Madras High Court

The State Of Tamil Nadu vs Tvl. Ravi Catering Services on 17 December, 2021

TC (R) No. 49 of 2021

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 17.12.2021

CORAM

THE HONOURABLE MR. JUSTICE R. MAHADEVAN
and
THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ

Tax Case (Revision) No. 49 of 2021

The State of Tamil nadu
Represented by
The Deputy Commissioner (CT)
Chennai (East) Division
Chennai – 600 006. .. Petitioner

Versus

Tvl. Ravi Catering Services
No.4, Ranganathan Street
Chennai – 600 005. .. Respondent

Tax Case (Revision) filed under Section 38 of the Tamil Nadu General
Sales Tax Act, 1959, r/w Rule 34 of the Tamil Nadu General Sales Tax Act,
1959 against the order dated 23.01.2002 passed by the Tamil Nadu Sales Tax
Appellate Tribunal (Main Bench), Chennai in T.A.No. 434/98.

For Appellant : Mr. V. Prashant Kiran
Government Advocate (Tax)

ORDER

(Order of the Court was made by R.MAHADEVAN, J.)

This tax case revision has been filed by the Petitioner/Revenue

challenging the order dated 23.01.2002 passed by the Tamil Nadu Sales Tax

Appellate Tribunal (Main Bench), Chennai in T.A. No. 434 of 1998. https://www.mhc.tn.gov.in/judis

TC (R) No. 49 of 2021

2.The respondent/assessee entered into contract with some public limited

companies, such as, The Madras Fertilisers Limited, Madras Refineries Ltd and

Indian Organic Chemicals Ltd, who have statutory obligation to run canteen for

the benefit of their employees. According to the respondent/assessee, they were

provided with all the requirements for the same, viz., fuel, raw materials, etc.,

and the companies have taken into consideration the cost of material, cost of

preparation of food and the cost of services and hence, the respondent partakes

the character of pure and simple agency and is entitled to claim exemption as

per notification No.II(i)/CT&RE/206/77 dated 05.10.1977. However, the claim

for exemption made by the respondent was disallowed by the Assessing Officer

by treating the transaction as sale and accordingly, the turnover was assessed to

tax, besides imposing penalty under section 12(3) of the TNGST Act.

3.Challenging the order of assessment, the respondent /assessee went on

appeal before the First Appellate Authority, who partly allowed the appeal by

reducing the penalty to 50% of the tax due. Aggrieved by the same, the

respondent / assessee preferred further appeal before the Tribunal. After

considering the materials placed before it, the Tribunal held that the

respondent/assessee had not only received coupon charges, but also service

charges and therefore, the same have to be treated as taxable turnover and https://www.mhc.tn.gov.in/judis

TC (R) No. 49 of 2021

accordingly, they have no right to claim exemption under the said notification.

At the same time, the Tribunal held that since the respondent has filed returns

and produced the accounts and that, the Assessing Officer has passed the order

only on the basis of the books of accounts produced by the respondent, the

question of imposition of penalty does not arise. After holding so, the Tribunal

deleted the penalty imposed on the respondent / assessee. Challenging the same,

the Revenue has come up with this Tax Case Revision before this court.

4.When the matter is taken up for consideration, the learned Government

Advocate (Taxes) appearing for the petitioner fairly submitted that before the

Tribunal, two sets of appeals have been filed, one by the respondent herein and

another by one A. Ravindran. Both the appeals were disposed of by the

Tribunal by a common order dated 23.01.2002. As against the order dated

23.01.2002 passed in the appeal filed by the said A. Ravindran, the Revenue has

filed T.C.(R). No. 352 of 2011. As against the very same order passed in the

appeal filed by the respondent herein, the present Revision came to be filed. By

order dated 23.12.2011, a Division Bench of this court upheld the order passed

by the Tribunal by holding that when there was no suppression of any material

fact by the assessee, the question of imposing penalty on best judgment

assessment does not arise; and accordingly, dismissed the said TC(R) No.352 of https://www.mhc.tn.gov.in/judis

TC (R) No. 49 of 2021

2011 against the Revenue. For better appreciation, the relevant passage of the

said order is extracted below:

“2.The assessment year involved in 1989-90. The issue relates to the imposing of penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959. On a reference to the order of the Tribunal, it is clear that the assessing authority has imposed penalty on the basis that no accounts has been produced. However the Tribunal, on fact, has found that in fact, the assessee had filed returns and produced the accounts and therefore, the question of imposing penalty on best judgment assessment does not arise at all. To arrive at such a finding, the Tribunal has followed the judgment of the Hon'ble Apex Court in the State of Madras Vs. S.G.Jayaraj Nadear & Sons (28 STC 700) and the judgment of this Court in Appollo Saline Pharmaceuticals (P) Ltd. Vs. Commercial Tax Officer (FAC) and Others (125 STC 505). The relevant portion of the order of the Tribunal is extracted hereunder:

21....... The appellants had filed returns and produced the accounts. Then the question arise as to whether it is a beat judgment assessment passed under Section 12(2) so that section 12(3) is attracted. As per the Supreme Court's decision in the famous Jayaraj Nadar's case (28 STC 700) if the book turnover has been found outside the accounts, then it cannot be terms as best judgment assessment. Further, in the latest decision of the Hon'ble High Court's order in the case of Apollo Saline Pharmaceuticals in W.P. No. 2188 to 2192 of 2000 dated 01.10.2001 it is decided that no penalty is leviable if the turnover is available in the books of accounts. Since we find that for levying penalty, and since the facts are different in the industrial catering services decision, we hold that no penalty is leviable in these documents since the appellants have filed returns and produced their accounts and orders were passed only on the basis of account books only. By respectfully following the Supreme Court's decision and the Tamil Nadu Taxation Special Tribunal, we come to a https://www.mhc.tn.gov.in/judis conclusion that there is no need to levy any penalty

TC (R) No. 49 of 2021

since the levy itself was doubtful in the minds of the appellants. So, the penalty levied for all the years are ordered to be deleted.”

3. Since there is no suppression of any material fact by the assessee, the question of imposing penalty on best judgment assessment does not arise. Accordingly, there is no question of law involved in this case and the same is dismissed.

4. In the result, the tax case revision stands dismissed.

However there is no order as to costs.” Referring to the above said order dated 23.12.2011 passed by the Division

Bench of this Court, confirming the order dated 23.01.2002 passed by the

Tribunal, which is also impugned in this revision case, the learned Government

Advocate (Taxes) submitted that the said order applies to the present case as

well and hence, there is no need for adjudication in this Tax Case Revision.

5.In view of the above submission of the learned Government Advocate

(Taxes) appearing for the petitioner and also following the aforesaid order of the

Division Bench of this Court in TC (R) No.352 of 2011 dated 23.12.2011, the

Tax Case Revision fails and it is accordingly dismissed. No costs.

[R.M.D., J.] [M.S.Q., J.] 17.12.2021 Index : Yes/No Speaking/Non-Speaking Order Maya/rsh

https://www.mhc.tn.gov.in/judis

TC (R) No. 49 of 2021

R. MAHADEVAN, J and MOHAMMED SHAFFIQ, J

Maya/rsh

1. The Deputy Commissioner (CT) Chennai (East) Division Chennai.

2.The Tamil Nadu Sales Tax Appellate Tribunal Main Bench, Chennai-104.

3.The Appellate Assistant Commissioner (CT) IV Chennai.