TMI Blog1994 (12) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the penalty levied under section 22(2) of the Tamil Nadu General Sales Tax Act. It is against that order the department is in revision before this Court. 2.. The learned Additional Government Pleader (Taxes) submitted as under: The assessee collected sales tax and surcharge, but did not show the same as such in the return. In the return it was shown that the sale turnover of the second sales is not liable to tax. The assessee has separate second sales cash bills and first sale cash bills and each second sale bills carries a printed caption as second sales. The bills verified by the assessing authority would go to show that the assessee used to add along with the price paid by it the tax and the surcharge due on the price fixed by the assessee. Even though the tax and surcharge were added with the price fixed by the assessee, it was not shown as such in the bills. According to the assessee what was collected by the assessee from its purchasers was not tax but as profits. What the assessee has done is along with the price at which the goods were purchased added the gross profit for the goods and fixed the higher price, which would also include the tax and surcharge on thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the assessing authority clearly found that the assessee collected 8.4 per cent and 6.4 per cent by way of sales tax and surcharge respectively. The extra amount collected by the assessee over and above what was paid by the assessee is exactly the same as the amount equal to tax and surcharge at the rate of 8.4 per cent and 6.4 per cent, hence it cannot be considered as a coincidence as alleged by the assessee. In view of the foregoing reasons the learned Additional Government Pleader (Taxes) submitted that the Tribunal was not correct in deleting the penalty levied under section 22(2) of the Act. 3.. On the other hand, the learned counsel appearing for the assessee submitted as under: A perusal of the sale bills would go to show that what was collected by the assessee is not sales tax and surcharge. The assessee along with the sales tax and surcharge paid by it added the gross profit and thereafter, collected extra amount under the caption add. Therefore, according to the learned counsel, inasmuch as what was collected by the assessee is neither sales tax nor surcharge, it is not possible for the department to say that collection of such amount is illegal under section 22(1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt and not shown under sales tax or surcharge collections. Hence, the assessee submitted that the presumption or inference of the assessing authority that these additional amounts noted in the bills are only against sales tax and surcharge is baseless and not supported by any proof. Therefore, the assessee requested to cancel the penalty of Rs. 9,047. 6.. A perusal of the bills and invoices issued by the assessee shows that bearing No. 11207 bearing 2 Nos. at Rs. 162.60 purchased for Rs. 325.20. In the sales invoice dated December 17, 1980, the assessee had sold these bearings at Rs. 165 for Rs. 990 and they have collected an addition of 8.4 per cent on the sales amount. So also in respect of bearing No. 11208, 4 Nos. purchased under the same invoice at Rs. 238.48 were sold at Rs. 250. According to the department the additional amount recovered by the assessee is nothing but sales tax and surcharge. The department also pointed out that the assessee cannot say that the gross profit has been added as it is not a trade practice to show the actual gross profit charged on the sale of goods by a particular dealer. In another instance the assessee bought goods for Rs. 162.60 and sold a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adu General Sales Tax Act (1 of 1959) held as under: "(i) that as the status of a commission agent carries with it certain rights and also certain duties, it is for the person who projects such a status before the taxing officers to establish by acceptable evidence that he was acting as such. The circumstance that in the bills issued by the assessee at the time when he parted with the goods to his purchasers, he charged the same price as paid by him at the time of their purchase from his dealers would not by itself be sufficient to decide whether the assessee was a dealer or a commission agent; (ii) that the bills issued by the assessee showed that he sold jaggery to the purchasers from whom he charged not only commission but also collected as tax an independent amount which represented tax at five per cent of the total consideration shown in the bill, though jaggery was liable to tax only at the purchase point. Accordingly, it could reasonably be assumed that the assessee collected five per cent as sales tax at the point of sale knowing that such tax was payable only at the point of purchase, as every dealer is expected to know the law. There was thus a clear violation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at the stage of first sale and collected something more than the tax incident, then to the extent it was discovered that the amount collected showed an excess, the excess amount must necessarily be attributed to the second sellers' profit element in the transaction of the second sale. For this purpose the assessee must show in the invoices and the bills issued by it that a particular goods was sold for a consolidated price without stating that the sales tax and surcharge were collected separately under the head sales tax and surcharge. But according to the decision reported in [1979] 44 STC 8 (Mad.) (M.A.R. Arunachalam Chettiar Co. v. State of Tamil Nadu) if the assessee collected more than what was paid by him by way of tax and surcharge, then the excess collection would be deemed to have been collected not in accordance with the Act. In such a case penalty is warranted under section 22(2) of the Act. According to the facts arising in the present case, the assessee issued invoices containing the price of the goods sold by way of second sales. It is the case of the assessee that a consolidated price was fixed which included the gross profit. Therefore, according to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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