TMI Blog2019 (11) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... ide and grants unrestricted powers to an assessing authority to bring to tax turnover that has in his opinion escaped assessment for any reason whatsoever. Thus, the statutory provision for initiating proceedings for assessment of escaped turnover permits an Assessing Authority under the TNGST Act to initiate proceedings for re-assessment merely if, in his opinion, turnover liable to be brought to tax, has escaped assessment. Concessional rate of tax - Fibre Glass Reinforced Plastic Products - TNGST Act - rate of sales tax chargeable - HELD THAT:- There appears to have been an inspection at the petitioners premises on 22.05.2006 and based on a statement recorded therein, a notice dated 22.05.2006 for revision of assessment was issued by the Enforcement Officers. The notice alleged that the inspection of the business premises revealed contravention of the provisions of the Act insofar as the sales in respect of which concessional rate was sought were not so eligible to the same and ought to have been taxed under regular rate. The conclusion of the Assessing Authority to the effect that section 3(5) would apply to 'capital goods' alone is clearly incorrect and does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He goes so far as to specifically state and record this in the original orders of assessment. While this is so, the petitioner received pre-assessment notices dated 06.12.2006 proposing to bring to tax the very same transactions at regular rate, thus denying the petitioner the benefit of concessional rate of tax. This, according to the petitioner, constitutes a change of opinion or review of the original stand adopted in assessment that is impermissible in law. He points out that neither the prerevision notices nor the impugned orders of assessment refer to any new material or information gathered by the department or that has come to its notice, warranting the revision of assessments, in law or on facts. 4. He relies on a judgment of the Supreme Court in the case of State of Uttar Pradesh and Others Vs. Aryaverth Chawl Udyoug and Others [(2016) 91 VST 1 (SC)], wherein, the Bench, in the context of the U.P. Trade Act, 1948, states that the Assessing Authority can reassess turnover only on the basis of new material and not upon a change of opinion. 5. Per contra, Mr.Mohammed Shafiq, learned Special Government Pleader, assisted by Mr.V.Haribabu, le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 16 provides for assessment of escaped turnover 'for any reason' . The language utilised is wide and grants unrestricted powers to an assessing authority to bring to tax turnover that has in his opinion escaped assessment for any reason whatsoever. 8. In Surya Fertilisers (supra), a Division Bench of this Court, in considering the validity of an assessment invoking powers under Section 16 of the Act, holds that the Assessing Officer can bring to tax turnover that has escaped on account of an erroneous understanding of the nature of transaction, a wrong understanding of the provisions of the Act or erroneous exclusion of taxable turnover from the ambit of tax. The ratio thereof has been confirmed in Yercaud Coffee Curing Works Ltd. (supra) by another Division Bench (Justice Sethuraman being common to both Benches). 9. In the case of Dinod Cashew Corporation (supra), a subsequent Division Bench has reiterated the same view as aforesaid. A specific argument advanced by the petitioner in that case was a comparison of the provisions relating to re-assessment in terms of the Indian Income Tax Act with the Tamil Nadu General Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench has referred to the earlier decision of a Full Bench of this Court in State of Madras v. Louis Dreyfus and Company Ltd. [1955] 6 STC 318 (FB) at page 329, where the Full Bench observed as follows : The 'escape' that serves as the foundation of the jurisdiction to reopen an assessment is that of 'turnover' and not, be it noted, an assessment. 'Turnover' escapes when it is not noticed by the officer either because it is not before him by reason of an inadvertence, omission or deliberates concealment on the part of the assessee, or because of want of care on the part of the officer the turnover though in the books has not been taken notice of. This would be the natural and normal meaning of the expression 'turnover which has escaped' in rule 17(1). ... ....The argument before the Supreme Court was that section 26 was not applicable to a case where income was returned but was initially held to be not liable to tax. This contention was negatived and the Supreme Court held that the Agricultural Income-tax Officer was competent under section 26 of the Bihar Act to assess an item of income which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessment made under section 16 of the Act. 11.Thus, the statutory provision for initiating proceedings for assessment of escaped turnover permits an Assessing Authority under the TNGST Act to initiate proceedings for re-assessment merely if, in his opinion, turnover liable to be brought to tax, has escaped assessment. 12. It is relevant to note that the U.P. Trade Tax Act,1948 also utilises the phrase 'reason to believe' in Section 21 of the Act dealing with 'Assessment of tax on the turnover not assessed during the yea r ', extracted below: '21. Assessment of tax on the turnover not assessed during the year (1) If the assessing authority has reason to believe that the whole or any part of the turnover of a dealer, from any assessment year or part thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under htis Act, or any deductions or exemptions have been wrongly allowed in respect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stand were referred to. 18. There was an exchange of communication thereafter and pursuant to a further notice dated 06.12.2006 and objection dated 11.1.2007, the Officer proceeds to pass the impugned orders of assessment confirming the assessment proposals. 19. Upon a perusal of the impugned orders dated 26.02.2007, I find that the petitioner has been denied concessional rate of tax on the following main grounds: (i) that the goods in respect of which concessional rate has been claimed do not find place in the Eighth Schedule to the Act, which according to the Officer deals only with capital goods; (ii) that FGRP does not constitute capital goods, or parts of machinery sold for replacement during maintenance and repairs; (iii) that the decisions relied upon by the assessee deal with section 3(3) and not section 3(5) which is relevant for the purposes of the present case; (iv) that the sales transactions have been effected with the full knowledge of the petitioner that the goods sold are not entitled to concessional levy of tax. 20. The petitioners submission th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. The Section extends a concessional rate of tax in respect of sale of those goods set out in the Eighth Schedule, the relevant portion of which, reads thus:- ...... 3. Machineries of all kinds (other than those specifically mentioned in the First Schedule) worked by (i) Electricity (ii) Nuclear power (iii) Hydrodynamic and steam power (iv) Diesel or petrol (v) Furnace oil (vi) Kerosene (vii) Coal including coke and charcoal or (viii) any other form of fuel or power (excluding human or animal labour) (ix) parts and accessories of machineries and tools used with the machineries mentioned in sub-item (i) to (viii) above.' 23. The conclusion of the Assessing Authority to the effect that section 3(5) would apply to 'capital goods' alone is clearly incorrect and does not appear to have any basis. Capital goods being machinery as well as parts, accessories and tools thereof fall within the ambit of clause (3) of the Eighth schedule and consequently within the beneficial sweep of section 3(5) as well. 24. There is no dispute in this case that the purchaser is an industrial consumer and is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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