Disposed

M/S.Hotel Gowrishankar (P) v. the Secretary, Sales Tax

Madras HC1 Oct 2024WP/16032/2008

Case brief

AI extract

What is this about?

This writ petition challenged an assessment order adding labour charges to turnover and imposing penalty under the Tamil Nadu General Sales Tax Act. The High Court, finding the additions arbitrary and baseless due to lack of incriminating material, quashed the penalty and set aside the impugned order.

What did the court decide?

The penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act was quashed and the impugned assessment order was set aside.

M/S.Hotel Gowrishankar (P) Vs the Secretary, Sales Tax — Banking and Recovery | Madras HC (2024)

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2024:MHC:3766

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WP.No.16032 of 2008

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 01.10.2024

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CORAM :

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THE HONOURABLE DR.JUSTICE ANITA SUMANTH and

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THE HONOURABLE MR.JUSTICE G. ARUL MURUGAN

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W.P.No.16032 of 2008 and

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MP.No.1 of 2008

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M/s.Hotel Gowrishankar (P) Ltd., Represented by its Director – Mr.K.Rengasamy Naidu, No.47, East Arokiaswami Road, Coimbatore.

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... Petitioner

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Vs.

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1.The Secretary, Sales Tax Appellate Tribunal, Additional Bench, Coimbatore.

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2.The Commercial Tax Officer, R.S.Puram (East) Assessment Circle, Coimbatore.

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... Respondents

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Prayer: Writ Petition filed under Article 226 of the Constitution of India, praying for the issuance of Writ of Certiorari, calling for the records of the 1^st respondent – Appellate Tribunal passed in CTSA No.321/1999 dated

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https://www.mhc.tn.gov.in/judis

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WP.No.16032 of 2008

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28.02.2008 pertaining to the assessment year TNGST 1995-96, quash the same as illegal and contrary to the provisions of law.

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For Petitioner : Mrs.R.Hemalatha For R1 : Tribunal For R2 : Mrs.K.Vasanthamala Government Advocate

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ORDER

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(Order of the Court was made by Dr.ANITA SUMANTH.,J.)

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The petitioner is an assessee under the provisions of the Tamil Nadu General Sales Tax Act, 1959 (in short Act) and challenges additions made to its turnover pursuant to an inspection conducted on 14.05.1996.

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2.An order of assessment dated 16.10.1998 was framed and one of the additions related to a slip, slip No:10, that was found in the course of inspection. That slip revealed collections of labour charges for the period 1995 – 1996 of a sum of Rs.21.12 lakhs (approx). To the aforesaid amount, the assessing authority adds 30% as cost of goods supplied and 70% towards cost of materials, arriving at a total of Rs.80,97,429/- (80.97 lakhs approx) towards estimated sales suppression of kitchenware. Penalty

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WP.No.16032 of 2008

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under Section 12(3)(b) of the Act at 150% of the alleged suppression was also levied.

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3.The petitioner challenged the assessment and was successful in first appeal. The appellate authority concluded that there was not a scrap of information found in the course of inspection that would support the addition of suppression of turnover whereas, in second appeal by the revenue, the aforesaid finding was reversed by the Sales Tax Appellate Tribunal (STAT/Tribunal) was of the view that the records supported such an addition.

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4.We have heard learned counsel.

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5.The order of assessment does not contain reference to any material that would justify the estimates made by the assessing authority. As rightly pointed out by the Appellate Assistant Commissioner, the department could, at best, have brought to tax, the labour charges, as an estimate or the turnover from sale of utensils. In the absence of any incriminating materials, the conclusion of the authority that the petitioner had engaged in fabrication of kitchenware utensils and furniture, is arbitrary baseless and devoid of any merits.

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WP.No.16032 of 2008

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6.The penalty relating to the addition is quashed and the impugned

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order, to the extent discussed above is set aside. This writ petition is allowed. No Costs. Consequently, connected miscellaneous petition is also closed.

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[A.S.M., J] [G.A.M., J] 01.10.2024

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sli Index : Yes Speaking Order : Yes Neutral Citation : Yes

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1.The Secretary, Sales Tax Appellate Tribunal, Additional Bench, Coimbatore.

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2.The Commercial Tax Officer, R.S.Puram (East) Assessment Circle, Coimbatore.

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WP.No.16032 of 2008

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DR. ANITA SUMANTH,J. and G. ARUL MURUGAN.,J

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sli

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W.P.No.16032 of 2008 and MP.No.1 of 2008

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01.10.2024

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https://www.mhc.tn.gov.in/judis

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M/S.Hotel Gowrishankar (P) v. the Secretary, Sales Tax

Case brief

What is this about?

What did the court decide?

M/S.Hotel Gowrishankar (P) v. the Secretary, Sales Tax

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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