Dismissed

M/S.Sri Cutch Vijay Saw Mill v. the Tamilnadu Sales Tax

Madras HC15 Oct 2024WP/16962/2008

Case brief

AI extract

What is this about?

A timber dealer challenged a Tribunal order restoring a best-judgment assessment based on stock variation found on inspection and levying penalty under Section 16(2) TNGST Act. Holding the voluntary sworn statement admitting suppression could not be retracted without evidence, and distinguishing precedents against penalty, the High Court dismissed the writ petition.

What did the court decide?

None granted; impugned Tribunal order dated 04.01.2008 confirmed, writ petition dismissed with no costs, connected miscellaneous petition closed.

M/S.Sri Cutch Vijay Saw Mill Vs the Tamilnadu Sales… — Writ and Judicial Review | Madras HC (2024)

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W.P.No.16962 of 2008

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 15.10.2024

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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.16962 of 2008

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and M.P.No.1 of 2008

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M/s. Sri Cutch Vijay Saw Mill, Rep. by its Partner Narshilal J. Patel, No.79-D, Meenkarai Road, Pollachi.

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.. Petitioner

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1.The Tamil Nadu Sales Tax Appellate Tribunal, (Addl. Bench), Coimbatore, Commercial Taxes Buildings, Coimbatore – 18.

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2.The Commercial Tax Officer, Pollachi (East) Circle, Pollachi. .. Respondents

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Prayer : Petition filed under Article 226 of the Constitution of India praying

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to issue a writ of certiorari by calling for the records of the first respondent in its order in CTSA No. 17/00 dated 04.01.2008 and quash the same as illegal.

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For Petitioner : Mr.S.Ramanathan For Respondents : R1- Tribunal Ms.Amirtha Dinakaran Government Advocate for R2

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

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W.P.No.16962 of 2008

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ORDER

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(Per :- Bench)

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The writ petitioner has filed this writ petition challenging an order of the first respondent / Tamil Nadu Sales Tax Appellate Tribunal in CTSA No.17 of 2000 dated 04.01.2008.

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The writ petitioner is a dealer in Timber registered under the Tamil Nadu General Sales Tax Act 1959 (TNGST Act) & the Central Sales Tax Act 1956 (CST Act) and was assessed to tax on a turnover of Rs.47,65,673.75 and Rs.22,76,145.75/- respectively for the period 1994 – 95 under the TNGST Act.

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While so, the petitioner's premises was inspected by the Enforcement Officers on 4.4.1995 and certain records were recovered and stock difference was noticed. Based on variation in stocks, the second respondent / Commercial Tax Officer, had determined the taxable turnover at an amount of Rs.47,81,668/- and also levied penalty of Rs.4,29,071/- under proceedings in TNGST 2260576/94-95 dated 12.3.1998.

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The petitioner appealed before the Appellate Assistant Commissioner (CT), Pollachi and contended that the determination of turnover was only an estimate, unsustainable in law. The authority, taking note of the fact that records were produced by the petitioner, even though during inspection they have admitted that they do not have details of purchase for stock variation, allowed the appeal.

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W.P.No.16962 of 2008

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The State preferred an appeal before the Sales Tax Appellate Tribunal in CTSA No.17 of 2000 and the Tribunal, vide order dated 4.1.2008 allowed the same on the ground that once an assessee during the inspection had admitted the fact that they have not maintained records and had also admitted that there was suppression of stock, it cannot be allowed to retract such statement at a later stage, in the absence of any material to indicate that the statement voluntarily given earlier was incorrect. Challenging the orders of the appellate tribunal, the assessee, before us, has laid this writ petition.

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We have heard learned counsel on either side and perused the materials available on record.

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In the instant case, the facts are not in dispute. The premises of the petitioner was inspected by the Enforcement Wing Officers on 4.4.1995 and during inspection, certain incriminating materials was seized and the petitioner had voluntarily had given a written statement as extracted below:-

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“Statement of Thiru J.S.Marshalal S/o. Thiru J.S.Patel, Partner, Tvl. Sri Cutch Vijay aw Mill, 79-D, Meenkarai Road, Pollachi before the DCTO (Roving Squad) Pollachi.

