State Of Tamil Nadu vs TV. Mahalakshmi Process

Dr. Vineet Kothari, J

The Revenue has filed this tax revision before this Court, which was transferred to Special Tribunal under Section 38 of the TNGST Act, 1959 and upon its abolition in the year 2002, has again come back to this Court.

The present revision is directed against the order of Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madurai in Madurai Tribunal State Appeal No.623/99 decided on 04.08.2003, whereby, the learned Tribunal merely upheld the order passed by the Appellate Authority viz., the Appellate Assistant Commissioner, by which, the first appellate authority had only remanded the case back to the Assessing Authority making the following observation:

"In this case, the learned Appellate Assistant Commissioner has remitted the issue in respect of the turn over of Rs.29,35,253/- for the reason to verify the transfer of non-taxable goods in picture varnish coating relying on the decision of this Tribunal in MTA Nos.549, 550 and 551/96 dated 24.7.97. He has also found that proper deduction is to be given under Se3ction 3-B(2)(b) of the Act while giving effect to the order. We are also of the view that varnish being a consumable as per the decision of the Bombay High Court in the case of Tvl.R.M.D.C. Press Private Limited, reported in 112 STC 307, wherein, it has been held that:

"It is difficult that in the execution of job work of printing, there is any transfer of property in the ink which is used for the purpose of printing. In fact, ink is a tool of the printer. It is consumed in the process of printing and looses its identify as "Goods". No property can be said to pass in ink in the execution of the contract of printing, either as ink or in any other form. No customer is concerned with the ink used in printing, its quantity or cost. It cannot be said that when a customer gets ink either as ink or in any other form, there is thus no transfer of ink involved in the execution of works contract of printing. It may be pertinent to observe that what is taxable under the Act is the value of the goods which gets transferred to the customer in the execution of works contract either as goods or in any other form and not the value of goods used or consumed in the execution of the works contract. If such user of consumption does not result in transfer of property in those goods in any form to the customer. That being so, in our opinion, the Tribunal was right in holding that there is no transfer of property in ink involved in the execution of contract of printing either as ink or in any other form."

Further, in the case of Pest Control India Limited, reported in 75 STC 188, wherein, it has been held that:

"There can be no transfer of property in goods unless the goods themselves exists. In the execution of a contract for eradication of pests, rodents, termites, although chemicals are used. The chemicals are sprayed through machines so that when the process ends. The chemicals are consumed and nothing tangible remains in which property is transferred. Such a transaction does not involve transfer of any goods..."

Thus, we find that there is no mistake in remaining the case to the Assessing Officer by the learned Appellate Assistant Commissioner. Accordingly, we confirm the order of the learned Appellate Assistant Commissioner and dismiss the appeal filed by the State regarding this petition.

a) The next point arises for consideration in this State appeal is whether the appellants revenue is correct in praying to restore the penalty deleted by the learned Appellate Assistant Commissioner of Rs. 7,38,700/- which was levied under Section 12(3)(b) of the Act, 1959? We have examined the issue and found that the learned Appellate Assistant Commissioner has deleted the penalty for the reason that the turnover considered by the levy of tax is available in the books of accounts. The learned Assessing Officers has included this with the taxable turnover. Hence, he contended that the assessment made is not best judgment assessment. In this case as contended by the learned Authorised Representative that as per the decision of the Honourable Supreme Court in the case of Tvl.S.G.Jayaraj Nadar and Sons Vs. State of Tamil Nadu, reported in 28 STC 700 and also as per the Honourable High Court of Madras in the case of Appollo Saline Pharmaceuticals (P) Ltd., Vs. Commercial Tax Officer, Palayamkottai, reported in 125 STC 505, the assessment has to be considered as one falls under Section 12(1) of the Act. So, no penalty under Section 12(3)(b) attracts in this case. Therefore, we found that there is no force in the grounds raised by the appellants revenue in the State appeal to restore the penalty deleted by the learned Appellate Assistant Commissioner. Accordingly, we confirm the order of the learned Appellate Assistant Commissioner in deleting the penalty."

We heard the learned counsel for the petitioner and the learned Additional Advocate General assisted by the learned Special Government Pleader.

Having heard the learned counsel for the parties, we are satisfied that no question of law arises in the present case as by the impugned order under revision dated 04.08.2003, only a remand of the case to the Assessing Authority, which was made by the first appellate authority viz., the Appellate Assistant Commissioner has been upheld by the Tribunal. The question of penalty deleted by the Tribunal under Section 12 (3)(b) of the Act will naturally be decided again as matter of consequence. Therefore, we do not find any necessity to make any observation or return any findings on the alleged question of law on which, the present revision petition was admitted by the Co-ordinate Bench of this Court. Therefore, without interfering with the impugned order of remand, we dismiss their appeal filed by State. The Assessing Officer is now free to take the proceedings afresh and decide the issue again in accordance with law uninfluenced by any observations made by the Appellate Tribunal.

No costs.