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TMI Blog2014 (2) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase tax under Section 7A on the purchases effected from unregistered dealers who were liable to pay tax under Section 3 by virtue of such sellers having turnover in excess of the exemption limit? 2. Is the order of the Sales Tax Appellate Tribunal restoring the levy of penalty under Section 16(2) legal without there being either finding of wilfulness or non-disclosure of turnover especially when no ground had been raised by the Revenue to seek the restoration of the penalty?" 2. The assessee has also filed writ petition challenging the levy of penalty as confirmed by the Sales Tax Appellate Tribunal. 3. The assessee herein purchased Bagasse from unregistered dealers for use in the manufacture of paper boards. Considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and paid tax thereon. A mere failure on the part of the sellers in registering themselves would not be justified in invoking Section 7A of the Tamil Nadu General Sales Tax Act, 1959. Thus, the First Appellate Authority allowed the assessee's appeal, thereby setting aside the order of assessment as well as the penalty levied. 6. Aggrieved by this, the Revenue went of further appeal before the Sales Tax Appellate Tribunal contending that in the light of the decision of the Supreme Court in [State of Tamil Nadu vs Kandaswami] reported in (1975) 36 STC 191 [SC], the goods not having suffered tax earlier by reason of circumstances stated under Section 7A of the Tamil Nadu General Sales Tax Act, 1959, the assessment made by the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r person, any goods, (the sale or purchase of which is liable to tax under this Act) and in the circumstances, if no tax is payable under Sections 3 or 4 and consumes or uses such goods in or for the manufacture of other goods for sale or otherwise, Section 7A would stand attracted. 10. Considering the fact that Section 7A of the Tamil Nadu General Sales Tax Act, 1959 is a charging section aimed at plugging the loop hole in cases where goods had not suffered tax and by reason of circumstances stated in the Section are not available for further dealing under the provisions of the Act, the contention of the assessee that the failure on the part of the seller to get himself registered and pay tax would be a circumstance, which has to be consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no case for levying penalty. 14. In the circumstances, we do not find there exists any ground to interfere with the order of assessment made under Section 7A of the Tamil Nadu General Sales Tax Act, 1959 and consequently, the order of the Tribunal is confirmed. However, as regards the levy of penalty under Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959, we set aside the order passed by the Sales Tax Appellate Tribunal. 15. In view of the above, the order dated 30.03.1999 passed by the Tribunal on confirming the penalty is set aside and the writ petition is allowed. 16. In the result, Tax Case (Revision)No.141 of 2009 is dismissed insofar as the quantum assessment is concerned and W.P.No.18910 of 2010 is allowed. No costs. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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