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TMI Blog2018 (4) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... order, dated 09.01.1998, partly allowed and Partly dismissed the appeals, as follows: "5. I heard the argument on both sides and perused the connected records. 6. The main point for determination in these cases are whether the orders of the Assessing Officer is liable to be set aside. Since these two appeals are related to the same dealer and the issues involved are one and the same dealer and the issues involved are one and the same, a common order is passed. A. The main issued in there two appeals is die development charges. The appellants are manufacturer of dies and using the dies, they manufacture components. The appeal AP.772/95 related to the same appellant in this appellate forum has been dismissed in the order dated 8.9.97. The appellants have filed written argument and stated that the order of the sales tax appellate Tribunal (Main Bench) in T.A.642/90 and 113/90 has not been considered while passing the order and insisted that these two order have to be considered. (i) It is held in AP.772/95, that the appellants have maintained separate accounts for the cost of engineering and Technical skills used in the manufacture of forges and crank shafts, as such the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said decisions are squarely applicable to the present case. Though the appellant has not maintained separate account for cost of technical skill and engineering, in as much as the die development charges are collected and maintained separately from the cost of regular dies and components, these accounts are accepted as genuine one. (iv) The appellants have also produced the order of the excise Department wherein the cost of sample die has been exempted from the levy of excise duty. These all to go to prove that there is no element of sale in the manufacture of sample dies and therefore, the development charges cannot be assessed to tax. In views of the above discussion, I set aside the assessment made of die development charges. B. Apart from this the appellants have also disputed against certain other assessments. They have not pressed for such appeal on those turnover as stated below:- AP.607/95:- Rs. 53,704-00 second sales disallowed AP.687/95:- Rs. 61,069-00 sales return disallowed. Since the appellants have not pressed for the appeal on these turnovers the assessment on these turnover are sustained. C. The appellants have also disputed against the assessment mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which cash is recovered from customers to harass loss of revenue if the party has gone back in his order. On examination of the record we have found that debit notes have been raised in the name of the customer. The expenses relate to the cost of the dies manufactured after putting in engineering and development skills, manfal labour, designs etc. For this purpose, the dealers are drawing the debt notes. In this context, we have referred to section 2(r) of the Tamil Nadu General Sales Tax Act. In explanation clauses 2 it is specifically stated that the turnover means, the amount for which goods are sold and it includes any sums charged for anything done by the dealer in respect of goods sold at the time of or before the delivery thereof. So, as per the section, any activity which has got also connection, if the sale of the finished goods should be included. In the context, our attention is drawn that as per definition of sale, only when the property in goods is transferred it attracts tax. It is contended that the sample die manufactured is not passed through the customer. When there is no transfer of property the turnover is not liable to be taxed as per the contention of the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchaser described as lot cooly charges are not includable. (80 STC 393). So we have to necessary refer to American Refrigeration's case which is relied on by the state. In that case, the Tribunal rejecting the assessee's claim to deduction from this turnover all the amounts representing engineering designing of the finding that the petitioner had charged for designing particular type of special coil but also manufactured it and supplied it to the Department. While effecting the sale, he had charged the designed fee and that design was one of the systematic activity of the petitioner and not an isolated case of rendering service. The Hon'ble High Court has confirmed the findings of the Tribunal to the effect that design fee was a pre-sale expense form part of manufacturing cost and therefore not deductible. The Hon'ble High Court has further held that mere fact that the engineering designing will be separately shown in invoices would not amply show that it would not form part of the sale price sold to the customers. The learned Advocated has contended this case law is not applicable since in that case, nothing has been brought to the notice of the High Court re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tamil Nadu General Sales Tax Act. Any pre-sale expenses are found to be includible in the sale price the question of exemption from excise duty is not a relevant factor in this case. The deletion of these turnovers by the Appellate Assistant Commissioner is found to be not acceptable. For all the four years, the turnovers are ordered to be restored. 8. PENALTY:- The Assessing Officer has levied penalty under section 12(3) of the Tamil Nadu General Sales Tax Act. The turnover is available in the books of accounts. Only with the bonafide belief that it is not the taxable turnover. This sum has not been shown in the monthly returns. As per the decision of the Madras High Court in the case of Appollo Saline Pharmaceuticals reported in 125 STC 505 and in the case of Raja Rajeswari Fine Arts in W.P.No.10201/2000 dt. 1.10.2001 no penalty is leviable when the turnover is available in the books of accounts. Accordingly, the deletion of penalty proportionately to this turnover by the Appellate Assistant Commissioner is confirmed. So, we do not order for the restoration of the penalty, as far as these turnover are concerned. 9. In fine, the State Appeals are partly allowed." 5. Being agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of India and it is pending disposal. 14. Section 12(3)(b) of the Act deals with, submission of incorrect or incomplete return and for the purpose of levy of penalty, under Clause (b), the tax assessed on the following kinds of turnover shall be deducted from the tax assessed on final assessment, (i) twenty-five per cent of the difference of the tax assessed and the tax paid as per return, if the tax paid as per the return falls short of the tax assessed on final assessment by not more than five per cent; (i-a) fifty per cent of the difference of the tax assessed and the tax paid as per return, if the tax paid as per the return falls short of the tax assessed on final assessment by more than five per cent but not more than fifteen per cent; (ii) seventy-five per cent of the difference of the tax assessed and the tax paid as per return, if the tax paid as per the return falls short of the tax assessed on final assessment by more than fifteen per cent but not more than twenty-five per cent; 15. In Appollo Saline Pharmaceuticals (P) Ltd., Vs. Commercial Tax Officer (FAC) and Others, reported in {(2002) 125 STC 505}, considering a decision of the Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me form. The legislative intention therefore, except during the period December 3, 1979 to May 27, 1993 and on and after April 1, 1996 must be taken to be to, permit the levy of penalty only in case where the assessment is a best judgment assessment made on an estimate and not by relying solely on the accounts furnished by the assessee in the prescribed return. On and after April 1, 1996 an explanation has been added below Section 12 (3) which requires the turnover relating to the tax assessed on the basis of the accounts of the assessee, to be disregarded, while determining the turnover on which the penalty is to be levied under Section 12 (3). 16. In Indira Industries Vs. State of Tamil Nadu, reported in {2014 (69) VST 139 (Mad.), this Court considered a question, as to whether, levy of penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959, was justifiable, particularly, when there was no suppression pointed out by the Revenue, that the Claim of the assessee related only to concessional rate of tax. This Court held as follows: 8. .......Thus when the turnover assessed under the assessment order is drawn from the books of accounts itself, and there being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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