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M/s. Sri Balamurugan Mills, Rep. by its Partner V. Jayabalan, Coimbatore v/s The Tamil Nadu Sales Tax Appellate Tribunal, Coimbatore & Another

    W.P. No. 27522 of 2007 & M.P. No. 1 of 2007

    Decided On, 18 February 2022

    At, High Court of Judicature at Madras


    For the Petitioner: S. Ramanathan, Advocate. For the Respondents: V. Prashanth Kiran, Government Advocate (Taxes).

Judgment Text

(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying for issuance of a Writ of Certiorari, calling for the records of the 1st respondent in its order in CSTA.No.211/2003 dated 28.02.2007 and quash the same as illegal.)

R. Mahadevan, J.

1. Challenging the order dated 28.02.2007 passed by the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore / first respondent in CTSA No.211 of 2003, the petitioner has come up with this writ petition.

2. The facts leading to the filing of this writ petition are as follows:

The petitioner is a dealer in groundnut and groundnut kernal, besides doing decordication work. They are assessee on the file of the second respondent. For the assessment year 1999-2000, the assessing officer assessed the petitioner on a total and taxable turnover of Rs.46,80,870/- and Rs.8,15,050/- under section 12(1)(a) of the TNGST Act. Subsequently, on 29.06.1999, the business place of the petitioner was inspected by the Enforcement Wing Officials, during the course of which, it was found that there was stock difference in respect of groundnut and groundnut kernal; and certain records were recorded by issuance of D7 receipt. Hence, the assessment was revised and the reassessment order was passed on 31.10.2001, determining the total and taxable turnover at Rs.26,88,000/- and levied penalty of Rs.1,61,280/- under section 16(2) of the TNGST Act. Challenging the same, the petitioner preferred an appeal before the Appellate Assistant Commissioner (CT), Pollachi / Appellate Authority, who allowed the appeal thereby setting aside the revision of assessment made by the assessing officer. Aggrieved over the order of the appellate authority, the State went on appeal before the first respondent / Tribunal. After hearing the arguments on both sides and upon perusal of the records, the Tribunal modified the order of the assessing officer and partly allowed the appeal by order dated 28.02.2007. Therefore, the petitioner is before this court with this writ petition for the aforesaid relief.

3. The learned counsel for the petitioner submitted that when the petitioner has filed the revised return for Rs.8,15,050/- and the same was also accepted in the original assessment order dated 28.09.1991, the first respondent / Tribunal was not correct in restoring the turnover of Rs.7,63,500/- which was estimated based on the entries in the slips, stating that there is no correlation to the suppression noticed and the turnover reported. The learned counsel further submitted that the first respondent having observed that the groundnut and groundnut kernal is taxable at the point of first purchase and having accepted and confirmed the order of the Appellate Authority in respect of deletion of stock difference estimation of Rs.62,000/-, ought not to have restored the estimated sales turnover of groundnut kernal of Rs.7,63,000/- which has been estimated on the purchase value of groundnut. It is also submitted that once the turnover, which was found at the time of inspection, has been brought to account, the restoration of equal addition made by the first respondent is arbitrary, illegal and against the provisions of the Act. Similarly, the levy of penalty under section 16(2) of the TNGST Act, would not be attracted against the petitioner. Therefore, the learned counsel prayed to allow the writ petition by setting aside the order of the Tribunal.

4. On the above contentions, we have heard the learned Government Advocate (Taxes) appearing for the respondents and also perused the materials placed before it.

5. In this writ petition, the petitioner questioned the order of the Tribunal in respect of the alleged suppression arrived at from D7 slips to the tune of Rs.7,63,500/- by the assessing officer and consequential addition and penalty. To that extent, we are inclined to examine the findings of the authorities below.

