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TMI Blog2022 (11) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... ut reasonable excuse to make use of the goods for the declared purpose, such person is a guilty of such offence and penalty may be imposed on him. On going through the Circulars of the Principal Commissioner and Commissioner of Commercial Taxes and the instructions therein are no doubt binding on the officers of the Department. However, they are not binding either on the Higher Jurisdiction Forum such as Tribunal, High Court or the Supreme Court in terms of the decision of the Hon'ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING WIRE INDUSTRIES [ 2008 (10) TMI 5 - SUPREME COURT] . Section 23 of the Act is elastic in nature. Discretion of power is vested with the Authority to impose penalty which is a maximum penalty. Discretion vested with a quasi jurisdictional authority cannot be taken away by a Circular. Therefore, Circular / Clarification of the Principal Commissioner and Commissioner of Commercial Taxes which is contrary to the provisions of the Act is not binding on the Court - The activity undertaken by the petitioner would have amounted to manufacture within the meaning of Central Excise Act, 1944 with introduction of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout Form 'XVII' in connection with its business. It was concluded that on perusal of Form 'XVII-A' filed, it showed that the petitioner had issued Form XVII for use in manufacture of goods for the purchase of consumables, i.e. furnace oil to the tune of Rs.10,24,025/- during 2000-2001 for being used for dyeing fabrics. 5. It was therefore concluded that the activity undertaken by the petitioner on job work basis for dyeing fabrics did not amount to manufacture of goods for sale by the consumer and therefore, the petitioner was not eligible to procure furnace oil against Form XVII under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959. 6. It was concluded that there was no sale by the petitioner and therefore it was proposed to invoke first proviso to Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 to levy difference of tax at 13%, i.e. 16% - 3%, on the aforesaid turnover of Rs.10,24,025/-. It was also concluded that the petitioner had availed the concessional rate of tax under Section 3(5) of the Tamil Nadu General Sales Tax Act, 1959 by wrongly issuing Form XVII Declaration for purchasing machineries as per Form XVII-A during the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorized representative, there was no discussion for coming to the conclusion to levy maximum penalty under Sec.23 either in the preassessment notice or in the assessment order. It is also seen that the appellant had disclosed the every fact of issue of Form XVII on the purchase of Furnace Oil and Machinery. The reasons adduced by the assessing officer for levying tax under proviso to Sec.3(3) were that the appellant was not a manufacturer but was only doing job work. As such the usage of Form XVII to buy the goods at concessional rate was incorrect. In this connection I find that there was mutual mistake on the part of the assessing authority also. Because after fully aware of the fact that the appellant was only doing job work and not eligible to buy any goods by issuing Form XVII, the forms should not have been sold to the appellant. 5. As claimed by the authorized representative the Principal Commissioner and Commissioner of Commercial Taxes in Ref.No.02/91364/2000 dated 05.01.2001 issued circular instructions to the assessing officers under Sec.28-A of the Act. In this circular the Commissioner of Commercial Taxes issued instruction to the assessing officers that f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sales under the TNGST Act and also under the CST Act. In the same way, the same also authorize the manufacturers to effect machinery of capital goods nature required for the manufacturing venture availing concessional rate of tax U/S.3(3). So when the respondent dealers business venture is not once of manufacturing, they are concluded as not eligible to effect the purchase of the said materials. Therefore their business venture is such, they are not permitted by Section 3(3) to effect the purchase of materials involved. Hence, misuse of Form XVII declaration is very well established by wrongly availing the concessional rate of tax for the purchase of the said materials made as if they are manufacturers. Therefore, the yard stick for the levy of 23 penalty considering the balance of tax cannot be accepted as correct one. Further, the levy of penalty U/S 23 stands entirely on a different footing. Therefore, the respondent dealers have misused Form XVII declarations by effecting the purchase of the said goods U/S/3(3) 23(5) to make use of the same for manufacture and their venture is not at all a manufacturing one to enable them to effect the purchase of the said materials U/S.3(3). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without using it in the manufacturing process within State. In case the diversion is detected by the Department and not disclosed voluntarily by the dealer, the penalty may be levied at 5% of course the difference in tax will be collectable in both cases. 13. It is submitted that based on the above Circular, the second respondent Appellate Assistant Commissioner has correctly reduced the rate of penalty to 5%. However, the first respondent Appellate Tribunal has failed to note the above Circular, ignored the same without considering and reversed the well considered order of the second respondent Appellate Assistant Commissioner vide impugned order. Therefore, the impugned order is liable to be quashed and the order the second respondent is liable to be confirmed. 14. This Writ Petition is opposed by the learned Special Government Pleader (T) on the ground that the petitioner has accepted that it has violated the provisions while procuring furnace oil at the concessional rate of tax on the strength of Form XVII under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 and therefore, the imposition of penalty under Section 23 of the Tamil Nadu General Sales Tax Act, 1959 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whom the goods are sold containing the prescribed particulars in the prescribed form obtained from the prescribed authority; Provided further that any dealer who, after purchasing the goods in respect of which he had furnished any declaration, fails to make use of the goods so purchased for the purpose specified in the declaration but disposes of such goods in any other manner, shall pay the difference of tax payable on the turnover relating to sale of such goods at the rate prescribed and three per cent: Provided also that the dealer purchasing the goods maintains a separate stock account for each of the goods purchased by him showing such particulars as may be prescribed. Section 3(5) Notwithstanding anything contained in subsection( 2), but subject to the provisions of sub-section (1), the tax payable by a dealer in respect of sale of any of the goods mentioned in the Eighth Schedule to any other dealer for installation of, and use in his factory site situate within the State for the manufacture of any goods shall be at the rate of three per cent on the turnover relating to such sale; Provided that the provisions of this sub-section s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (e) of sub-section (2) of section 45, the assessing authority may, after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one and a half times the tax payable on the turnover relating to the sale of such goods at a rate which is equal to the rate prescribed in the First Schedule less three percent: Provided that no prosecution for an offence under section 45 shall be instituted in respect of the same facts on which a penalty has been imposed under this section. 21. As per Section 45(2)(e) of the Act, if any person who after purchasing any goods in respect of which he has made a declaration under the second proviso to Sub-Section (3) or Sub-Section (5) of Section 3 fails without reasonable excuse to make use of the goods for the declared purpose, such person is a guilty of such offence and penalty may be imposed on him. Section 45(2)(e) of the Act as it stood then reads as under:- Section 45. Offenses and Penalties. __ (1)....... (2) Any person who __ (a)........... ............... (e) after purchasing any goods in respect of which he has made a declaration un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r angle, a circular which is contrary to the statutory provisions has really no existence in law. 24. At the same time, we are of the view that Section 23 of the Act is elastic in nature. Discretion of power is vested with the Authority to impose penalty which is a maximum penalty. Discretion vested with a quasi jurisdictional authority cannot be taken away by a Circular. Therefore, Circular / Clarification of the Principal Commissioner and Commissioner of Commercial Taxes which is contrary to the provisions of the Act is not binding on the Court. 25. The activity undertaken by the petitioner would have amounted to manufacture within the meaning of Central Excise Act, 1944 with introduction of Section 3A of the Central Excise Act, 1944 with effect from 14.05.1997 which was later omitted by Finance Act, 2001. The dispute pertains to the Assessment Year 2000-2001. 26. By virtue of Section 3A of the Central Excise Act, 1944, processing of dyeing was made liable to tax and tax was payable based on the annual capacity of production of the machine. In our view, the petitioner being a manufacturer would have been compelled to take out a Central Excise Registration during the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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