Madras High Court
Tvl. Hotel New Raja vs The Tamil Nadu Sales Tax Appellate on 19 October, 2022
W.P. No. 44961 of 2006
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 19.10.2022
CORAM
THE HON'BLE MR.JUSTICE S. VAIDYANATHAN
AND
THE HON'BLE MR .JUSTICE C.SARAVANAN
W.P. No. 44961 of 2006
&
M.P. No. 1 of 2006
Tvl. Hotel New Raja,
rep. by its Partner S. Shanti
11/12-A, Kalpana Road,
Udumalpet, Coimbatore District. ..Petitioner
Vs.
1. The Tamil Nadu Sales Tax Appellate
Tribunal (Addl. Bench), Coimbatore,
Commercial Taxes Buildings,
Coimbatore – 18.
2. The Commercial Tax Officer,
Udumalpet (South) Circle,
Udumalpet, Coimbatore District. ..Respondent
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W.P. No. 44961 of 2006
Prayer: Petition under Article 226 of the Constitution of India praying
for issue of a Writ of Certiorari to call for the records of the 1st respondent in
its order in C.T.S.A. No. 284/2004 dated 28.03.2006 and quash the same as
illegal.
For Petitioner :: Mr.S. Ramanathan
For Respondents :: Mr.T.N.C. Kaushik,
Addl. Govt. Pleader
ORDER
S. VAIDYANATHAN,J.
AND
C. SARAVANAN,J.
This writ petition has bee filed against the final order dated
28.03.2006 passed by the Tamil Nadu Sales Tax Appellate Tribunal
(Additional Bench), Coimbatore in C.T.S.A. No. 284 of 2004. By the
impugned order, the Tribunal has partly allowed the appeal filed by the
Commercial Tax Department refixing the turnover of the petitioner as
Rs.40,07,450/- and remanded the case back to the Original Authority for
imposing proportionate penalty under Section 12(3) of Tamil Nadu General
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W.P. No. 44961 of 2006
Sales Tax Act, 1959 (in short, 'TNGST'Act).
2. The facts on record indicate that the petitioner had
declared a taxable turnover of Rs.7,78,302/-. A surprise inspection was
conducted during which the officers of the Commercial Tax Department
found certain notes/slips. Based on the entries made by the petitioner in
these notes, which were found in the books and marked as A & B, the
Assessing Officer had arrived at the total taxable turnover of the petitioner
as Rs.49,13,582/- as detailed below:
'Sales turnover as per account Rs. 7,78,302.00
Add: 10% for Rs. 77,830.00
Total ------------------------Rs.8,56,132.00
Add: Actual Suppression as arrived
as per entries in the records
recovered
As per entries in the book mark
"A"& "B" (From 01.04.98 to
05.10.98) Rs.20,03,725.00
Add: equal for the remaining
period (from 6.10.98 to 31.03.99) Rs.20,03,725.00
--------------------
Total Rs.40,07,450.00
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W.P. No. 44961 of 2006
Proposal for Levy of Tax under
Sec.7-A Estimate value of ingredient
such as Masala power and Cashewnut
were used to add to the taste of
food stuffs prepared and served to
customer for which no purchase bill
were produced.
Masala Powder Cashewnut Powder
40,000 taxable at 10,000/- taxable at
8% 4% Rs.50,000.00
Taxable Turnover proposed ---------------------
Rs.49,13,582.00
---------------------
3. Aggrieved by the aforesaid order, the petitioner preferred an
appeal before the Appellate Assistant Commissioner (CT), Pollachi. The
Appellate Assistant Commisioner had refixed the taxable turnover of the
petitioner as Rs.23,33,142/- as detailed below:
1. Total receipt noticed and arrived at from
the entires mde in the records recovered
for the period from 1.4.98 to 5.10.97. Rs.3,88,857/-
2. As the entires found in the records
related only to the coins, provision has
made for the receipt of currency notes
for each day by adopting 2 times the
figure arived at Rs.7,77,714/-
________________
Rs.11,66,571/-
Add: Equal time in receipt of sales effected from
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W.P. No. 44961 of 2006
6.10.98 to 31.3.99 Rs.11,66,571/-
_____________
Total Rs.23,33,142
_____________
The discussion in the order of the Appellate Assistant Commissioner
in the petitioner's appeal No. 231 of 2002 dated 13.05.2003 reads as
hereunder:
'On the day of inspection survey was also conducted by the Inspecting
Officers and they have noticed the total sales on that day worked out to
Rs.5638/- only. Even by adopting this figure and without giving
allowance to holiday or Sunday, the total turnover worked out
Rs.20,57,870/- only. I hold that the method adopted by the Assessing
Officer in determining the turnover at Rs.49,13,582/- was quite
irregular; when sales were adopted for the whole year with reference to
the records recovered, he should not have added the turnover reported
by the appellants for which he has also made addition of 10% without
assigning any proper reason. By way of adoption of correct method with
reference to the records recovered the maximum turnover that could be
fixed for the year 1998-99 works out Rs.23,33,142/- only, which is below
taxable limit of Rs.25,00,000/- for that year. Further the assessment
made under Sec.7-A on the purchase of Masala powder and cashewnut
was made without any basis and reasons and they are also ordered to be
delted. As the turnover worked out by way of proper and correct
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W.P. No. 44961 of 2006
calculation is below Rs.25,00,000/-which is taxable limit for the year
1998-99, I order for the setting aside of the assessment made by the
Assessing Officer for the year 1998-99.'
