2013 (8) TMI 911 - HC - VAT and Sales Tax

Whether the Tribunal was correct in confirming the estimation of first sales turnover holding that the petitioner has not maintained stock account whereas party has maintained separate stock accounts for each time. the inter-mingling of taxable and non-taxable goods not allowed.

Summary

Issues:
1. Estimation of first sales turnover based on stock account maintenance.
2. Identification of different goods based on route cards.
3. Penalty imposition on estimated turnover of first sales.

Analysis:

Issue 1: Estimation of first sales turnover based on stock account maintenance
The Revenue conducted an inspection at the assessee's business premises and observed that the stock of local and inter-State purchase of leather was not separately stored for proper identification. Consequently, the assessing officer estimated the first sales of leather using a formula and imposed a penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959. The assessee contended that they maintained separate stock accounts for various purchases and exports. The Appellate Assistant Commissioner accepted the assessee's argument, but the Sales Tax Appellate Tribunal disagreed. The Tribunal noted the inter-mingling of taxable and non-taxable goods and rejected the assessee's claim, ultimately estimating 50% of the turnover as taxable.

Issue 2: Identification of different goods based on route cards
The assessee argued that they maintained route cards to identify goods purchased from different sources. However, the Sales Tax Appellate Tribunal found that without proper identification marks regarding the source of supply, the claim of the assessee could not be sustained. The Tribunal applied the decision in a previous case to reevaluate the turnover, reducing the penalty correspondingly.

Issue 3: Penalty imposition on estimated turnover of first sales
Regarding the penalty, the Sales Tax Appellate Tribunal upheld the estimation due to the lack of identification marks in the physical stock. However, since there was no evidence of stock concealment by the assessee, the court ruled that no penalty should be imposed. The court agreed with the assessee that without concealment, there was no basis for penalty imposition.

In conclusion, the court rejected the assessee's plea to set aside the Sales Tax Appellate Tribunal's order on the first two issues, ruling in favor of the Revenue. However, the court allowed the tax case (revision) partially, answering the third issue in favor of the assessee and against the Revenue, ultimately reducing the penalty imposed.