w w w . L a w y e r S e r v i c e s . i n



M/S. New Prakash Metals rep. By its Proprietrix Savitha Ramesh Kumar v/s The Joint Commissioner-III (SMR) Commercial Taxes & Others


Company & Directors' Information:- SMR INDIA PRIVATE LIMITED [Active] CIN = U17290DL2012PTC237165

Company & Directors' Information:- KUMAR METALS PRIVATE LIMITED [Active] CIN = U74899DL1980PTC018257

Company & Directors' Information:- RAMESH METALS PRIVATE LIMITED [Strike Off] CIN = U28113OR1997PTC004849

Company & Directors' Information:- KUMAR METALS PRIVATE LIMITED [Strike Off] CIN = U28999KA1980PTC003849

Company & Directors' Information:- PRAKASH COMMERCIAL CO PVT LTD [Active] CIN = U65993WB1985PTC038600

Company & Directors' Information:- KUMAR METALS PVT LTD [Active] CIN = U36911WB1973PTC028719

    WP.(MD). No. 7003 of 2005

    Decided On, 18 January 2011

    At, Before the Madurai Bench of Madras High Court

    By, THE HONOURABLE MR. JUSTICE M. VENUGOPAL

    For the Petitioner: R. Subramanian, Advocate. For the Respondents: D. Sasikumar, Government Advocate.



Judgment Text

(Prayer: Writ Petition is filed under Article 226 of Constitution of India to issue a Writ of Certiorarified Mandamus to call for the records in Ref.M2/53216/96 SMR No.628/97 dated 21.10.2004 issued by the 1st respondent and quash the same.)

1. The petitioner has filed the present Writ Petition seeking the relief of Certiorarified Mandamus in calling for the records in Ref.M2/53216/96 SMR No.628/97 dated 21.10.2004 passed by the 1st respondent/Joint Commissioner-III (SMR), Commercial Taxes, Chennai-5 and to quash the same.

2. The learned counsel for the petitioner urges before this Court that the order passed by the first respondent in Ref.M2/53216/96 SMR.No.628/97 dated 21.10.2004 is a non-est and unsustainable one in the eye of law.

3. It is the contention of the learned counsel for the petitioner that the order of the second respondent/Appellate Assistant Commissioner (CT), Trichy has been passed on 30.05.1996, whereas the order of the first respondent has been passed on 21.10.2004 and indeed, Section 34 of the Tamil Nadu General Sales Tax Act, 1959 envisages suo motu powers to be exercised by the 1st respondent/Joint Commissioner-III (SMR), Commercial Taxes, Chennai-5 as per Section 34 (2) (c) of Tamil Nadu General Sales Tax Act, 1959.

4. Advancing his argument, it is the submission of the learned counsel for the petitioner that the 1st respondent/Joint Commissioner-III (SMR), Commercial Taxes, Chennai-5, while passing the impugned order dated 21.10.2004, has no jurisdiction to commence proceedings after a lapse of 5 years from the date of the order of the second respondent/Appellate Assistant Commissioner (CT), Trichy dated 30.05.1996.

5. The learned counsel for the petitioner submits that the first respondent has not recorded any reasons for invoking suo motu power and as a matter of fact, the first respondent has overlooked that in case of second sales goods, if any stock variations are found, it cannot be taken as excess or deficit one.

6. Expatiating his contentions, the learned counsel for the petitioner contends that the 1st respondent/Joint Commissioner-III (SMR), Commercial Taxes, Chennai-5 has omitted to see that the third respondent/Deputy Commercial Tax Officer, Mailam Chandai-II Circle, Trichy has made unreasonable additions in the turnover. Furthermore the 1st respondent/Joint Commissioner-III (SMR), Commercial Taxes, Chennai-5 ought to have accepted the gross profit calculation.

7. The sum and substance of the contention put forward on the side of the petitioner is that the show-cause proceedings, in the instant case on hand, commenced on 18.11.1997 and the impugned order of the 1st respondent/Joint Commissioner-III (SMR), Commercial Taxes, Chennai-5 has been passed on 21.10.2004 and after a lapse of 5 years, the first respondent has no jurisdiction to commence proceedings from the date of the order of the second respondent/Appellate Assistant Commissioner (CT), Trichy. Also, it is contended on behalf of the petitioner that show-cause proceeding has commenced on 18.11.1997 and that the impugned order of the first respondent has been passed on 21.10.2004. After lapse of 7 years, after keeping the matter pending such a long period, the concerned authority has passed the impugned order which seriously prejudices the case of the petitioner and consequently, the impugned order of the first respondent dated 21.10.2004 is vitiated and non-est in the eye of law.

