1976 (8) TMI 136 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Reopening and reassessment of escaped turnover under Section 16 of the Tamil Nadu General Sales Tax Act, 1959.
2. Applicability of Section 16 to cases covered by Section 7 of the Act.
3. Legislative intent behind the introduction of Section 16-A.

Issue-wise Detailed Analysis:

1. Reopening and Reassessment of Escaped Turnover under Section 16 of the Tamil Nadu General Sales Tax Act, 1959:

The petitioners were initially assessed and taxed under Section 7 of the Tamil Nadu General Sales Tax Act, 1959. However, certain transactions were later found to have escaped assessment, leading to the reopening of assessments under Section 16 of the Act. The reassessment involved redetermining the turnover and demanding tax based on the newly determined turnover, including penalties under Section 16(2). The petitioners challenged the reopening and reassessment, arguing that Section 16 did not authorize such actions for cases under Section 7. The court rejected this argument, stating that Section 16 refers to "turnover" in general, not specifically "taxable turnover," and thus applies to all turnovers, including those under Section 7.

2. Applicability of Section 16 to Cases Covered by Section 7 of the Act:

The court clarified that Section 7 deals with "total turnover" and allows dealers to pay a lump sum tax based on different slabs of turnover, without distinguishing between taxable and non-taxable turnover. When the total turnover, including the suppressed turnover, exceeds the maximum limit prescribed in Section 7, the case automatically falls under Section 3(1), making Section 16 applicable. The court emphasized that the non obstante clause in Section 7 ensures that once the turnover exceeds the prescribed limit, the case goes out of Section 7 and attracts Section 3(1) and Section 16. The court concluded that Section 16 is applicable to the facts of the present cases, and the reopening and reassessments were done in accordance with the law.

3. Legislative Intent Behind the Introduction of Section 16-A:

The petitioners argued that the introduction of Section 16-A by Tamil Nadu Act No. 31 of 1972 indicated that Section 16 did not apply to cases covered by Section 7. The court disagreed, stating that Section 16-A constitutes legislative recognition of what the assessing authorities and the Tribunal had done in the present cases. Section 16-A was seen as declaratory of the law flowing from Section 16, read with Sections 7 and 3, to place the position beyond all doubt. The court held that the enactment of Section 16-A did not imply that Section 16 was inapplicable to cases under Section 7.

Conclusion:

The court dismissed the tax revision cases, upholding the reopening and reassessment of escaped turnover under Section 16. The court affirmed that Section 16 applies to cases covered by Section 7 and that the introduction of Section 16-A was merely declaratory of the existing law. The petitions were dismissed with costs, and counsel's fee was set at Rs. 150 in each case.