2009 (4) TMI 874 - HC - VAT and Sales Tax

Summary

Issues:
Appeal against order of Joint Commissioner under Tamil Nadu General Sales Tax Act, 1959 restoring revision of assessment and penalty set aside by first appellate authority.

Analysis:
The judgment pertains to an appeal filed under section 37 of the Tamil Nadu General Sales Tax Act, 1959 against the order of the Joint Commissioner made in suo motu revision dated October 1, 1996. The Joint Commissioner had restored the revision of assessment made by the assessing officer along with penalty, which were earlier set aside by the first appellate authority. The case involved an assessee who dealt in groundnut kernel and reported a total and taxable turnover for the assessment year 1990-91. The assessing officer rejected the claim of exemption on a turnover related to the purchase of groundnut kernel from a specific trader who was declared as a bill trader in various other cases. The Appellate Assistant Commissioner had initially deleted the tax on the said turnover and the penalty, citing reasons such as the trader renewing registration certificate and goods passing through a check-post. However, the Joint Commissioner, through suo motu revision, found the order of the first appellate authority prejudicial to the Revenue's interest and erroneous. The Joint Commissioner restored the tax on the turnover and the penalty. The appeal was filed against this decision.

The court considered the facts that the trader in question had been declared as a bill trader by the Department in various cases, including for other dealers. It was noted that the trader admitted to issuing bills for commission only and receiving cash payments. Additionally, other dealers claiming similar exemptions were held not entitled to second sale exemption based on the trader's status as a bill trader. The court found that the voluminous materials available with the Department indicated that the trader was indeed a bill trader who never dealt with goods directly. Therefore, the court concluded that the claim of second sale exemption by the assessee based on transactions with this trader was not valid. The court upheld the Joint Commissioner's decision to restore the taxable turnover and levy tax on it, along with the penalty under section 12(3) of the Act, as the claim made by the assessee was deemed false to avoid local tax payment. The court found no grounds to take a different view and dismissed the appeal, ruling in favor of the Department. No costs were awarded in this matter.