2024 (8) TMI 707 - HC - VAT and Sales Tax

Confirmation of tax being the turnover assessed by the Assessing Authority under section 7A for nonproduction of sale bill - disallownace of turnover by the Assessing Authority on the export sales claimed by the dealer - burden to proof - levy of penalty. Whether the tax of Rs. 5,80,905/- being the turnover assessed by the Assessing Authority under section 7A for nonproduction of sale bill and confirmed by the Appellate Assistant Commissioner is correct? - HELD THAT - Section 10 of the TNGST Act, 1959 is entitled 'Burden of proof' and states that for the purpose of assessment of tax under the Act the burden of proving that any transaction or any turnover of a dealer is not liable to tax, shall lie on such dealer. The provision goes on to enumerate the consequence of non-discharge of the burden imposed stating that in the case of a claim of second sale, if an assessee is unable to prove that the goods have already been subjected to tax, he will be deemed to be a first seller/first purchaser. The full onus of this burden falls on the petitioner and has, admittedly, not been discharged in this case - the conclusion of the Tribunal to the effect that the levy of purchase tax is warranted in the absence of any material to support the petitioner's stand contains no infirmity and we confirm the same. Whether the turnover of Rs. 8,68,432/- disallowed by the Assessing Authority on the export sales claimed by the dealer and confirmed by the Appellate Assistant Commissioner is correct? - HELD THAT - There is a mismatch between the products purchased by the petitioner and those exported. Even if one were to take a stand that the hosiery yarn purchased by the petitioner had been utilised in the manufacture of the mens shorts that had been ultimately exported, there is no bifurcation available between the export turnover relating to mens shorts and the tops - the addition is confirmed. Whether the levy of penalty of Rs. 85,133/- by the Assessing Authority and confirmed by the Appellate Assistant Commissioner is correct? - HELD THAT - Though learned counsel for the petitioner would submit that levy of penalty is excessive, the levy is a percentage of the disputed tax alone - there are no avenue to intervene in the levy of penalty and thus confirm the same. This Writ Petition is dismissed.

Summary

Issues:
- Challenge to the order of the Tamil Nadu Sales Tax Appellate Tribunal
- Assessment of turnover for nonproduction of sale bill
- Disallowance of turnover on export sales
- Levy of penalty

Analysis:

First Issue:
The petitioner claimed purchases of hosiery yarn but failed to produce purchase bills. The assessing officer proposed to reject the turnover and levy purchase tax under Section 7A of the TNGST Act. The petitioner's affidavit filed before the Appellate Assistant Commissioner was insufficient to establish the purchases. The petitioner requested an enquiry into the transactions of the selling dealer, Park-in-Mills, but it was deemed futile as Park-in-Mills lacked necessary materials to support the petitioner's case. The Tribunal upheld the assessment, citing the burden of proof on the assessee under Section 10 of the Act. The Court concurred, stating that the burden was not discharged by the petitioner.

Second Issue:
Regarding the exemption on export sales claimed under Section 5(3) of the CST Act, the petitioner failed to establish a clear nexus between the goods purchased and those exported. The mismatch between the products purchased and exported was evident, with discrepancies in documentation. The Appellate Assistant Commissioner rejected the claim, emphasizing the lack of proof of purchase of polyester yarn for the exported goods. The Court upheld the rejection, noting the petitioner's failure to meet the statutory pre-conditions for the exemption under Section 5(3).

Third Issue:
The issue of penalty under Section 12(3)(b) of the TNGST Act was raised, with the petitioner arguing that the penalty was excessive. However, the Court found no grounds to intervene in the penalty levy, given the conclusions on the previous issues. The penalty was upheld as a percentage of the disputed tax amount. Ultimately, the Court dismissed the Writ Petition, ruling against the petitioner on all issues without awarding costs.

This comprehensive analysis of the judgment highlights the key legal arguments, findings, and conclusions on each issue raised in the case before the Madras High Court.