found that but for the surprise inspection and the recovery of various records, the assessee would not have disclosed turnover before the assessing authority. Therefore, this is a case certainly attracting section 12(3) of the Act. The tax cases are therefore allowed and the Tribunal is directed to fix the quantum of penalty in proportion to the suppressed turnover as estimated by the Tribunal. The revenue will have its costs, one set. Counsel's fee Rs. 250.

3. Petitions allowed.


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