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TMI Blog2018 (5) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... cts as deduced from the material on record are that Tvl.Mangal Marbles, dealer in Marbles Stone, were assessed, on a total and taxable turnover of ₹ 24,10,111/- and ₹ 23,81,033/- respectively, for the assessment year 1994-95. However, the Assessing Authority has enhanced the turnover of the respondent, based on the inspection conducted in their place of business on 04.03.1994. Contending inter alia that the dealers had not maintained a detailed closing stock inventory or day-to-day stock account, he had arrived at the closing stock value as on 31.03.1994 as ₹ 6,10,377/- and arrived at the purchase suppression of ₹ 5,21,339/-. But the respondent had shown the closing stock as per trading account, for the year 1994-95 on ₹ 11,22,716/-. Therefore, the assessing authority had arrived at the sales suppression and the estimated sales suppression and levied tax on the respondent and also penalty of ₹ 1,22,796/-, under Section 12(3)(b) of TNGST Act, 1959. 3. Aggrieved over the assessment, the dealer, filed an appeal in A.P.No.60 of 1997, before the Appellate Assistant Commissioner (CT), Coimbatore, disputing the 1% addition made for defects; estimatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94 is treated as ₹ 11,22,716-00 against ₹ 6,10,377-00 estimated by Enforcement Wing Officers and the sales estimated on this basis treating the difference as purchase suppression and adding Gross Profit, thereafter, there is no necessity to estimate further suppression for the year 1994-95. As the entire closing stock as on 31.3.1994 as reported by the appellants have been taken into consideration and assessed, there is no necessity for further estimation. In view of the above, I delete the estimated suppression made. The appellants are eligible for consequential relief in penalty also on the tax due on the turnovers deleted by me. The defects enumerated vide (i) to (iii) of page 2 of assessment order are material defects warranting addition. Hence, I sustain the 1% addition made to book turnover. In fine, the appeal is modified. 4. Being aggrieved the same, the respondent has preferred C.T.A.No.463 of 1997, before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, along with connected appeals. While confirming the order passed by the Appellate Assistant Commissioner in sustaining the actuals, after deleting the addition made for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : ₹ 20,500-00 Wages for cutting Polishing : ₹ 34,600-00 Total : Rs.36,84,272-00 Less: Actual stock on 4.3.94 : ₹ 8,38,874-00 Value of goods sold : Rs.28,45,398-00 Add: 18% Gross Profit derived as per books : ₹ 5,12,172-00 Estimates sales for the period : Rs.33,57,570-00 Sales recorded upto 4.3.94 : Rs.28,04,873-00 Actual suppression of sales @ 16% : Rs.5,52,697-00 8. Basing on the above inspection report, suppression was arrived at as given below: Actual suppression of sales for 1993-94 : Rs.5,52,697-00 Add Estimated suppression for the year : Rs.5,52,697-00 Total turnover assessed u/s.16. Rs.11,05,394-00 at 16% Penalty at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTA No.464/97 (1994-95): i. Disputed Turnover Rs.2,43,050/-@8% Rs.4,13,842/-@16% : Rs.6,56,892/- ii.Penalty u/s.12(3)(b) : Rs.1,08,361/- Issue No.I: CTA 462/97 Rs.5,52,697/- CTA 463/97 Rs.6,15,180/- CTA 465/97 Rs.6,64,659/- CTA 464/97 Rs.6,56,892/- 11. The learned Authorised Representative would argue that the entire addition hings around the shop inspection made on 4.3.94, and the alleged suppression has only been notionally arrived by the inspecting officers, which was adopted by the Assessing Officer and erroneously confirmed by the first appellate authority. He would further argue that the authorities below ought to have noted that the alleged various were not quantitatively arrived at but only notionally. Further, the learned Authorised Representative would emphasis the fact that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penal provisions, concrete evidences of suppression either in purchases or sales is a condition precedent and in the absence of such evidences, penalty is not sustainable. In other words, the authorities below have failed to follow the dictum that the levy of penalty is not automatic but is dependent on existence of element of mensrea which is conspicuously absent in the instant case. The learned Authorised Representative would further emphasis the point that the penalty has been levied purely and solely based on an arithmetical calculation without even aniota of evidence of suppression either in purchase or sales in any form of documents. The authorities below also failed to note that the turnovers based on which the alleged suppression has been arrived at, are all available in the books of accounts produced before the Departmental Officers and thus the levy of penalty directed to be made is benefit of validity and therefore prayed to set aside the same. 13. It is to be noted that the entire assessment relating to the assessment year 1993-94 and 1994-95 relating to the appellants Tvl.Mangal Marbles, Coimbatore and Classique Marbles, Coimbatore made u/s.12 and 16 i.e.both revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... items in the dealers turnover, the assessment cannot be regarded as based on the best judgment and penalty can be levied in respect of such items. Whereas the account books are accepted along with other records, there can be no ground for making a best judgment assessment. In the case on hand, no turnover outside the books had been detected by the Assessing Authority. In 13 STC 686, in the the case of Deputy Commissioner of Commercial Taxes, Madras Division v. Manohar Brothers, it was held that the non-obtaining of Form C will have the consequence of the assessee not obtaining the benefit of Section 8(1) it would not in any way vitiate the return or render it incomplete or defective. Referring to the decision reported in 94 STC 157, of their Lordships of the Madras High Court in the case of State of Tamil Nadu v. Indian Silk Traders, the learned Authorised Representative, for the appellants had further argued that the bonafides of the assessees have to be gone into before imposing the penalty. Their Lordships have also referred to the decision of the Apex Court in 45 STC 197 in the case of Cement Marketing Company of India Limited vs. Assistant Commissioner of Sales Tax, according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative intention therefore, except during the period 3.12.79 to 27.5.93 and on and after 1.4.96 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 1.4.96 an explanation has been added below Section 12(3) which requires the turnover relating to the tax assessed on the basis of the account of the assessee, to be disregarded, while determining the turnover on which the penalty is to be levied under Section 12(3). 18. Therefore, the case on hand relates to the assessment years 1993-94 and 1994-95 in which the assessment was made on the basis of the accounts and not based on any other materials and were only estimates. Therefore, it could be regarded as an assessment made u/s.12(1) to which the penal provisions of Sec.12(3) are not attracted. Therefore, under the clear facts and circumstances of the case and relying on the decisions of the Hon'ble High Court and Apex Court, if the above facts are taken into consideration, we have no hesitation to hold that the amended provisions of the TNGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal has erred in deleting the penalty, in view of the fact that the levy of penalty, under Section 12(3)(b), is not called for, as per the amended provisions of Section 12(3)(b) of the TNGST Act and therefore, levy of penalty is automatic and it should be levied, when there is balance of tax payable to the Government. Heard the learned counsel appearing for the petitioner and the materials available on record. 10. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account books was reiterated by the Supreme Court in the case of Commissioner of Sales Tax, Madhya Pradesh Vs. H.M.Esufali H.M.ABDULALI {(1973) 32 stc 77}. 7. Though other sub-Sections of Section 12 were amended by the State Legislature subsequent to the date of the judgment in the case of Jayaraj Nadar Sons {(1971) 28 STC 700 (SC), Sections 12 (1) and 12 (2) have remained in the same 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). 12. 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 pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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