2009 (4) TMI 428 - SC - VAT and Sales Tax

SALES TAX DEALER CLAIMING SALES WERE ONLY OF PARTS OF WET GRINDERS TO AVAIL OF EXEMPTION - PENALTY EXEMPTION CLAIMED CLAIM REJECTED

Summary

Issues:
Challenge to judgment of Madras High Court regarding assessment of tax on sale of wet grinders, applicability of previous judgments, imposition of penalty, comparison of factual scenarios.

Analysis:
The appeal before the Supreme Court challenged the judgment of the Madras High Court regarding the assessment of tax on the sale of wet grinders by a registered dealer under the Tamil Nadu General Sales Tax Act, 1959. The appellant claimed to have sold only parts of wet grinders, but tax and penalty were imposed for the assessment years 1992-93 and 1993-94. The appellant relied on a previous judgment in State of Tamil Nadu v. Suguna Agencies, where it was held that what had been sold were parts of the wet grinder. However, a later judgment in S. Durai v. Joint Commissioner of Commercial Taxes took a different view, stating that what was sold was a complete wet grinder, not just parts.

In the present case, the High Court applied the later decision to the facts and dismissed the writ petitions. The appellant argued that the earlier judgment should have been applied, but the High Court upheld its decision. The Supreme Court noted that the factual scenario in the present case was similar to S. Durai's case, where it was found that a complete wet grinder was sold, not just parts. As this was a factual finding, the Court found no grounds for interference in terms of tax levy.

Regarding the imposition of penalty, certain items not included in the turnover were found in the appellant's account books. When items not included in turnover are disclosed in the dealer's account books and then included by assessing authorities, penalty cannot be imposed. Therefore, the penalty levied was set aside by the Supreme Court.

In conclusion, the Supreme Court disposed of the appeals by upholding the tax assessment based on the sale of complete wet grinders, not just parts, and setting aside the penalty imposed due to the items found in the dealer's account books.