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TMI Blog2018 (4) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... lers and effected second sales. The Assessing Officer has found that though at the bottom of the invoice, it was noticed that "this yarn is sending for sending knitting / fabrication purpose", the yarn was purchased by them and resold locally and hence, one such purchase made for Rs. 2,15,435/- is not permissible for exemption and thus, added 2% towards freight and 15% towards gross profit and assessed the first sales turnover of Rs. 2,52,706/-. He has also levied penalty u/s.12(3)(b). 3. Aggrieved over the assessment, the dealer, filed an appeal before the Appellate Assistant Commissioner (CT), Pollachi, who vide order, dated 31.08.2001, dismissed the appeal, as follows: "4. I heard the arguments of both the Representatives and verified the records produced before me, the only issue to be decided in this appeal is whether the estimation of first sales made on the sales of cotton yarn purchased vide bill No.2130/14.9.98 from Tvl.S.V.A. Syntex Pvt. Ltd., Palani is proper or not? This purchase bill is available at page 23 of the assessment file. The Assessing Officer has found that in this bill the seller Tvl.S.V.A.Syntex Pvt. Ltd., have not charged tax at 4% and collected the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted for by them. He has not proved with any records as to why there is a mentioning about the sending of the goods for knitting / for fabrication purpose". In view of the above it is proved that the appellants are to be treated as first sellers of the yarn purchased. Inasmuch as the appellants have camouflaged the first sales, I hold that the penalty levied under Sec.12(3)(b) is also proper, I see no reason to interfere with the levy of tax and penalty, I sustain the same and dismiss the appeal. 4. Being aggrieved, State has preferred C.T.A.No.431 of 2001 before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore. Vide order dated 21.09.2004, C.T.A.No.431 of 2001 has setaside the penalty levied under Section 12(3)(b), and modified the appeal as hereunder: "We have heard the arguments of both the sides and perused the connected material records to decide the issues involved they are assessment made on the disputed turnover as first sales for the purchasers established as not genuine dealers and 12(3)(b) penalty levied. The appellants arguments are that they have effected the purchase of cotton cones relating to the disputed turnover from registered dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover as first sales at the hands of the appellants for their inability to prove the earlier purchases made from genuine dealers and the payment of tax on the relevant sales involved is proved as taxable sales. Hence the disputed turnover held as first sales is confirmed. 7. The next issue relates to 12(3)(b) penalty levied at Rs. 15,162/-. The appellants have argued that the assessment made is under Section 12(1), the turnover relating to the goods is treated as first sales rejecting the claim and the assessment made is accepting their books of accounts and levy of penalty would not arise as decided by the Hon'ble Supreme Court in case of S.G.Jayaraj Nadar and Sons reported in 28 STC 700 and also the decision reported in 125 STC 505. The appellants have argued further that the penalty is not leviable as per Act 60 of 1997 added to Section 12(3)(b) with effect from 1.4.96 and the tax due falling under explanations 1 to 3 have to be excluded for the purpose of arriving at the tax due for levy of penalty. In the appellants case, as already marked the disputed turnover is disclosed by them in their books of accounts and also exemption claimed on the same as second sales. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch amounts to filing of incorrect and incorrect return hence, the assessment made falls under Section 12(2). Consequently, the penalty under Section 12(3)(b) is automatic. 10. Further, the learned Additional Government Pleader submitted that the tribunal erred in deleting the penalty on the view that the levy of penalty under Section 12(3)(b) is not called for, in this case, since as per the amended provisions of section 12(3)(b) of the TNGST Act, levy of penalty is automatic and it should be levied when there is balance of tax payable to the Government. 11. Learned Additional Government Pleader further submitted that the Tribunal erred in following the decision reported in Appollo Saline Pharmaceuticals (P) Ltd., Vs. Commercial Tax Officer (FAC) and Others, reported in {(2002) 125 STC 505}, against which the revenue had filed Special Leave petition before the Hon'ble Supreme Court of India and it is pending disposal. 12. Section 12(3)(b) of the Act deals with, submission of incorrect or incomplete return and for the purpose of levy of penalty, under Clause (b), the tax assessed on the following kinds of turnover shall be deducted from the tax assessed on final assessment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recognised principles of justice. An element of guess-work is bound to be present in best judgment assessment but it must have a reasonable nexus to the available material and the circumstances of each case: [see State of Kerala Vs. C.Velukutty {(1966) 17 STC 465 (sc)}. Where account books are accepted along with other records, there can be no ground for making a best judgment assessment." 6. The law so declared that the best judgment assessment is based on an estimate and is not one based solely on the account books was reiterated by the Supreme Court in the case of Commissioner of Sales Tax, Madhya Pradesh Vs. H.M.Esufali H.M.ABDULALI {(1973) 32 stc 77}. 7. Though other sub-Sections of Section 12 were amended by the State Legislature subsequent to the date of the judgment in the case of Jayaraj Nadar & Sons {(1971) 28 STC 700 (SC), Sections 12 (1) and 12 (2) have remained in the same form. The legislative intention therefore, except during the period December 3, 1979 to May 27, 1993 and on and after April 1, 1996 must be taken to be to, permit the levy of penalty only in case where the assessment is a best judgment assessment made on an estimate and not by relying solely on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 of 2009, dated 28/7/2016, between Tvl. Shyam Air Fridge, Vellore and The State of Tamil Nadu, rep. By The Deputy Commissioner (CT), Vellore, on the facts and circumstances of the case, at para No.18, a Hon'ble Division Bench of this Court held as follows:- "Levy of penalty would not be justifiable, if at the time of assessment, turnover has been recorded as per the books of accounts, verified by the department and in such circumstances, suppression cannot be attributed. Transaction giving rise to taxable turnover, has been categorically declared by the assessee as composite works contract and at the concessional rate of 4%, tax has been paid. In such circumstances, it cannot be contended that it is a deliberate and wilful non-disclosure of turnover, in the return and thus rightly proceeded, under Section 12 (3) (b) of the Act, which deals with submission of incorrect or incomplete return. Though penalty is leviable under the provisions of the Act, while exercising discretion, the assessing officer is required to take note of the bona fides of the assessee. Contention of the respondent that levy of penalty under Section 12 (3) is automatic, cannot be accepted, in the light o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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