Madras High Court
Tvl. Benz Automobiles (P) Limited vs The State Of Tamil Nadu on 3 December, 2021
WP No. 36139 of 2005
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 03.12.2021
CORAM
THE HONOURABLE MR. JUSTICE R. MAHADEVAN
AND
THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ
Writ Petition No. 36139 of 2005
and
WP.MP.No.38992 of 2005
Tvl. Benz Automobiles (P) Limited
Rep by the Managing Director
C/o Benz Towers, C.C. Road,
Salem – 636 001 .. Petitioner
Versus
1. The State of Tamil Nadu
Rep. by the Secretary
Dept. of Commercial Taxes and
Religious Endowments
Fort St. George
Chennai – 600 009
2. The Secretary
Tamilnadu Sales Tax Appellate Tribunal
(Additional Bench)
Coimbatore – 18
3. The Appellate Assistant Commissioner (CT)
Salem
4. The Commercial Tax Officer
Salem Town (South)
Salem. .. Respondents
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WP No. 36139 of 2005
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 second
respondent in CTA 138/03 dated 08.08.2005 and quash the same as illegal.
For Petitioner : Mr. Rajesh
For Respondents : Mr.N.R.R. Arun Natarajan
Special Government Pleader (Taxes)
ORDER
(Order of the Court was made by R.MAHADEVAN, J.)
The petitioner has filed this writ petition to quash the order of the
Second Respondent-Tribunal made in CTA No. 138/03 dated 08.08.2005.
2. The petitioner is a dealer in four wheelers automobiles parts,
tractor parts and tractor engine parts and an assessee under the fourth
respondent herein. For the assessment year 1996-1997, the assessee reported a
total turnover of Rs.9,26,01,139/- and taxable at Rs.4,61,25,909/-. However,
the Assessment Officer/fourth respondent, based on an inspection conducted
on 11.09.1996, passed an order dated 31.01.2000 determining the total
turnover at Rs.11,65,69,152/- and taxable at Rs.7,00,93,915/-. According to
the petitioner / assessee, the Assessing Officer passed the best judgment on the
basis of the six slips recovered and 2 note books marked 'A' and 'B' with other
minor discrepancies in stock, etc. Further, the Assessing Officer verified and
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WP No. 36139 of 2005
concluded that there was no suppression in most of the entries, however,
refused to accept that the books marked 'A' and 'B' with reference to market
survey conducted by the employees of the assessee from the mechanics at
various places as to the value of consumption of various types of automobile
parts. The book marked 'A' contains estimation of probable sales in the opinion
of the mechanics in the particular area and the book marked 'B' is with
reference to actual purchase of spare parts by particular mechanics and the
same cannot be the basis for determining the total taxable turnover of the
assessee. Thus, the Assessing Officer also imposed penalty for alleged
suppression of sales, besides levying additional sales tax at 2.25%.
3. Aggrieved by the order of assessment dated 31.01.2000, the
petitioner filed A.P. No. 96 of 2000 before the third respondent. The third
respondent, by the order dated 27.12.2002 modified the order of the Assessing
Officer with respect to certain findings and remanded the matter back to the
Assessing Authority for fresh consideration. However, the Appellate Authority
confirmed the imposition of penalty. Assailing the order passed by the
Appellate Authority, the petitioner / assessee filed C.T.A. No. 138 of 2003
before the Tribunal. The Tribunal, by order dated 08.08.2005, partly allowed
the appeal by modifying the order of the Appellate Authority. As against the
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WP No. 36139 of 2005
order passed by the Tribunal, the present writ petition came to be filed at the
instance of the assessee.
4. Heard Mr. Rajesh, learned counsel for the petitioner and
Mr.N.R.R. Arun Natarajan, learned Special Government Pleader (Taxes)
appearing for the respondents and also perused the materials available on
record.
5. We find that the Tribunal had dealt with each and every
contentions raised by the petitioner / assessee before it, in extenso, rendered its
findings on facts and thereafter, given relief to the assessee with respect to levy
of tax on some items and also upheld the findings of the Appellate Authority
on some count. The order passed by the Tribunal can profitably be extracted
hereunder:-
"6. .....On the other hand, in respect of slip No.2, the
front page indicates the sale of spare parts for Rs.2,930/- on
06.07.1996 to J.R.B.B. and though the sale had been effected to
transport company, the appellants have raised the sale bills on
Thiru. Kalidas, Salem, who is a mechanic. Similarly, there is
another sale for Rs.6,341/- to SMES on 28.08.1996. In this case
also, the sale bill was raised in the name of mechanic Thiru.
Kalidas. It is therefore proved that the appellant-company even
though sold goods to transport companies and bus owners, had
actually raised the sale bills in the name of mechanics only.