4. Learned counsel for the petitioner has placed reliance on the
decision of this Court rendered in S.R.S. Industries V. State of Tamil Nadu
reported in [2011] 42 VST 166 (Mad) and therefore submits that there is no
justification in adding equal amount to the taxable turnover without any
tangible evidence. It is further submitted that if equal addition is removed
and the order of the Appellate Assistant Commissioner is upheld, the
petitioner's turnover will be below Rs.25 lakhs and therefore, the petitioner
is not required to pay tax in terms of Section 3-D of TNGST Act, 1959 read
with Part A to 9th Schedule to the said Act. Consequently, the question of
imposing penalty under Section 12(3) of TNGST Act,1959 also does not
arise. Learned counsel for the petitioner has also placed reliance on the
explanation to Section 12(3) of TNGST Act, 1959 which reads as under:
Section 12(3)(b):...
[Explanation:For the purpose of levy of penalty under clause (b) above,
the tax assessed on the following kinds of turnover shall be deducted
from the tax assessed on final assessment:-
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W.P. No. 44961 of 2006
(i) Turnover representing additions to the turnover as per books
made by the assessing authority without any reference to any specific
concealment of turnover from the accounts;
(ii) Any turnover estimated by the Assessing Authority with reference
to any specific concealment of any turnover from the accounts;
(iii) Any turnover on which tax is paid at the concessional rate
subject to the condition of furnishing any declaration but where such
declaration could not be furnished at the time of assessment
5. Opposing the writ petition, learned Additional Government
Pleader for the Commercial Tax Department submits that the impugned
order is well-reasoned and requires no interference. It is submitted that the
order passed by the Appellate Tribunal reversing the order of the Appellate
Assistant Commissioner cannot be interfered with as the petitioner has
suppressed the turnover and the taxable turnover and therefore, the order
passed by the Commercial Tax Officer vide order dated 16.09.2002 for the
assessment year 1998-99 deserves to be upheld as confirmed by the
Appellate Tribunal.
6. We have given our careful consideration to the orders passed
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W.P. No. 44961 of 2006
by the Commercial Tax Officer, Appellate Assistant Commissioner and the
impugned order passed by the Appellate Tribunal.
7. The facts on record clearly indicate that the petitioner has
admitted the taxable turnover of Rs.7,78,503/-. The respondent, namely, the
Department has added a sum of Rs.20,03,725/- based on the entries in the
books maintained by the petitioner between 01.04.1998 and 05.10.1998 and
has added an amount equal to the aforesaid amount for the period from
06.10.1998 to 31.10.1999.
8. Prima facie, we are of the view that an equal addition of
Rs.20,03,725/- cannot be sustained in the absence of any tangible evidence.
Though the Department is required to invoke best judgment method where
there is suppression of information and the facts on record indicate that
tangible evidence were recovered and based on the same, a sum of
Rs.20,03,725/- was added, there can be no further addition to the suppressed
turnover. Under these circumstances, we are inclined to modify the
impugned order and re-determine the turnover of the petitioner. We are also
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W.P. No. 44961 of 2006
inclined to uphold the purchase tax under Section 7A on Masala Powder
and Cashewnut Powder , which were used for suppressed turnover.
Therefore, the turnover is re-determined as follows:
'Sales turnover as per account Rs. 7,78,302.00
As per entries in the book mark
"A" & "B" (From 01.04.98
to 05.10.198) Rs.20,03,725.00
__________________
Total Rs. 27,82,027.00
Proposal for Levy of Tax under
Sec.7-A Estimate value of ingredient
such as Masala power and Cashewnut
were used to add to the taste of
food stuffs prepared and served to
customer for which no purchase bill
were produced.
Masala Powder Cashewnut Powder
40,000 taxable at 10,000/- taxable at
8% 4% Rs. 50,000.00
_______________
Taxable turnover proposed Rs.28,32,027.00
_______________
The tax liablity of the petitioner therefore would be in terms of S.No.1
to Part A to 9th Schedule to TNGST Act, 1959 as the petitioner's turnover
has not exceeded 30 lakhs during the assessment year in question.
Accordingly, the petitioner is liable to pay tax of Rs.24,000/-.
9. As far as imposition of penalty under Section 12(3)(b) is
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W.P. No. 44961 of 2006
concerned, we are of the view that there is suppression and therefore,
proportionate amount of penalty has to be levied on the petitoner. Under
these circumstances, we are inclined to remit the case back to the Assessing
Officer insofar as imposition of penalty is concerned.
10. Considering the fact that the dispute pertains to the assessment
year 1998-99, the 2nd respondent/Commercial Tax Officer shall pass
appropriate orders insofar as imposition of penalty is concerned, within a
period of three months from the date of receipt of a copy of this order. The
petitioner is given liberty to make additional submissions, if any, before the
2nd respondent. It is needless to state that the petitioner shall also be heard
before orders are passed by the 2nd respondent.
11. The writ petition stands partly allowed with the above
observations,. No costs. Consequently, connected M.P. is closed.
(S.V.N.J.) (C.S.N.J.)
nv 19.10.2022
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W.P. No. 44961 of 2006
To
The Commercial Tax Officer,
Udumalpet (South) Circle,
Udumalpet, Coimbatore District.
S. VAIDYANATHAN,J.
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W.P. No. 44961 of 2006
AND
C. SARAVANAN,J.
nv
W.P. No. 44961 of 2006
19.10.2022
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