6. Admittedly, based on the inspection report submitted by the Enforcement Wing Officials, the assessment of the petitioner was revised by the assessing officer. During the course of inspection, 86 slips relating to business transactions of the petitioner were recovered by the Enforcement Wing Officials and out of the same, 13 slips revealed suppression of purchase of groundnut and groundnut kernel, which was valued at Rs.7,63,500/- by the assessing officer. Taking note of the contentions raised by the petitioner that the transactions covered under the slips were brought to accounts in the month of July and the same were reported in the return and that, the petitioner paid tax for the same, the Appellate Authority deleted the said turnover. On the other hand, the Tribunal did not accept the same, upon verifying the records and was of the view that there is no correlation between the suppression that was culled out from the D7 slips and the turnover that was taken for assessment. Accordingly, the Tribunal held that the deletion of the turnover of Rs.7,63,500/- by the appellate authority is wrong and the assessment made by the assessing officer on the turnover of Rs.7,63,500/- is restored. For better appreciation, the relevant portion of the order of the Tribunal is extracted below:

“As seen from the returns that had been filed, it is seen that the dealer had not reported the turnover in the month of July and paid the tax due thereon and it had also been reflected in the accounts. Further more the dealer had filed a statement while producing the accounts for self-assessment and the turnover of Rs.17,29,750/- was shown as the purchases of groundnut and it had filed at page 101 of the asst. file. In the statement that was filed at page 101 of the asst file, the dealer had shown that he had effected purchase of groundnut by raising bought note on six occasions namely by bought note No.380/1.4.99, 381/3.4.99, 382/6.4.99, 383/9.4.99 for Rs.15,000/- each and bought note No.384/24.6.99, 385/24.6.99 for Rs.35,000/- each. So this Rs.60,000/-for the month of April and Rs.70,000/- for the month of June had been reported to the department by return as stated at an earlier dates. But when the matter was taken up for self assessment on 28.9.01, the dealer had filed a revised return on 13.9.01 disclosing the turnover of Rs.8,15,050/- shown as first purchase and tax paid. When the accounts of the dealer show the fact that the bought note purchases amounted only to Rs.1,30,000/- it is not known how the dealer had filed a return for Rs.8,15,050/- which is not supported by any documents as per the dealer's own statement. The suppression was noticed during the course of inspection on 29.6.99 and the D7 records that had been recovered during the course of inspection was processed on 21.7.99 and it had been filed at page 57 to 61 of the asst file and in all the statements that had been given as explanation to the slips, the dealer had invariably in all cases has stated that the said transactions noted in the slips had not been brought to accounts. So this shows the fact that no records had been maintained by the dealer and the Appellate Assistant Commissioner's statement that the dealer had disclosed the turnover in the return for the month of July and paid taxes is against the facts of the case. The suppression that was noticed under D7 slips amounted to Rs.7,63,500/-. There is no explanation for the above said turnover from the dealer which ought to have been gone into by the Appellate Assistant Commissioner and he ought to have verified the records to come to a conclusion. When the dealer had clearly filed a statement of purchases which had been filed at 101 of the asst file, how the Appellate Assistant Commissioner had come to a conclusion that the transaction had been accounted for in the accounts and the tax had been paid and there is also no correlation between the suppression that was culled out from the D7 slips and the turnover that was taken for assessment. So the turnover that was assessed by the Assessing Authority under self-assessment scheme has no correlation at all to the suppression that was noted from D7 records. So the deletion of the turnover of Rs.7,63,500/- by the Appellate Assistant Commissioner is wrong and the assessment made by the Assessing Authority on the turnover of Rs.7,63,500/- is restored.”

We find no reason to differ with the view taken by the Tribunal, as it was based on the material records available before the same.

7. As regards the issue relating to addition, the assessing officer made two times addition on the suppression amounting to Rs.17,92,000/-. The appellate authority deleted the said addition. Whereas the Tribunal

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after having found that the period covered in the slips for one month i.e., from 12.04.1999 to 16.05.1999 and the inspection took place in the month of June i.e., on 29.06.1999, observed that the left out months are only May and June, for which two times additions had been made. Considering the gravity of suppression, the Tribunal restricted the addition to equal time, which in the opinion of this court, appears to be correct and the same warrants no interference. 8. In respect of levy of penalty, the Tribunal was of the view that inasmuch as the suppression is proved by the recorded evidence, the same is warranted, however, restricted to the actual suppression and is accordingly, modified. We find no fault with the finding of the Tribunal in this regard. 9. In such view of the matter, the writ petition deserves to be dismissed and is accordingly, dismissed. No costs. Consequently, connected miscellaneous petition is closed.