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V. Krishnappa Chettiar Vs. State of Tamil Nadu - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case Number Tax Case No. 568 of 1975 (Revision No. 133 of 1975)
Judge
Reported in[1980]46STC52(Mad)
AppellantV. Krishnappa Chettiar
RespondentState of Tamil Nadu
Appellant Advocate P.R. Ranganathan, Adv.
Respondent Advocate The Additional Government Pleader
DispositionPetition allowed
Cases ReferredState of Kerala v. Vijaya Stores
Excerpt:
- .....determination of the purchase turnover having regard to the seed element in the purchase price of cotton. cotton is one of the items of 'declared goods' and it is therefore brought within the scope of the second schedule. in respect of the goods falling within the second schedule there is single point taxation in accordance with the provisions of section 4 read with the said schedule. in the case of cotton the turnover is taxable at the point of last purchase in the state. subsequently, under tamil nadu act 39 of 1973, item 6 of the second schedule came to be amended and now item 6(iii) deals with taxability of cotton seeds which are liable to tax at the point of first sale in this state. prior to act 39 of 1973 it is common ground that cotton seed was subject to multi-point tax in.....
Judgment:

Sethuraman, J.

1. The revision petition has been filed under Section 38 of the Tamil Nadu General Sales Tax Act (hereinafter called the Act) against the order of the Sales Tax Appellate Tribunal dated 30th June, 1975, of Coimbatore Tribunal Appeal No. 343/74 and Coimbatore Tribunal Misc. Petition No. 37/75. The assessee is a dealer in cotton and cotton seeds. He reported a total and taxable turnover of Rs. 3,38,94,604.97 and Rs. 21,09,505.57 respectively in the A-2 return for the year 1972-73. In the absence of separate purchase figures for inter-State sales of cotton lint, the Joint Commercial Tax Officer held that the sales turnover would be treated as purchase turnover and assessed at 2 per cent. The total turnover taxed by him came to Rs. 1,05,90,401 consisting of Rs. 21,20,126 being the turnover in cotton seeds taxable at 3 per cent and Rs. 84,70,275 being the turnover taxed at 2 per cent. The assessee appealed to the Appellate Assistant Commissioner. The question raised before him was that the sum of Rs. 84,70,275 was arrived at in an arbitrary and illegal manner and that the Joint Commercial Tax Officer was wrong in taking the last purchase value of lint at the same figure as the sale value. The Appellate Assistant Commissioner considered that for arriving at the purchase value the assessing officer should have deducted the gross profit of 3 per cent of the sale value of Rs. 84,70,275 and arrived at the purchase value of Rs. 82,16,167. He worked out the figure of purchase value of cotton taxable at Rs. 83,00,871. When the matter came up before the Tribunal at the instance of the assessee, the department filed an enhancement petition. It was pointed out in the said petition that both the assessing officer as well as the Appellate Assistant Commissioner had not arrived at the correct value of the purchase price of cotton and, according to the State representative, the purchase value should have been taken at Rs. 85,25,638. The basis for arriving at this figure was set out in an enclosure to the enhancement petition dated 7th April, 1975. The appeal came to be heard subsequently and before the hearing of the appeal, the assessee filed his objections to the proposed enhancement.

2. The Tribunal accepted the figure as shown in the enhancement petition and directed that the sum of Rs. 85,25,638 should be taken into account as the purchase price of cotton, the purchase being the last one in the State. There was another point taken before the Tribunal, namely, that the assessee had effected all his purchases of cotton within the State and that cotton so purchased was unginned cotton. His submission was that to the extent of two-thirds of this purchase the price was referable to the cotton seeds and that in taxing at the rate of 3 per cent on the sales, there is double taxation because to the extent of the purchase price embedded in the sum of Rs. 85,25,638, the sales of cotton seeds to the extent of Rs. 21,20,126 has also been taxed. The Tribunal did not accept this submission and, therefore, the result was that the turnover was directed to be enhanced by Rs. 2,24,767 from Rs. 83,00,871 to Rs. 85,25,638. The assessee has questioned this order of the Tribunal in this revision before us.

3. The first point to be considered in this revision is whether the Tribunal in dealing with the appeal of the assessee was entitled to add to the turnover, as determined by the assessing authority, any further figure so as to enhance the assessment beyond the figure as appearing in the assessment order. In other words, according to the learned counsel of the assessee, the assessing authority having taxed only a sum of Rs. 84,70,275 as the purchase turnover in cotton, the Tribunal even when it accepted the enhancement petition, could not have travelled beyond this figure and brought to tax the sum of Rs. 85,25,638. In substance, the contention of the learned counsel is that the enhancement could only mean restoration of the assessment as it emerged at the time of passing of the assessment order.

4. Section 36 is the provision that deals with appeal to the Appellate Tribunal. Section 36(3)(a)(i) reads as follows:

(3) In disposing of an appeal, the Appellate Tribunal may, after giving the appellant a reasonable opportunity of being heard,

(a) in the case of an order of assessment-(i) confirm, reduce, enhance or annul the assessment or penalty or both.

5. The present case is one of enhancement of assessment. The plain language of the section appears to contemplate the enhancement of an assessment even beyond what was originally taxed by the assessing authority. Otherwise, the provision should have contained some expression to show that the enhancement of the assessment is restricted to the amount assessed. Enhancement of assessment can only mean enhancement beyond the assessment. When the words of the provision plainly indicate that the Tribunal has power to travel even beyond the assessment, it is not possible to accept the submission that the limit of the power of the Tribunal is only up to the amount of turnover as assessed by the assessing authority.

