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Judgment
Chitra Venkataraman, J.—The assessee is on revision as against the common order passed by the Sales Tax Appellate Tribunal for the assessment years 1992-93, 1987-88, 1990-91 and 1989-90 respectively. The assessee purchased raw materials like M.S. Scrap from unregistered dealers and used the same in the manufacture of rough castings. The facts narrated show that the assessment were revised treating the purchase turnover as suppression and hence were brought to tax u/s 7A of the Tamil Nadu General Sales Tax Act, 1959. Penalty was also levied thereon u/s 16(2) of the Tamil Nadu General Sales Tax Act, 1959.
As far as the present case, viz., TC(R) No. 55 of 2009 is concerned, it relates to the assessment year 1992-93. The assessee manufactured machinery parts and sold as rough castings and paid tax at 4%. Considering the fact that the assessee had not reported the turnover for assessment u/s 7A of the Act on the use of the iron scrap purchased from unregistered dealers, in the manufacture of iron castings, penalty was also levied u/s 12(5)(iii) of the Act.
Aggrieved by the assessment, the assessee went on appeal before the Appellate Assistant Commissioner contending that the assessee had paid tax at the time of sale of rough castings, hence there was no case warranting levy of tax u/s 7A of the Act for declared goods. Thus, the purchase of iron scrap being the commodity falling under the II Schedule, it was not liable to tax. The First Appellate Authority however, confirmed the assessment.
As regards, levy of penalty u/s 12(5)(iii) of the Act, the same was also confirmed.
Aggrieved by this, the assessee went on further appeal before the Sales Tax Appellate Tribunal.
On going through the materials placed before the Sales Tax Appellate Tribunal, the Tribunal pointed out that the scrap and rough castings being two different products and iron scrap being purchased from unregistered dealers, the assessment made u/s 7A of the Act was in order. The fact that rough castings attracted liability of its sale by itself would not be of any assistance to the assessee in the matter of charging the purchased scrap for assessment u/s 7A of the Tamil Nadu General Sales Tax Act, 1959. Hence, the Sales Tax Appellate Tribunal held that rough castings being commercially different from iron and steel scrap purchased by the assessee from unregistered dealer, rightly the assessment was made u/s 7A of the Act. In so holding the Tribunal also levied penalty.
Aggrieved by the same, the present revision by the assessee raising the following questions of law:
Whether in the facts and circumstances of the case, the Tribunal is right in upholding the levy of purchase tax u/s 7A on the iron scrap purchased by the petitioner when the goods sold by the petitioner also fails under the very same sub entry (i) of Entry 4 of the Second Schedule to the TNGST Act, 1959, by virtue of which they ought to be reckoned with as the same commercial commodity?
Whether in the facts and circumstances of the case, the Tribunal is right in ignoring the judgment of the Apex Court in the case of Telangana Steel Industries and others Vs. State of Andhra Pradesh and others, and in the case of State of Tamil Nadu Vs. Pyare Lal Malhotra and Others, , wherein the Apex Court has held that goods of one sub-item and in one sub-division have to be taken as on commercial commodity?
Whether in the facts and circumstances of the case, the Tribunal is right in upholding the levy of purchase tax when it is not disputed that the petitioner had purchased the goods locally and as per the provisions of the Act, the petitioner's vendors are bound to get themselves registered under the Act?
Whether in the facts and circumstances of the case, the Tribunal is right in overlooking the judgment of the Apex Court reported in 93 STC 185, wherein it has been held that in order to enjoy exemption, it is sufficient if the dealer proves that the earlier sale was a taxable sale and it is not necessary for the dealer to prove the actual sufferance of tax at an earlier stage?
On the admitted fact, that the assessee had purchased scrap iron through unregistered dealers and there being sufferance of liability on the scraps purchased under the Tamil Nadu General Sales Tax Act, rightly the Tribunal confirmed the order of assessment u/s 7A of the Act based on the decision reported in State of Tamil Nadu Vs. Pyare Lal Malhotra and Others, . We do not find any justifiable ground to set aside the order of the Sales Tax Appellate Tribunal passed under the provisions of the Act.
In the circumstances, satisfied with the reasoning stated by the Sales Tax Appellate Tribunal on facts, we reject the revision filed by the assessee.
As regards the levy of penalty u/s 12(5)(iii) of the Act, as already seen in the preceding paragraphs, the assessee consistently took a plea that in view of the sufferance of tax on the manufacture of rough castings, there could be no liability u/s 7A of the Act for the purchases made. The Assessing Officer, however, pointed out that the assessee had not reported the turnover of scraps purchased for the purpose of manufacture of rough castings. In that view of the matter, penalty u/s 12(5)(iii) of the Act was levied.
In the decision reported in State of Tamil Nadu Vs. Indian Silk Traders this Court pointed out that false return is different from "incorrect and incomplete return". This Court further observed while the element of deliberateness, wilfulness or a blameworthy conduct on the part of the assessee may not be necessary for invoking Section 12(5) of the Act, the bona fides of the assessee has to be gone into before imposing penalty. It was further pointed out by this Court that facts of each case has to be separately analysed before coming to the conclusion that the return filed by the assessee is "incorrect or incomplete" and only with a view to postpone the legitimate due to the Government that the return was not filed in accordance with law.
On the facts narrated above, we find there being no such allegation that the assessee had deliberately submitted incorrect and incomplete return, we are inclined to set aside the order of the Sales Tax Appellate Tribunal, as regards the levy of penalty alone.
In the result, Tax Case (Revision) No. 55 of 2009 is partly allowed.
In respect of the very same facts, for the assessment years 1987-88, 1990-91 and 1989-90, the assessee has preferred TC(R) Nos. 1657, 1663 and 1689 of 2008 respectively.
In the light of the view taken by us in disposing of the Tax Case (Revision) No. 55 of 2009, the Tax Case (Revision) Nos. 1657, 1663 and 1689 of 2008 are also dismissed in respect of the tax levied u/s 7A of the Tamil Nadu General Sales Tax Act, 1959 except to the extent of cancelling the levy of penalty u/s 12(5)(iii) of the Act. In the result, all these Tax Case (Revisions) are partly allowed. However, there shall be no order as to costs.