8. Per contra, it is the contention of the learned Government Advocate appearing for the respondents that the petitioner's place of business has been inspected on 23.06.1994 by the Enforcement Wing Officers and excess stock has been found to an extent of Rs.31,336/- and the petitioner has reported a total and taxable turnover of Rs.4,92,655/- and Rs.Nil during the assessment year 1994-95. Also during the vehicular check by the roving squad officers on two different occasions viz., on 25.07.1994 and 17.08.1994, the petitioner has transported aluminium scrape worth of Rs.6,000/- and Rs.78,000/- without bill of sale or delivery note, for which a compounding fee or tax has been levied and collected by the department. Therefore, the third respondent has calculated the total and taxable turnover of the petitioner, on adding 19% percent towards gross profit as per accounts on the purchase suppression along with an equal addition for the probable omissions. The suppression indulged in by the petitioner is a continuous one as seen from the detection made by the department on three occasions in the months of June, July and August 1994 i.e on 23.06.1994, 25.07.1994 and 17.08.1994 respectively.

9. The learned Government Advocate for the respondents submitted that the assessment has been made as per the principles laid down in the decision reported in 57 STC 290 and being dissatisfied with the order of the third respondent, the petitioner projected an appeal before the second respondent and in appeal, equal time addition has been deleted. But on revision, the first respondent while, reviewing the order of the second respondent, as per Section 34 of the Tamil Nadu General Sales Tax Act, 1959, has set aside the order and restored the order of the third respondent.

10. The core contention of the respondents is that there is no violation of Section 34(2)(c) of the Tamil Nadu General Sales Tax Act, 1959. When the first respondent has issued show-cause notice, it has been pointed out that 'excess and deficit stocks have been noticed at the time of inspection of place of business which reveals purchase omissions and that stock variation has been arrived at by taking quantitative details and not by notional Trading Account method and that the purchase suppression of Rs.78,000/- has been noticed at the time of vehicular check works out to 16% of the unaccounted purchases to that of the total turn over reported'.

11. According to the respondents, the petitioner has not been in a position to offer any explanation as to the stock variation and also that no day-to-day stock accounts have been maintained by the petitioner and added further the petitioner, when he has transported aluminium scraps without any records, has admitted the same and has paid the compounding fees and tax.

12. Even the test purchase made on 16.11.1994 in the petitioner's place of business proved that the petitioner has not issued any sale bill for aluminium vessel which goes to show that the petitioner has been effected purchases and sales without bringing into account and not paying legitimate tax due to the Government.

13. Continuing further, the contact of the petitioner also goes to show that he has not maintained correct and complete accounts through out the year and when there is an excess stock, certainly the onus is on the petitioner to establish that the purchases effected by him have been made from the registered dealers.

14. At this juncture, it is useful for this court to refer to Section 34 of the Tamil Nadu General Sales Tax Act, 1959 which runs as follows:

'Section 34.Special Powers of Joint Commissioner of Commercial Taxes:-

(1) The Joint Commissioner of Commercial Taxes may, of his own motion, call for and examine an order passed or proceeding recorded by the appropriate authority under Section 4-A, section 12, section 12-A, Section 14, section 15 or sub-section (1) or (2) of section 16 or an order passed by the Deputy Commissioner under sub-section (1) of section 32 or sub-section (3) of section 33 and if such order or proceeding recorded is prejudicial to the interests of revenue, may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may initiate proceedings to revise, modify or set aside such order or proceeding and may pass such order thereon as he thinks fit.

Sec.34(2)The Joint Commissioner of Commercial Taxes shall not initiate proceedings against any such order or proceeding referred to in sub-section (1) if-

a) the time for appeal against that order has not expired, or

b) the order has been made the subject of an appeal to the Appellate Tribunal or of a revision in the Special Tribunal or

c) more than five years have expired after the passing of the order:

Provided that if the order passed or proceeding recorded by the appropriate authority, Deputy Commissioner referred to in sub-section (1) involves an issue on which the Special Tribunal has given its decision adverse to the revenue in any other proceedings, and an appeal to the Supreme Court against the order of the Special Tribunal is pending, the period of time between the date of the above said order of the Special Tribunal and the date of the order of the Supreme Court shall be excluded in computing the period of referred to in clause (c).