6. During the course of the argument there was some discussion as to whether the Tribunal could have travelled beyond the point in appeal before it and enhanced the assessment with reference to some other item. It is unnecessary to consider this aspect as in the present case the question relates only to a particular item of turnover which alone was the subject-matter of enhancement.

7. The learned counsel for the assessee brought to our notice a recent decision of the Supreme Court in State of Kerala v. Vijaya Stores [1978] 42 S.T.C. 418. The following passage in that decision was relied on :

The normal rule that a party not appealing from a decision must be deemed to be satisfied with the decision, must be taken to have acquiesced therein and be bound by it and, therefore, cannot seek relief against a rival party in an appeal preferred by the latter, has not been deviated from in Sub-section (4)(a)(i) above. In other words, in the absence of an appeal or cross-objections by the department against the Appellate Assistant Commissioner's order the Appellate Tribunal will have no jurisdiction or power to enhance the assessment.

8. The contention urged was that at the time when the State representative filed the enhancement petition on 7th April, 1975, it was beyond the period of limitation for any appeal that could have been filed against the order and that the State cannot be permitted to raise this matter before the Tribunal at a belated stage. Unfortunately, for the assessee in the present case, the provision of the Tamil Nadu General Sales Tax Act is not worded identically with the Kerala General Sales Tax Act, with which their Lordships of the Supreme Court were concerned in that case. In the Kerala Act, there is provision for appeal by the State against the order of the Appellate Assistant Commissioner before the Tribunal. But such a power is not available to the State under the Tamil Nadu General Sales Tax Act. That the Supreme Court dealt with the principle only on the basis of the provisions of the Kerala Act is clearly brought out from the following passage :

Further, to accept the construction placed by the counsel for the appellant on Sub-section (4)(a)(i) would be really rendering Sub-section (2) of Section 39 otiose, for if in an appeal preferred by the assessee against the Appellate Assistant Commissioner's order the Tribunal would have the power to enhance the assessment, a provision for cross-objections by the department was really unnecessary. Having regard to the entire scheme of Section 39, therefore, it is clear that on a true and proper construction of Sub-section (4)(a)(i) of Section 39 the Tribunal has no jurisdiction or power to enhance the assessment in the absence of an appeal or cross-objections by the department.

9. This decision cannot, therefore, govern the powers of the Tribunal under the Tamil Nadu Act. It is apparently because there is no provision for appeal by the State to the Tribunal against the order of the Assistant Commissioner that the power of enhancement has been conferred on the Tribunal.

10. The learned counsel then contended that the Tribunal's power is only for suo motu enhancement and that the Tribunal should itself have given a separate notice to the assessee after it felt satisfied that the enhancement petition was liable to be accepted. In this case, as mentioned already, the enhancement petition was filed on 7th April, 1975, and the appeal itself came to be disposed of on 30th June, 1975. There is no dispute about the fact that the assessee was furnished with a copy of the enhancement petition. The assessee also filed his objections and it is only after that the matter was heard and disposed of by the Tribunal. Any further notice by the Tribunal would in this context be unnecessary as the assessee had every opportunity of making submission on the enhancement petition and did avail himself of the opportunity. Therefore, we do not find any material on the first point taken by the assessee in the present revision petition.

11. The second point, as mentioned earlier, is with regard to the correctness of the order of the Tribunal in not interfering with the determination of the purchase turnover having regard to the seed element in the purchase price of cotton. Cotton is one of the items of 'declared goods' and it is therefore brought within the scope of the Second Schedule. In respect of the goods falling within the Second Schedule there is single point taxation in accordance with the provisions of Section 4 read with the said schedule. In the case of cotton the turnover is taxable at the point of last purchase in the State. Subsequently, under Tamil Nadu Act 39 of 1973, item 6 of the Second Schedule came to be amended and now item 6(iii) deals with taxability of cotton seeds which are liable to tax at the point of first sale in this State. Prior to Act 39 of 1973 it is common ground that cotton seed was subject to multi-point tax in accordance with the provisions of Section 3. The contention of the learned counsel was that in the purchase price of cotton which was evaluated at Rs. 85,25,638 there is an element of price in relation to cotton seed. When this turnover has been taxed at the rate of 2 per cent the contention is that it cannot be again taxed at the multi-point rate of 3 per cent. In other words, the turnover in regard to the sum of Rs. 85,25,638 would have to undergo revision consequent on the purchase tax having been levied thereon. The Tribunal does not appear to have considered this contention properly. The Tribunal has proceeded only on the basis of certain decisions of other courts and of the Supreme Court. The Tribunal has not found that no part of the purchase price of cotton seeds has entered into the determination of the turnover of Rs. 85,25,638. The assessee's claim that part of the purchase price relating to cotton seeds is embedded in the turnover taxed requires examination. As the Tribunal has not looked into this aspect, we direct the Tribunal to go into the question and examine the matter in accordance with law and the provisions of Section 4-A of the Act. Nothing said here is to be construed as expressing any opinion on the merits of the claim. Both the parties will have every opportunity to make any factual or legal submission on this point. This revision is allowed accordingly. No order as to costs.


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