1995 (7) TMI 385 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Assessability to tax of baling charges.
2. Deletion of penalty under section 12(5)(ii) and 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959.

Issue-wise Detailed Analysis:

1. Assessability to Tax of Baling Charges:
The primary issue in this case was whether the baling charges amounting to Rs. 1,00,000 incurred by the assessee while selling cotton should be included in the "turnover" and thus be chargeable to Central Sales Tax under the Tamil Nadu General Sales Tax Act, 1959. The Tribunal had previously ruled that these charges were not taxable, reasoning that the charges were billed separately and there was no proof that they were incurred prior to the sale. The Revenue contended that these charges were part of the sale price as defined under section 2(h) of the Act and should be taxable. The Court examined the definitions of "turnover" and "sale price" under sections 2(j) and 2(h) of the Act, respectively, and referenced multiple precedents, including Hindustan Sugar Mills Ltd. v. State of Rajasthan and Ramco Cement Distribution Co. Pvt. Ltd. v. State of Tamil Nadu. The Court concluded that the baling charges were indeed part of the "sale price" as they were integral to the sale transaction and thus chargeable to tax. The Tribunal's decision was found to be erroneous, and the Court set aside the Tribunal's ruling on this matter.

2. Deletion of Penalty under Section 12(5)(ii) and 12(5)(iii):
The second issue was the deletion of penalties levied under sections 12(5)(ii) and 12(5)(iii) of the Act. The assessing officer initially imposed a penalty of Rs. 5,500, which was later reduced to Rs. 3,000 by the Appellate Assistant Commissioner, for the assessee's failure to include the baling charges in the revised return. The Tribunal had deleted this penalty, but the Revenue argued that the assessee had not acted bona fide. The Court agreed with the Revenue, noting that the assessee did not include the baling charges even in the revised return, indicating a lack of bona fide action. Consequently, the penalty of Rs. 3,000 was sustained.

Regarding the penalty under section 12(5)(ii), the Tribunal had deleted a penalty of Rs. 12,952, stating that the assessee had filed a revised return which was acted upon by the department. The Court referenced the decision in State of Tamil Nadu v. Dunlop India Ltd., which held that there is no time limit for filing a revised return, and thus, the levy of penalty under section 12(5)(ii) was not justified. The Court found no error in the Tribunal's deletion of this penalty.

Conclusion:
The Court partially allowed the tax case revision. It set aside the Tribunal's decision regarding the assessability of the baling charges and the penalty under section 12(5)(iii) but upheld the Tribunal's decision to delete the penalty under section 12(5)(ii). The case was thus partly allowed with no costs.