Sec.34(3)No order under this section adversely affecting a person shall be passed unless that person has had a reasonable opportunity of being heard.

Sec.34(4)In computing the period referred to in clause (c) of sub-section (2), the time during which the proceedings before the Joint Commissioner of Commercial Taxes remained stayed under the order of a Civil Court or other competent authority shall be excluded.'

15. Though a plea has been raised in the memorandum of grounds on the side of the petitioner that the impugned order of the first respondent dated 21.10.2004 is in negation of Section 34(2) (c) of the Tamil Nadu General Sales Tax Act, 1959, this court is of the considered view that admittedly, the show-cause notice has been issued to the petitioner on 18.11.1997, which is within 5 years from the date of the order of the second respondent/Appellate Assistant Commissioner (CT), Trichy dated 30.05.1996 and as such, it is candidly clear that there is no infraction of Section 34(2) (c) of the Tamil Nadu General Sales Tax Act, 1959.

16. Apart from the above, this Court pertinently quotes the relevant order of the first respondent dated 21.10.2004 which runs hereunder.

'1. During the time of inspection, excess and deficit stocks have been noticed in various different commodities. This shows that the appellants were involved in both purchases and sales suppression.

2. The stock variation had been arrived at by taking quantitative details and not by notional Trading Account method.

3. The appellants had reported a total turnover of only Rs.4,92,655.00. But, they had effected unaccounted purchases to an extent of Rs.78,000/- which is 16% of the total turnover. This purchase suppression had come to light only because of a lorry check conducted by the Department. Hence, there is scope for probable purchases without purchases bills. Substantiating this, the inspection conducted in the place of business, had revealed excess and deficit stock of good.

The Assessing Officers's order in full has to be confirmed.

For the reasons above, it is proposed to set aside the Order of the Appellate Assistant Commissioner (CT), Trichy and to restore the Order of the Assessing Officer through a show-cause notice in TNGST No.358771/94-95 dated 27.11.1995.'

17. On going through the order of the first respondent/Joint Commissioner-III (SMR), Commercial Taxes, Chennai-5, it is patently evident that the suo motu revision has been confirmed resultantly. In the impugned order dated 21.10.2004, the first respondent has inter alia stated that 'When there are excess stocks in different items, it is the duty of the dealers to prove that the purchases were from registered dealers. This has not been proved at any stage. Therefore their contention that they do not manufacture any item or they are only second sellers is not accepted.'

18. Even in the preamble portion of the impugned order of the first respondent dated 21.10.2004, the date of hearing is clearly specified as 29.09.2004 and the date of order is also mentioned as 21.10.2004.

19. Be that as it may, the ingredients of Section 34(2)(c) of the Tamil Nadu General Sales Tax Act, 1959 confers powers to the first respondent/Joint Commissioner (III SMR), Commercial Tax, Chennai-5, to initiate proceedings in revising, modifying or setting aside the order or proceeding

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mentioned in Section 34(1) of the Tamil Nadu General Sales Tax Act, 1959 and he is at liberty to pass such order as he thinks fit and proper and this special power has been vested to the first respondent as per Section 34 (1) of the Tamil Nadu General Sales Tax Act, 1959. 20. As stated earlier, the show-cause notice has been issued in the present case to the petitioner on 18.11.1997. Even though the order has been passed on 21.10.2004 by the first respondent, yet the first respondent has commenced the proceedings to revise the assessment and issued the show-cause notice dated 18.11.1997 within five years from the date of the order of the second respondent dated 30.05.1996 and therefore, there is no violation as per Section 34(2)(c) of the Tamil Nadu General Sales Tax Act, 1959 and in this regard, the contra plea taken by the petitioner is negatived by this court. 21. In view of the quantitative and qualitative discussions and on overall assessment of the facts and circumstances of the case in an integral passion, this Court has come to an inescapable conclusion that the writ petition filed by the writ petitioner is devoid of merits and consequently the same fails. 22. In the result, this Writ Petition is dismissed leaving the parties to bear their own costs. Consequently, connected M.P.Nos.7608 and 545 of 2005 are also dismissed.
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