TMI Blog2018 (4) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... abu ORDER ( Order of the Court was made by S. Manikumar, J ) Instant Tax Case Revision is filed to revise the order dated 17.04.2002, made in S.T.A.No.459 of 2000, on the file of the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai. 2. Facts as deduced from the material on record are that Tvl.Shardlow India Ltd., manufacturers of steel forgings and crank shafts at Huzur Gardn, Madras, were finally assessed, on a total and taxable turnover of ₹ 11,73,60,615/- and ₹ 11,73,60,615/-, respectively, against the reported total and taxable turnover of ₹ 22,20,37,318/- and ₹ 11,88,68,103/- respectively, for the year 1990 91, under Tamil Nadu General Sales Tax Act, 1959, and also levied penalty of ₹ 6,19,703/-, under Section 12(3) of the Act. 3. Aggrieved over the assessment, the dealer, filed an appeals before the Appellate Assistant Commissioner (CT)-VI, Chennai, who vide order, dated 09.01.1998, partly allowed and Partly dismissed the appeals, as follows: 5. I heard the argument on both sides and perused the connected records. 6. The main point for determination in these cases are whether the orders of the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant used, these dies for further re-casting for further orders, there is no transfer of property and as such, charges involved for making dies represent only Labour charges and this turnover cannot be included in the taxable turnover and the appellants is entitled for the exemption claimed. (iii) In the same matter, the sales tax Appellate Tribunal (Main Bench) has held below in the case of Ennore Foundaries Ltd, in T.A.113/90, dated 2.5.91. Modification charges can be amount and only labour charges since the pattern remains the property of the customers and there is no transfer of property to the appellant, the charges are only labour charges not liable for assessment. According to the above decision of the Hon'ble Tribunal, the assessment made by the Assessing Officer is not sustainable one as held by sales tax appellate tribunal in T.A.No.642/90 and 113/90, there is no transfer of property and hence tax cannot be levied. The said decisions are squarely applicable to the present case. Though the appellant has not maintained separate account for cost of technical skill and engineering, in as much as the die development charges are collected and maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are manufactured by using the dealers own material and they are not at all sold. The die cost as against the Engg., and development cost is recovered in the selling price of the forgings. The cost structure of the product in which die cost is also recovered from the customers and it is subject to tax in overall price. Whenever the dies are manufactured and shown in the Balance Sheet, it is wrong to state that the dealers are retaining the dies as their own. Further, they did not manufactured dies for the purpose of sale and dies are manufactured for their own consumption to manufacture forgings. It is evident by the fact that dies did not attract excise duty. 3. It is also contended that in a common practice in such kind of industry, to charge development cost in the form of preparation of necessary engineering specific model which will not come under the purview of sale as per section 2-A. Normally manufacture will prepare dies blocks for manufacturing any products out of their own materials for which cash is recovered from customers to harass loss of revenue if the party has gone back in his order. On examination of the record we have found that debit notes have been rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed the expenses of and incidental to putting the goods in a deliverable state shall be borne by the seller. But under the agreement of sale these charges are to be borne by the buyer they become part of the price whether separately charged or not. The object of the word, any sum charged for anything done in the section is to bring within the meaning of the term, Turnover, all amounts charged by the seller for making the goods ready and fit for sale. The expression also means that in the popular sense what is demanded and collected or received by the dealer. It can however take him only amounts charging for anything done by the seller in respect of goods sold such as bailing charges for cotton agreed to be sold in bales (101 STC 19). The charges for designing the goods manufactured as per the specification of the buyer is also an amount to be included. (94 STC 261). Other amounts which are collected without having any connection with the sale such as labour charges for selecting the goods to be paid by the purchaser described as lot cooly charges are not includable. (80 STC 393). So we have to necessary refer to American Refrigeration's case which is relied on by the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dealers will not start to work sample dies. It is not the case that so may designs are also developed and kept for perusal of the customer. Only after receiving orders from the customers, the dealers started to develop sample dies and once it is acceptable, final product has been manufactured and sold. The initial expenses relating to the manufacture of sample dies is also recovered from the customers by way of raising debit notes. It is not the case that the sample dies has also to be sold to bring the turnover into consideration. For developing the sample dies, the dealer had incurred expenses as the first step for the manufacturing and this expenses has been passed over to the customer. Then it can safely be said that the consideration for the sale of forging is inclusive of this die development charge. The relief given by the excise duty has no relevance to the present case since the Tamil Nadu General Sales Tax Act is a separate enactment and we have to follow only with the words and phrases available in Tamil Nadu General Sales Tax Act. Any pre-sale expenses are found to be includible in the sale price the question of exemption from excise duty is not a relevant factor i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this cannot be taken as an act of voluntary discharge of an obligation by the dealer under Section 13(2) of the TNGST Act and hence, the levy of penalty under section 12(3) by the Assessing Officer is in order. 11. He further submitted that the Tribunal ought not to have interfered with the order of the Assessing Authority who has rightly levied penalty under section 12(3) of the TNGST Act. 12. He further submitted that the Tribunal failed to follow the decision rendered by the Hon'ble Supreme Court, in the case of India Pistons Ltd, in Civil Appeal No.360/93 dated 13.1.98 wherein it was held that the appellant had filed at the time of assessment a statement showing correct taxable turnover, but did not pay the tax due. In the above circumstances penalty levied was upheld. This decision of the Apex Court squarely apply to the case on hand. 13. He further submitted that the Tribunal erred in following the decision reported in 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. 14. Section 12(3)(b) of the Act deals with, submission of incorrect or incomplete return and for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy a penalty. It is well known that the best judgment assessment has to be on an estimate which the assessing authority has to make not capriciously but on settled and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 is set aside and the tax case (revision) is allowed. No costs. 17. In Tax Case Revision No.186 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 Dsivision 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 office ..... X X X X Extracts X X X X X X X X Extracts X X X X
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