TMI Blog1994 (6) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Tax Officer, Gandhipuram Circle) came to the conclusion that the bush, coupling, etc., of the value of Rs. 1,29,699 were purchased from unregistered dealers; therefore, the turnover was liable to sales tax. It was further found that as the returns were incorrect to the extent the aforesaid turnover was not shown as liable to tax, penalty was leviable as per section 12(5)(iii) of the TNGST Act. Accordingly, he assessed the tax on the turnover of Rs. 1,29,699 at eight per cent to a sum of Rs. 10,376, surcharge at Rs. 519 and additional surcharge at Rs. 519, and also levied penalty of Rs. 3,259. 3.. Aggrieved by the aforesaid order of the Deputy Commercial Tax Officer, the dealer preferred an appeal before the Appellate Assistant Commissioner, Commercial Taxes, in Appeal No. 818 of 1989. The Appellate Assistant Commissioner agreed with the findings recorded by the Deputy Commercial Tax Officer and with regard to penalty he observed as follows: "Knowing fully well that the purchases effected from an unregistered dealer in the State and when the turnover had not been reported in the monthly returns, and paid the due taxes the penalty is warranted under section 12(5)(iii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dealer used such goods in the manufacture of other goods. Such purchases were shown in the accounts of the dealer but not shown in the monthly returns as being subjected to sales tax. On these facts, the authorities below have found that section 7-A is attracted, because the dealer had in the course of its business purchased the goods not from a registered dealer, but from an unregistered dealer. Such a sale was subjected to sales tax under the provisions of section 3 of the TNGST Act. At the point of purchase, it did not suffer any sales tax, because it was sold by an unregistered dealer and the purchaser also did not show such purchases in its returns. Such goods were also used in the manufacture of other goods for sale or otherwise. Section 7-A of the TNGST Act has been considered by the Supreme Court in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191. On analysing the section, the Supreme Court has held that sub-section (1) of section 7-A contains the following ingredients "(1) The person who purchases the goods is a dealer; (2) The purchase is made by him in the course of his business; (3) Such purchase is either from 'a registered dealer or from any other person' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivil Appeal No. 1043 of 1973) were crushed into oil and the butter (vide Civil Appeals Nos. 1049, 1050, 1058, 1067 of 1973) was converted into ghee by the purchaser-dealers concerned, the condition in clause (a) of subsection (1) of section 7-A would be satisfied and section 7-A would be attracted. If in the case of arecanuts (vide Civil Appeals Nos. 1040 to 1044 of 1973), turmeric and gram (vide Civil Appeals Nos. 1051 to 1053 of 1973), the purchasing dealers transported these goods outside the State for sale on consignment basis, their case would also be covered by clause (b) or (c) of section 7-A(1) and such dealers would be liable to tax on the purchase turnover of these goods. It may be remembered that section 7-A is at once a charging as well as a remedial provision. Its main object is to plug leakage and prevent evasion of tax. In interpreting such a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book, should be eschewed. If more than one construction is possible, that which preserves its workability and efficacy is to be preferred to the one which would render it otiose or sterile. The view taken by the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State except as a direct result of sale or purchase in the course of inter-State trade or commerce. The assessees are registered as dealers and they have purchased building materials in the course of their business; the building materials are taxable under the Act, and the appellants have consumed the materials otherwise than in the manufacture of goods for sale and for a profit-motive. On the plain words of section 7 the purchase price is taxable.' The impugned section 7-A is based on section 7 of the Madhya Pradesh Act. Although the language of these two provisions is not completely identical, yet their substance and object are the same. Instead of the longish phrase, "the goods, the sale or purchase of which is liable to tax under this Act" employed in section 7-A of the Madras Act, section 7 of the Madhya Pradesh Act conveys the very connotation by using the convenient, terse expression "taxable goods". The ratio decidendi of Ganesh Prasad [1969] 24 STC 343 (SC); [1969] 3 SCR 490 is, therefore, an apposite guide for construing section 7-A. Unfortunately, that decision, it seems, was not brought to the notice of the learned Judges of the High Court." (Emphasis* supplied) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner and also by the Tribunal. Hence the present tax case. The same argument is reiterated before us. Mr. S.V. Subramaniam, learned counsel appearing for the petitioner, submitted that details of purchases from shandy dealers and also agriculturists have already been furnished with break-up figures. Therefore, it is for the Revenue to find out the unregistered dealers from whom the petitioner has purchased gingerly oil-seeds and assess the turnover accordingly. The Revenue cannot shift the point of taxability merely on the ground that the seller is a small unregistered dealer/shandy dealer. 4.. The learned Additional Government Pleader (Taxes) is not in a position to controvert the argument of the learned counsel for the petitioner. 5.. We find force in the argument of the learned counsel for the petitioner. 6.. As rightly contended by the learned counsel for the petitioner, the tax is attracted on the first sale of gingerly oil-seeds as per section 4 read with entry 6(ii) of the Second Schedule to the Tamil Nadu General Sales Tax Act. Therefore, the sales by unregistered dealers are exigible to tax only at the hands of the seller and not at the hands of the purchaser. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er whether penalty is leviable; therefore, the order of the Tribunal is vitiated, cannot also be accepted. It may be pointed out that the Tribunal was exercising the power of revision and as long as the order under revision passed by the Appellate Assistant Commissioner, contained reasons for imposing the penalty and those reasons were not disapproved by the Tribunal, all that can be said is that the Tribunal had approved those reasons and upheld the penalty. In the case of affirmation of the order of the lower authority by the appellate or revisional authority, the judgment need not be as elaborate as the original or the first appellate order. 8.. In the facts and circumstances of the case as noticed by the Appellate Assistant Commissioner, and the Appellate Tribunal, we are of the view that the penalty levied under section 12(5)(iii) of the TNGST Act is correct, because the return to that extent was incorrect, and incomplete, and the accounts of the dealer had been approved, the same were not discarded, as such it was not best judgment assessment. 9.. The contention of learned counsel for the petitioner is that this is a case of revision of assessment under section 16 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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