Even according to the appellants, the entries in the Note Books
marked A and B are the details obtained from the mechanics
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WP No. 36139 of 2005
only. In the absence of the name of the spare parts and also the
quantity of the spare parts and as the entries against each
mechanic contains only the value, having regard to the entries in
the slips, there is every justification to conclude that the same
related to sales made to the mechanics only. However, we find
that all the entries cannot be treated as sales taxable at the hands
of the appellants. The appellant-company besides receiving
goods by way of stock transfer from their Head Office, had also
been effecting purchase from other registered dealers within the
State and effecting sales at second and subsequent points.
Having regard to the above facts and also the ratio of the
decision reported in 55 STC 210, we are inclined to adopt the
ratio of 50 : 50 as between the first and second sales. We
therefore, confirm the assessment on a turnover of Rs.2,86,909/-
and on a turnover of Rs.52,89,357/- taxable at 11% for the
period from 17.07.1996 to 31.03.1997. The assessment on the
balance turnover is set aside.
7. As regards the difference in stock, it is the
contention of the learned Authorised Representative that the
same was meagre, when compared to huge stock held at the
time of inspection. But the explanation of the learned
Authorised Representative could not be accepted. The
appellants have not maintained day-to-day stock account even
though they have received the goods from other State. Even
according to the learned Authorised representative, the details of
actual stock taken at the time of inspection ran to 10 pages. In
the absence of stock account, Assessing Authority is forced to
make verification in respect of selected items only. Thus, he had
made verification with reference to 10 items of goods and had
noticed discrepancy valued at Rs.53,485/-. Similarly because
the verification was limited to 10 items only, the appellant
cannot claim that the stock difference arrived at was meagre and
liable to be set aside. The position may be different if
verification is made on all items of stock. The orders of the
Government referred to by the learned Authorised
Representative would also be applicable to a case, where the
entire stock was verified and the difference noticed fell below
2%. We therefore confirm the assessment made on the turnover
of Rs.53,485/-.
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WP No. 36139 of 2005
8. As regards the assessment on the turnover of
Rs.69,954/- representing the general addition for defects, we
find that the appellant company had not maintained stock
account and at the time of inspection on 11.09.1196 the cash
book was found written upto 07.09.1996 only. These defects,
coupled with discrepancy in stock, clearly establish that the
accounts maintained by the appellant are not correct and
complete. The addition sustained by the first appellate authority
is therefore confirmed.
9. As regards further addition sustained by the
appellate authority, we find that the entries in the Note Books
marked 'A' & 'B' almost cover the period upto the time of
inspection and further addition is therefore not necessary. The
assessment on the turnover of Rs.4,30,363/- at 8% and on the
turnover of Rs.79,34,036/- are set aside.
10. As regards the addition made with reference to the
discrepancy in stock, it is seen that the discrepancy in stock was
deficit only. The appellant company, had also been effecting
purchase from local registered dealers. In such circumstance,
the further addition with reference to the stock discrepancy is
not warranted. The assessment on the turnover of Rs.40,114/-
at 11% is set aside.
11. As regards the further addition with reference to the
slips, we confirm the same as the appellate are found to be
effecting sales without bills and selective in raising sale bills.
The assessment on the turnover of Rs.49,790/- at 11% is
confirmed.
12. The next item of dispute is the rate of tax on the
sale of Tractor parts. The Assessing Authority had assessed the
same at 11% holding that the tractor parts are suitable for
engine also. But the stand taken by the Assessing Authority is
not correct. The sale of tractor and tractor parts and accessories
are liable to tax at 4% under Entry 79 of Part B of First
Schedule to the Act with effect from 17.07.1996 alone will
prevail over the general entry. We therefore set aside the
assessment on the turnover of Rs.7,81,249/- at 11% and order
the same to be assessed at 4%.
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WP No. 36139 of 2005
13. The next item of dispute in the levy of additional
sales tax for the period from 01.04.1996 to 31.07.1996. This
issue has been settled by the decision of the Honourable High
Court of Madras in the case of Philips India Limited vs.
Assistant Commissioner (Commercial Taxes) Fast Track
Assessment Circle-II and others reported in 137 STC
134............
In this case, the levy of Additional Sales Tax had been
made under Section 2 (1) (a) of the TNGST Act before its
amendment by Act 31/96 for the period from 01.04.1996 to
31.07.1996 only. Respectfully following the orders of the
Honourable High Court of Madras referred to above and also the
decision of the Tamil Nadu Taxation Special Tribunal, Chennai
in OP No. 410 of 2001 dated 10.07.2001 in the case of Tvl. Sri
Murugan Timber Traders, Tenkasi vs. The Commercial Tax
Officer, Tenkasi, we hold that the levy had correctly been made
and also sustained by the first appellate Authority. The
additional sales tax levied is therefore confirmed.
