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TMI Blog2018 (4) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... ision is filed to revise the order dated 21.09.2004, made in C.T.A.No.431 of 2001, on the file of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore. 2. Facts as deduced from the material on record are that Tvl.Vinayagar Cotton Company, Tirupur, respondent herein are dealers of Cotton Yarn, Cotton lint Hosiery Cloth and the Assessing Officer vide order in TNGST No.2381891/98-99 dated 03.07.2000, has determined the total and taxable turnover of the respondent/dealer viz Tvl.Vinayagar Cotton Company, Tirupur, as ₹ 2,45,08,071/- and ₹ 2,52,706/- as against the total and taxable turnover of ₹ 2,45,08,071/- and Rs. NIL respectively, reported by them. The respondent has purchased cotton lint, cotton cloth and cotton yarn from local registered dealers and effected second sales. The Assessing Officer has found that though at the bottom of the invoice, it was noticed that this yarn is sending for sending knitting / fabrication purpose , the yarn was purchased by them and resold locally and hence, one such purchase made for ₹ 2,15,435/- is not permissible for exemption and thus, added 2% towards freight and 15% towards gross profit and as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proves that this sales had already suffered tax under this Act. In the case on hand the appellants have not discharged this burden of proof. On the other hand the assessing officer has proved with records that in the purchase bill there is no collection of tax and that there is specific mentioning about the sending of the goods for knitting / fabrication purpose. Inasmuch as the purchase bill is available, the appellants cannot deny but they have to accept this conclusion of the assessing authority. The fact remains that in this ale bill the seller has not charged tax and he has mentioned about sending the goods for knitting / fabrication purpose. It is proved that this sale has not been subjected to tax. The appellant have not filed any affidavit from the seller as to how this transaction was accounted for by them. He has not proved with any records as to why there is a mentioning about the sending of the goods for knitting / for fabrication purpose . In view of the above it is proved that the appellants are to be treated as first sellers of the yarn purchased. Inasmuch as the appellants have camouflaged the first sales, I hold that the penalty levied under Sec.12(3)(b) is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced as evidence for the purchase of yarn made from the said dealer contains no evidence for collection of tax. Further, there is specific mention in the bill that the goods involved is sent for knitting and fabrication purpose. Therefore, the same indicate that there is no conclusive evidence that the sellers effected the sales of the yarn and the same is liable to tax. Evidences produced by the appellant have not indicated the sellers are genuine registered dealers liable for payment of tax. But the evidences produced mention the yarn involved as sent for knitting and fabrication purpose. Therefore, such evidences cannot be treated as conclusive evidence for the status of the selling dealers as registered dealers and also for the transaction as taxable sales. Hence the assessment made on the disputed turnover as first sales at the hands of the appellants for their inability to prove the earlier purchases made from genuine dealers and the payment of tax on the relevant sales involved is proved as taxable sales. Hence the disputed turnover held as first sales is confirmed. 7. The next issue relates to 12(3)(b) penalty levied at ₹ 15,162/-. The appellants have argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional Government Pleader that the tribunal failed to note that the assessment was one made to the best of judgment because, the taxable turnover was not reported by the dealers to the Department, and the tax due thereon was not paid till the time of final assessment, that the turnover was brought to assessment by the Assessing Officer only on final assessment. this warrants levy of penalty under Section 13(3)(b) of the TNGST Act in view of the fact that there was a difference of tax assessed with that of the tax paid and there was balance of tax payable by the dealers. 9. Learned Additional Government Pleader (Taxes), further submitted that the Tribunal ought to have seen that the Assessing Officer had levied the penalty in as much as the dealer have not reported the above turnover and paid tax as prescribed under the Act which amounts to filing of incorrect and incorrect return hence, the assessment made falls under Section 12(2). Consequently, the penalty under Section 12(3)(b) is automatic. 10. Further, the learned Additional Government Pleader submitted that the tribunal erred in deleting the penalty on the view that the levy of penalty under Section 12(3)(b) is not ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing authority that penalty can be levied. It seems to us that the High Court came to the correct conclusion because sub-sections (2) and (3) have to be read together. Sub-Section (2) empowers the assessing authority to assess the dealer to the best of its judgment in two events: (i). if no return has been submitted by the dealer under sub-section (1) within the prescribed period, and (ii). If the return submitted by him appears to be incomplete or incorrect. Sub-Section (3) empowers the assessing authority to levy the penalty only when it makes an assessment under sub-Section (2). In other words, when the assessing authority has made the assessment to the best of its judgment, it can levy a penalty. It is well known that the best judgment assessment has to be on an estimate which the assessing authority has to make not capriciously but on settled and recognised principles of justice. An element of guess-work is bound to be present in best judgment assessment but it must have a reasonable nexus to the available material and the circumstances of each case: [see State of Kerala Vs. C.Velukutty {(1966) 17 STC 465 (sc)}. Where account books are accepted along with other records, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a specific concealment alone, the purpose of addition, invite the penal provisions under the Tamil Nadu General Sales Tax Act, 1959. In the decision reported in [2002] 125 STC 505 (Mad) (Appollo Saline Pharmaceuticals (P) Limited v. Commercial Tax Officer (FAC)) this court pointed out that when the assessment is based on the accounts turnover, the question of levy of penalty does not arise. 9. In the circumstances, applying the said decision reported in [2002] 125 STC 505 (Mad) (Appollo Saline Pharmaceuticals (P) Limited v. Commercial Tax Officer (FAC)) and the Explanation to section12(3)(b) of the Tamil Nadu General Sales Tax Act, the order of the Sales Tax Appellate Tribunal in levying penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 is set aside and the tax case (revision) is allowed. No costs. 15. In Tax Case Revision No.186 of 2009, dated 28/7/2016, between Tvl. Shyam Air Fridge, Vellore and The State of Tamil Nadu, rep. By The Deputy Commissioner (CT), Vellore, on the facts and circumstances of the case, at para No.18, a Hon'ble Division Bench of this Court held as follows:- Levy of penalty would not be justifiable, if at th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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