TMI Blog2018 (5) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the order of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Chennai, dated 2/12/2002, made in S.T.A.No.718 of 2000. 2. Facts as deduced from the material on record are that Tvl. The Paper Products Limited, dealer in packing materials, at Chennai, were finally assessed, on a total and taxable turnover of ₹ 64,61,796/- and ₹ 64,61,796/-, respectively, against the reported total and taxable turnover of ₹ 62,93,954.39 and ₹ 62,93,954.39 respectively, for the year 1993 94, under Tamil Nadu General Sales Tax Act, 1959, and also levied penalty of ₹ 1,30,993/-, under Section 12(3)(b) of the Act. Aggrieved over the assessment, the dealer, filed an appeal before the Appellate Assistant Commissioner, disputing the turnover of ₹ 48,65,364/- at 8% and penalty of ₹ 1,30,993/-, under Section 12(3)(b) of the Act and penalty of ₹ 1,35,289/-, under Section 22(2) of the Act. The Appellate Assistant Commissioner, vide order, dated 01.04.1998, partly allowed the appeal, as follows: I heard their arguments and also perused the connected records. The main points for consideration in these appeals are:- i) Whether the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty in goods involved in the execution of works contract and the said transfer of property in such goods take place when the goods re incorporated in the works... This makes it crystal clear that the process of delivery of goods either within the State or outside the State after the execution of incorporation in the works contract is a separate even which cannot be clubbed with the incorporation of inputs to claim the benefit of Section 3(a) of the Central Sales Tax Act, 1956. On the ground that the definition of 'Sales' under the Central Sales Tax Act, 1956 has not been amended to include the 'Deemed Sale'. The Hon'ble Madras Additional Bench of the Tribunal in its Tribunal Appeal No.359/92 and 360/92 dated 21.7.96 in the case of the Appellants themselves confirmed the assessment made by the Assessing Officer for 88-89 and 89-90 under the same facts and identical circumstances relying on the observation of the Hon'ble Supreme Court of India in the case of Ganon Dunkerly Co (Vs.) State of Rajasthan. In the Tribunal Appeals referred to above the learned Members of the Additional Bench hold as follows:- So bearing all these things in mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 12(1) of the Act by accepting the book turnover. Hence, it is deleted as per the principles stated in 28 STC 700. POINT (iv): The appellants have collected tax on the entire receipt of conversion charges instead of on 70% of the conversion charges which is in contravention of the provisions of the Act as contemplated in Section 22(2) of the Act. Hence, the levy of penalty under Section 22(2) as levied by the Assessing Officer is confirmed for 1991-92 and 1993-94. In the result the Appeals are partly confirmed, partly remanded and partly allowed. 3. Being aggrieved, State has preferred S.T.A.No.718 of 2000, disputing the deletion of penalty of ₹ 1,30,993/-, under Section 12 (3) (b) of the Tamil Nadu General Sales Tax Act, 1959, for the year 1993 94, under the Tamil Nadu General Sales Tax Act, 1959, against the order of the Appellate Assistant Commissioner (CT) II, Chennai, in A.P.No.969 of 1995, dated 1/4/1998. Vide Order, dated 2/12/2002, the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Chennai, dismissed the same, as hereunder: 6. We find that the respondent/dealers were finally assessed on a total and taxable turnover of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Tribunal, ought to have seen that the Assessing Officer had levied the penalty in as much as the dealer had claimed incorrect exemption by not reporting the turnover as taxable and paid tax, as prescribed under the Act, which amounts to filing of incorrect and incomplete return and hence, the Assessment made falls under Section 12 (2). Consequently, the levy of penalty under Section 12 (3) (b) is automatic. 6. He further submitted that the Tribunal erred in deleting the penalty holding that levy of penalty under Section 12 (3) (b) is not called for, 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. 7. He further submitted that the Tribunal failed to note that the State has preferred Special Leave Petition in an identical issue before the Hon'ble Apex Court, which is pending in SLP.CC.7430/2002/Tagged with C.A.Nos.1683 of 2002 dated 25/6/2002 in respect of the issue relating to levy of penalty under Section 12 (3) (b) of the TNGST Act. 8. Section 12(3)(b) of the Act deals with, submission of incorrect or incomplete return and for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it can levy 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in levying 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. 11. 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 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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