14. The next item of dispute is the penalty levied under
Section 22 (2) of the Act. It is seen that the appellants have
collected tax at 12% instead of the correct rate of 11% on a
turnover of Rs.9,68,855.44. The learned Additional State
Representative argued that the excess collection of tax, if not
recoverable, would amount to undue enrichment and therefore,
the penalty levied under Section 22 (2) of the Act is correct. The
Supreme Court of India in the case law reported in 111 STC 467
has held as follows:-
“The doctrine of unjust enrichment is just and
salutary doctrine; no person can seek to collect the
tax or duty from both ends. In other words, he
cannot collect the duty from the purchaser at one end
and also collect the same from the State on the
ground that it has been collected from him contrary
to law. The power of the Court is not meant for
unjustify enriching a person.”
The collection of tax at 12% as against the correct rate of
11% warrants levy of penalty under Section 22 (2) of the Act.
The penalty levied is therefore confirmed."
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WP No. 36139 of 2005
6. Though the petitioner / assessee raised various grounds assailing
the order passed by the Tribunal, we are not inclined to go into the same in
detail, as it is a purely question of fact. It is well settled that “a writ of certiorari
can be issued for correcting errors of jurisdiction committed by inferior courts
or tribunals; these are cases, where orders are passed by inferior courts or
tribunals without jurisdiction or in excess of it, or as a result of failure to
exercise jurisdictions. A writ can similarly be issued where in exercise of
jurisdiction conferred on it, the court or tribunal acts illegally or improperly, as
for instance, it decides a question without giving an opportunity to be heard to
the party affected by the order, or where the procedure adopted in dealing with
the dispute is opposed to principles of natural justice. There is however no
doubt that the jurisdiction to issue a writ of certiorari is a supervisory
jurisdiction and the court exercising it, is not entitled to act as an appellate
court. This limitation necessarily means that the findings of fact reached by the
inferior court or Tribunal as a result of the appreciation of evidence, cannot be
reopened or questioned in writ proceedings. An error of law, which is apparent
on the face of the record, can be corrected by a writ, but not an error of fact,
however, grave it may appear to be. In regard to a finding of fact recorded by
the Tribunal, a writ of certiorari can be issued, if it is shown that in recording
the said finding, the Tribunal had erroneously refused to admit admissible and
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WP No. 36139 of 2005
material evidence or had erroneously admitted inadmissible evidence which has
influenced the impugned finding. Similarly, if a finding of fact is based on no
evidence, that would be regarded as an error of law which can be corrected by
a writ of certiorari. In dealing with this category of cases, however, we must
always bear in mind that a finding of fact recorded by the Tribunal cannot be
challenged in proceedings for a writ of certiorari on the ground that the relevant
and material evidence adduced before the Tribunal was insufficient or
inadequate to sustain the impugned finding. The adequacy or insufficiency of
evidence led on a point and interference of fact to be drawn from the said
finding are within the exclusive jurisdiction of the Tribunal and the said points
cannot be agitated before a writ court. It is within these limits that the
jurisdiction conferred on the High courts under Article 226 to issue a writ of
certiorari, can be legitimately exercised” (Refer: Syed Yakoob v.
K.S.Radhakrishnan and others, 1964 AIR 477].
7. In the light of the aforesaid legal proposition, we are of the
opinion that the Tribunal had dealt with all the contentions urged on behalf of
the petitioner / assessee and independently given its findings based on the
materials available before the same. In fact, the Tribunal had given relief in
favour of the Assessee in respect of certain findings made by the Assessing
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WP No. 36139 of 2005
Authority, as confirmed by the Appellate Authority. Therefore, the order
passed by the Tribunal does not call for any interference and the same has to
be confirmed as such.
8. Accordingly, the Writ Petition filed by the petitioner / assessee
fails and it is dismissed. No costs. Consequently, connected miscellaneous
petition is closed.
(R.M.D., J.) (M.S.Q., J.)
03.12.2021
dhk/rsh
Internet : Yes / No
Index : Yes / No
To
1. The Secretary
The State of Tamil Nadu
Dept. of Commercial Taxes and
Religious Endowments
Fort St. George, Chennai – 600 009
2. The Secretary
Tamilnadu Sales Tax Appellate Tribunal
(Additional Bench) Coimbatore – 18
3. The Appellate Assistant Commissioner (CT)
Salem
4. The Commercial Tax Officer
Salem Town (South), Salem.
https://www.mhc.tn.gov.in/judis
WP No. 36139 of 2005
R. MAHADEVAN, J
and
MOHAMMED SHAFFIQ, J
dhk/rsh
WP No. 36139 of 2005
03.12.2021
https://www.mhc.tn.gov.in/judis
