2012 (1) TMI 151 - HC - VAT and Sales Tax

Summary

Issues involved:
The issues involved in the judgment are:
1. Levy of penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959.
2. Determination of whether the sale of packing materials to M/s. Natchiar Spinning Mills Limited falls under section 5(3) of the Act.

Levy of Penalty (Section 16(2)):
The High Court considered the assessment order for the years 1996-97 and 1997-98. It was noted that penalty could only be levied in cases of best judgment assessment made on an estimate, not solely based on the accounts provided by the assessee. The assessment for the relevant years was found to be based on figures from the books of account, falling under section 12(1) of the Act. As a result, the Tribunal's decision to delete the penalty was upheld, as there was no basis for penalty under section 12(3) or 16(2) of the Act. The Court concluded that the Tribunal's decision was justified, and there was no reason to interfere with it.

Sale of Packing Materials (Section 5(3)):
Regarding the sale of packing materials to M/s. Natchiar Spinning Mills Limited, the Tribunal examined the claim of exemption under section 5(3) of the Central Sales Tax Act, 1956. It was found that the packing materials were used by Tvl. Natchiar Textile Exporters for export of yarn as per the contract with Natchiar Spinning Mills. The Appellate Assistant Commissioner determined that the exporter of yarn acted as an agent of the buyer, Natchiar Spinning Mills, based on the contract details. The Tribunal accepted this finding as a fact, considering it an agency sale transaction. As there was no error in the Tribunal's conclusion, the Court ruled in favor of the assessee, dismissing the tax case revision.

Therefore, the High Court upheld the Tribunal's decisions on both issues, ruling against the petitioner in both instances.