1974 (10) TMI 36 - AT - VAT and Sales Tax

Summary

Issues:
1. Assessment of turnover under the Tamil Nadu General Sales Tax Act, 1959 for the year 1959-60.
2. Cancellation of penalty of s. 4,442.00.
3. Disputed turnover related to inter-State sales by the appellant.
4. Applicability of exemption under s. 3(2) of the Tamil Nadu General Sales Tax Act.
5. Tax liability on the second sale of machinery purchased from Sree Meenakshi Mills.
6. Legality of penalty levied.

Detailed Analysis:
1. The judgment by the Appellate Tribunal ITAT Madurai pertains to the assessment of the appellant under the Tamil Nadu General Sales Tax Act, 1959 for the year 1959-60, involving a disputed turnover of Rs. 98,700. The appellant also sought the cancellation of a penalty amounting to s. 4,442.00.

2. The appellant, a registered firm in Bombay, had purchased diesel generating sets from Meenakshi Mills Limited, Madurai. The Revenue contended that the appellant sold one set within the State and the rest outside, leading to the disputed turnover related to inter-State sales. The assessment was based on estimates due to the appellant's failure to file returns or respond to pre-assessment notices. The judgment also mentions another appeal concerning three other generators purchased from the same Mills.

3. The facts in the present appeal were not in dispute, as the appellant sold machinery to National Power Supply Corporation, Calcutta. An argument was made regarding the assessment under the Central Sales Tax Act on the Mills, but it was held that it did not bar the assessment on the appellant for sales within the State. The appellant later contended that the second sale of goods purchased from the Mills was exempt under s. 3(2) of the Tamil Nadu General Sales Tax Act.

4. The appellant argued that the second sale of goods was covered by an exemption and was only a second sale, not exigible to tax under the Act. Referring to item 23 of the First Schedule, which was applicable until 1961, the appellant claimed that the assessment was unsustainable. The judgment agreed that the sale was only a second sale and not taxable, leading to the annulment of the assessment and cancellation of the penalty.

5. The appeal was allowed in its entirety, with the assessment annulled, and the penalty canceled. The judgment concluded that since the assessment itself was unsustainable, the penalty could not be upheld.