(Prayer: Appeal presented to revise the order of the Joint Commissioner dated 27.11.1998 passed in SMR. 187/98.)
CHITRA VENKATARAMAN, J.
The above Tax Case Appeal is filed by the assessee. The assessment year under consideration is 1992-93. The appellant herein is a dealer in pre-recorded cassettes. In respect of turnover offered for claiming second sales exemption, the Assessing Authority found that the dealer had purchased stickers and inlay cards. The Assessing Authority verified the purchases and found that blank papers and stickers were purchased from unregistered dealers and printed by another dealer by paying labour charges. The printed inlay cards and stickers were laid in the cassettes and sold. Thus the turnover pertaining to the purchase of blank papers and stickers to the tune of Rs.4,98,239/- was sought to be assessed under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959. The Assessing Officer also levied penalty under Section 12(5)(iii) of the Tamil Nadu General Sales Tax Act.
2. Aggrieved by the same, the assessee went on appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner agreed with the assessee's case and pointed out that as the assessee was not engaged in the manufacturing activity, Section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959 would not apply to the facts of this case.
3. Finding the order of the Appellate Authority as prejudicial to the interest of the Revenue, the Joint Commissioner initiated Suo Moto Revision proceedings by issuing a show cause notice to set aside the order of the Appellate Assistant Commissioner and to restore the order of the Assessing Authority. The Joint Commissioner found that in the course of the business activity of selling recorded cassettes, the assessee purchased white boards and stickers from unregistered dealers, got them printed and used such printed materials as inlay cards. The name of the musicians and other details are printed on such inlay cards to identify the cassettes and the contents therein. The Joint Commissioner viewed that since the purchase of white boards and stickers were from unregistered dealer and the same were used in the sales of cassettes, Section 7-A (1)(a) of the Tamil Nadu General Sales Tax Act, 1959 was attracted. The assessee objected to the same. However, the Joint Commissioner reversed the order of the Appellate Assistant Commissioner and restored the order of the Assessing Authority by holding that as the purchase of the blank papers and stickers were from the unregistered dealers and printed inlay cards and stickers were pasted on the cassette and sold as such, Section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959, stood attracted. Thus, the order of the Assessing Authority both on the aspect of assessment and on levy of penalty was confirmed.
4. Aggrieved by the same, the assessee has come before this Court with the above Tax Case Appeal.
5. Learned counsel for the assessee pointed out that to the admitted fact that the assessee had purchased pre-recorded cassettes from the registered dealer and submitted that the mere fact of purchasing white boards and stickers for the purpose of attractive package label, by itself, would not result in any manufacture, as regards the sale of the cassettes. Consequently, when the sale of cassettes enjoys second sale exemption, the question of assessing the purchase of white boards and stickers from unregistered dealer would not come for assessment under Section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959. Having regard to the admitted fact that the pre-recorded cassettes are from the registered dealers, there being no new manufacture, the question of invoking Section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959 in respect of purchase of white boards, did not arise. In support of his contention, he also produced a sample of cassettes sold by the assessee.
6. We have gone through the order of the Assessing Authority, Appellate Authority as well as the order passed by the Joint Commissioner.
7. It is seen from the order of the Appellate Assistant Commissioner that the Assessing Officer had accepted the fact that the assessee had purchased recorded cassettes from the registered dealers. However, the assessee had not sold the recorded cassettes as such. On the other hand, the assessee packed them in a plastic case with printed materials to identify the name of the singer as well as the content of the cassettes. In order to make the recorded cassettes marketable under its name, the assessee had pasted its name therein, apart from printing the details of contents of the recorded cassettes by purchasing inlay cards as well as stickers from unregistered dealers, got them printed and pasted them in the plastic case, in which recorded the cassettes were laid and sold. A look at the cassettes placed before this Court shows that the ownership of the cassettes were vested with the assessee and that the sale is under the brand name of the assessee. Given the fact that the assessee had thus gone further on the sale of the cassettes by putting them in the plastic case with its name printed therein, with other details of the contents by getting them printed on the blank papers purchased, the provision of Section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959, stands attracted, particularly on the aspect of the purchase of the white card boards from unregistered dealers and printed with materials for further pasting them on the cassettes for sale. On the given facts as stated above, we do not find any ground to disturb the order of the Joint Commissioner.
8. Even though learned counsel for the appellant insisted that there is no manufacture, a reading of Section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959, shows that purchase tax stands attracted to the transaction when a person purchases materials from unregistered dealers used them in the manufacture of other goods for sale or otherwise. Given the fact that the section 7-A(1)(a) of the Act applies not only to a case of manufacture of other goods for sale, but also to cases falling under 'otherwise', which means, dealing with the materials purchased in any other manner too, we have no hesitation in holding that the purchase of white boards from the unregistered dealer and got them printed and pasted in a plastic case, in which cassettes are laid and sold, certainly would fall under the term 'otherwise' for the purpose of making levy under Section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959. Accordingly, we uphold the order of the Joint Commissioner as regards the levy of tax under Section 7-A(1)(a) of the Tamil Nadu General Sales Tax, 1959.
9. As regards levy of penalty under Section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, it is not denied that the tur
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nover was available in the books of accounts and on a bona fide impression as to the non liability the said turnover was not included in the taxable column. Learned counsel for the assessee placed reliance on the decision reported in 125 STC 505 - APPOLLO SALINE PHARMACEUTICALS PRIVATE LIMITED v. COMMERCIAL TAX OFFICER (SAC) AND OTHERS and 28 STC 700 - STATE OF MADRAS v. S.G.JAYARAJ NADAR AND SONS wherein, it is held that no levy of penalty is warranted on the assessment made solely relying on the turnover available in the books of accounts. Following the above said decision, we set aside the order of penalty imposed under Section 12(5)(iii) of the Tamil Nadu General Sales Tax Act. 10. The Tax Case Appeal is partly allowed to the above extent. No costs.