2000 (3) TMI 1058 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Suppression of stock and turnover.
2. Disallowance of exemption under Section 5(3) of the CST Act.
3. Penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act.

Issue-wise Detailed Analysis:

1. Suppression of Stock and Turnover:

The Appellate Tribunal confirmed the suppression of stock and turnover as follows:
- Excess Stock: During an inspection on August 12, 1993, the assessee admitted to having an excess stock of 313 pieces of leather. The assessee's claim that these were received for color dyeing was rejected due to lack of documentary evidence. Similarly, the excess stock of 1,946 pieces of finished leather was not accepted as job-work stock because the job-work register did not reflect these transactions.
- Misclassification: The Tribunal upheld the suppression of Rs. 81,920 related to the last purchase of raw skins, rejecting the claim that it was subsequently accounted for, as no stock account was produced.
- Total Suppression: The Tribunal sustained an actual suppression of Rs. 3,07,820 and added 50% for estimated suppression, refixing the total suppression at Rs. 4,61,730.

2. Disallowance of Exemption Under Section 5(3) of the CST Act:

The Tribunal disallowed the claim of exemption for raw hides and skins under Section 5(3) of the CST Act, citing that:
- Different Commodities: Following the Supreme Court's decision in K.A.K. Anwar & Co. v. State of Tamil Nadu, raw hides and skins and dressed hides and skins are considered different commodities. Therefore, the purchase of raw hides and skins does not qualify for exemption under Section 5(3) because the exported commodity (dressed hides and skins) is different from the purchased commodity (raw hides and skins).
- Legal Precedents: The Tribunal referred to the Supreme Court's decisions in Sterling Foods v. State of Karnataka and Vijayalaxmi Cashew Company v. Deputy Commercial Tax Officer, which reiterated that if the goods purchased and the goods exported are different commercial commodities, exemption under Section 5(3) is not applicable.

3. Penalty Under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act:

The Tribunal upheld the penalty levied under Section 12(3)(b) for the following reasons:
- Automatic Penalty: Given the suppression and the assessment made to the best judgment, the penalty is a corollary to the assessment under Section 12(2).
- Quantum of Penalty: The penalty, which is the difference between the tax assessed and tax paid, was deemed appropriate and in accordance with the law.

Conclusion:

The Tribunal found no merit in the petitioner's arguments and upheld the Appellate Tribunal's decisions on all counts. The suppression of Rs. 4,61,730 was confirmed based on factual findings, the disallowance of exemption under Section 5(3) was justified by legal precedents, and the penalty under Section 12(3)(b) was deemed appropriate. Consequently, the tax revision case was dismissed at the admission stage.