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TMI Blog2022 (12) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... h sweets and hotel. There is not even an iota of material evidence adduced to establish that Sree Annapoorna Sweet stall is the sister concern of the petitioner herein. The act of the petitioner herein is an attempt to swindle exchequer's money by evading payment of tax and if the contention of the petitioner that Tirupur Sree Annapoorna Hotel and Sree Annapoorna Sweets are independent entities is accepted, then the term sister concern will become diluted and all the firms will adopt the same tactics of creation of one or more sister concerns under one umbrella with different names and claim the benefit of tax. In that event, it will defeat the real intention of the legislature. The Assessing Authority, in support of his assessment by clubbing both units as one, had stated that based on the divulgence of the petitioner that Sree Annapoorna Sweet Stall got merged with Tirupur Sree Annapoorna Hotel with effect from 01.04.1997, common assessment was made by branding them as a single unit. Even prior to that, the petitioner was not in possession of valid registration certificate and therefore, it cannot be contended that the petitioner is entitled to the tax benefit for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1999 and in the grounds of appeal of the petitioner, it was stated thus: i) the 3rd Respondent, on the basis of the cash flow found with the cashier on a particular day, erroneously worked out the sales turnover for six months and the sale of a single day could not be the standard calculation for the entire period of six months, as, in a hotel business, there is every possibility of fluctulation of sales turnover on various factors, such as seasonal factors, festival seasons, etc.; ii) the exempted sale of sweets and karams amounting to Rs.14,21,059/- belonging to another concern cannot be added to the petitioner's concern, as, food, which is a general term, cannot denote only meals in the light of the judgment of Andhra Pradesh High Court in the case of Jaya Food Industries (P) Ltd., vs. Commercial Tax Officer, Nampally Circle, Hyderabad, reported in (1991) 82 STC 319 by holding that food ordinarily cannot what can be readily eaten; which is consumed straightaway going into some sort of processing . iii) the petitioner's sister concern, namely, Sri Annapoorna Sweets, a partnership firm registered with Registrar of Firms, Tirupur, is a separate legal ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Hotel including the sweet stall can be considered as a single entity only when exemption was granted by introduction of Entry 48 of Part B of Third Schedule to the TNGST Act, was utter vague and the reasons attributed by the 1st Respondent for restoration of the order of the 3rd respondent are far from imagination. 6. Thus, it was argued that the order of the 1st Respondent is devoid of merits and against the principles of natural justice. 7. The 3rd respondent has filed a counter affidavit, in which it has been inter alia stated as follows: i) At the time of finalization of assessment for the year 1992-1993 and 1995-1996, it was noticed that both the petitioner concern and and Sree Annapoorna Sweets were located in the same premises by sharing the common kitchen, even though there were two accounts for evading payment of taxes. It was found that there was no bifurcation of salary of employees and electricity meters and the amount for sweet sales and hotel section was received in the cash counter of the Hotel section only; ii) Even though the petitioner had accepted the clubbing of sales turnover for the year 1997-1998 onwards, such method of business ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity on the reasoning that both firms are situated in the same premises and there cannot be two different rents for the same premises having two different rent agreements and payments to the owner of the building. In the given ciccumstances, no fault can be attributed to the action of the Assessing Authority for clubbing the turnover pertaining to the sister concern of the petitioner with that of the petitioner's hotel and it cannot at any stretch of imagination be said to be incorrect. It was further contended that the petitioner herein, in the guise of formation of a sister concern without Registration Certificate cannot be permitted to cause loss to the Revenue and to evade payment of tax and therefore, an average sales for hotel section was worked out purely in the interest of Revenue. 9.1. It was also contended that after witnessing the commonality of business transaction carried out in the premises, no proudent man would dare to say that it was a different entity, especially when there was a common cash counter for collection of amount towards sales of both concerns. Except having separate books of account and raising bills, the entire business activities were carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept for their common owners, legally or financially, they are not related to each other. Though it is permitted to have close affiliations with another company with a separate name and personnel and both companies can be owned by the same parent, the paremeter attributed to Sister companies is that it should function independently of one another in its entirety. 13. A perusal of the assessment order unravels the fact that the dealer, namely, Tirupur Sree Annapoorna Hotel had, though, maintained separate accounts for sweet stall and hotel, there was no set up of detached kitchen and even both concerns were functioning in the same site. There was no proof adduced regarding disbursement of salary to the employees under different salary slips and on scrutiny of bills, it came to light that bills for common telephone expenditure and electricity charges were raised. Above all, there was a common cash counter for collection of sale amount in respect of both sweets and hotel. There is not even an iota of material evidence adduced to establish that Sree Annapoorna Sweet stall is the sister concern of the petitioner herein. The plea raised that even Income Tax Department assessed the turn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Tirupur Sree Annapoorna Hotel with effect from 01.04.1997, common assessment was made by branding them as a single unit. Even prior to that, the petitioner was not in possession of valid registration certificate and therefore, it cannot be contended that the petitioner is entitled to the tax benefit for the previous year. 17. It is saddening to note that tax evasion has been mushrooming in our State / Country day- by-day, which is purely illegal and such evasion includes hiding of true income and portrayal of false income, not reporting cash flow, etc. The companies / firms / entities, which evade payment of tax are liable to be punished under criminal charges with substantial penalties. It is pertinent to state that taxes are the main sources of income for the Government to concentrate on the welfare of the people and the monies can be invested in various development projects. The firms, which pay taxes equally find ways and means not to pay it also as that of the petitioner herein, on account of which, our State / Country has been facing massive problem. According to a report of National Restaurant Association of India (NRAI), hotel business is the fastest-growing one in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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