1991 (8) TMI 320 - HC - VAT and Sales Tax

Issues Involved:
1. Inclusion of excise duty collections in the turnover.
2. Wilful suppression of excise duty collections.
3. Maintainability of the enhancement petition.
4. Taxability of the purchase of old jewellery under the TNGST Act.

Issue-wise Detailed Analysis:

1. Inclusion of Excise Duty Collections in the Turnover:
The petitioners were initially assessed for the assessment year 1977-78 with a total turnover of Rs. 1,52,03,546 and a taxable turnover of Rs. 1,50,97,455. A subsequent notice under section 16 of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act) proposed to include Rs. 1,42,054.47 representing excise duty collected by the petitioners, which was not disclosed in their returns. The fresh assessment determined the total turnover as Rs. 1,53,45,600 and taxable turnover as Rs. 1,52,39,509. The appellate authority deleted Rs. 1,204 of excise duty on labour charges for synthetic stones but upheld the inclusion of the remaining excise duty collections. The Tribunal dismissed the petitioners' appeal and allowed the Revenue's enhancement petition. The High Court affirmed that excise duty collections are taxable under the Madras General Sales Tax (Second Amendment) Act, 1969, and cited the Supreme Court's judgment in McDowell & Company Limited v. Commercial Tax Officer, which held that excise duty forms part of the sale price and is includible in the turnover.

2. Wilful Suppression of Excise Duty Collections:
The petitioners argued that the excise duty collections were bona fide and disclosed in separate bills with endorsements indicating potential refunds. However, the High Court found that the petitioners did not disclose these collections in their A2 returns or to the assessing officer, indicating a culpable intention to conceal the collections. The Tribunal and the High Court agreed that this non-disclosure amounted to wilful suppression, attracting penalties under section 16(2) of the TNGST Act.

3. Maintainability of the Enhancement Petition:
The petitioners contended that the enhancement petition was not maintainable as the original assessment and subsequent appeals only concerned excise duty collections. However, the High Court noted that the order under section 16 of the TNGST Act was a composite order that refixed the entire total and taxable turnover, including the purchase turnover of old jewels. The Court cited a Division Bench judgment in Deputy Commissioner of Commercial Taxes v. Panayappan Leather Industries, which held that when an appeal is filed, the entire assessment is before the appellate authority, allowing for enhancement. The High Court concluded that the enhancement petition was maintainable and rightly entertained by the Tribunal.

4. Taxability of the Purchase of Old Jewellery:
The petitioners argued that the old jewellery purchased was not jewellery but "bullion" or "specie" and thus should be taxed at a lower rate. The High Court referred to the Supreme Court's judgment in Deputy Commissioner of Sales Tax v. G.S. Pai & Co., which clarified that old or antiquated ornaments and other articles of gold are not "bullion" or "specie" but manufactured products of gold. Consequently, the purchase of old jewellery did not fall under entry 15 of the First Schedule to the TNGST Act and was subject to the general multi-point rate under section 3(1) of the Act. The Tribunal's decision to allow the enhancement petition and tax the purchase of old jewellery at the general rate was upheld.

Conclusion:
The High Court dismissed the tax case (revision) filed by the petitioners, rejecting all points raised. The inclusion of excise duty collections in the turnover, the finding of wilful suppression, the maintainability of the enhancement petition, and the taxability of the purchase of old jewellery were all upheld, affirming the decisions of the lower authorities and the Tribunal. The petition was dismissed without costs.

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