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,d;W (4-4-95) gfy; 12.45 kzpf;F jhq;fSk; cjtp tzpfthp mYtyh; (nr) nghs;shr;rp mth;fSk; Nkw;Fwpg;gpl;l vq;fsJ tpahghu ,lj;ij jzpf;ifapl;Bh;fs;. mg;NghJ ehd; NehpypUe;Njd;. ,e;j tpahghu ,lj;jpw;F NtW fpisNah my;yJ fpl;lq;fpNah fpilahJ. ,q;F Timber Logs, Sizes, Teak Poles thq;fp tpw;gid nra;J tUfpNwhk;. Timber Logs I ngUk;ghYk; irrhf mWj;J cs;khfhzk; kw;Wk; ntsp khepyj;jpy; tpw;gid nra;J tUfpNwhk;. D1 eKdhtpy; Fwpg;gpl;lgbAs;s vq;fsJ 1994-95k; tUlf; fzf;Ffis jq;fspd;

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W.P.No.16962 of 2008

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jzpf;iff;F fhz;gpj;J mtw;wpy; jq;fsJ Ruf;ff; ifnaOj;J ngw;W mitfis jpUk;gg; ngw;Wf; nfhz;Nld;. 1995-96k; Mz;bw;F Gjf;fzf;F ,g;NghJjhd; rkh;g;gpf;f Ntz;Lk;. 1994-95k; tUlj;jpw;Fhpa jpdrhp Fwpg;G 31.1.95 tiu jhd; vOjg;gl;bUe;J. mjd;gpd; 31.3.95 tiuapYk; u/g; rPl;ilAk; vOjtpy;iy. ehq;fs; 1994-95k; Mz;by; ntspehl;by; ,Ue;Jk; ntspkhepyj;jpy; ,Ue;Jk; kw;Wk; cs;khepyj;jpy; ,Ue;Jk; kuk; kuir];fs; thq;FfpNwhk;. ntspkhepyj;jpw;F ruf;Ffs; mDg;gp Consignment Sales vdlw Kiwapy; tpw;gid nra;tJ fpilahJ. ehq;fs; ntspehL kw;wk; ntspkhepyq;fspy; ,Ue;J ruf;Ffs; nfhs;Kjy; nra;J> tpw;gid nra;jhYk; me;j ruf;FfSf;F jpdrhp ,Ug;G fzf;F NgZtJ fpilahJ. jq;fsJ jzpf;ifapd;NghJ tpahghu ,lj;jpy; ,Ue;J vq;fsJ tpahghu rk;ge;jg;gl;l rpy Mtzq;fis jq;fspd; Nky; ghprPyidf;fhf b7 nurPJ ngw;Wf;nfhz;L> jq;fsplk; nfhLj;Js;Nsd;. jzpf;ifapd;NghJ tpahghu ,lj;jpy; ,Ue;j cz;ikapUg;ig ehd; vz;zpvLj;Jj;jdpj;jhspy; Fwpj;Jf; ifnaOj;jpl;Lj; jq;fsplk; nfhLj;Js;Nsd;. ,e;j cz;ik ,Ug;G jq;fsJ cjtp tzpf thp mYtyh; Kd;dpiyapy; vLf;fg;gl;lJ. ,ijj; jtpu NtW vq;Fk; ,Ug;G ruf;Ffs; fpilahJ. ehq;fs; jpdrhp ,Ug;G fzf;F Ngzhjjhy; 1.4.94 md;W tpahghu ,lj;jpypUe;j Kjy; tpw;gidf;Fhpa Muk;g ,Ug;G ruf;F> mjd;gpd; 31.3.95 tiuAs;s nfhs;Kjy; (yhgKk; Nrh;e;J) kw;Wk; tpw;gidNahL> jzpf;ifapd;NghJ tpahghu ,lj;jpy; ,Ue;j cz;ikapUg;ig xg;gpl;L ghh;j;j NghJ fPo;f;fz;lthW tpj;jpahrk; fhzg;gl;lJ. 1-4-94 md;W Muk;g ,Ug;G &.31>79>069-00 1-4-94 Kjy; 31-3-95 tiu ntspehL kw;Wk; ntspkhepyf; nfhs;Kjy; &.73>38>926.00 nkhj;jk; &.1>05>17>995.00 fopT jzpf;ifapd; NghJ Kjy; tpw;gidf;Fhpa cz;ik ,Ug;G ruf;F &. 32>30>000.00 -------------------------kPjp tpw;gid nra;ag;gl;lit &. 72>87>995.00 yhgk; 12 % rjtPjk; (1993-94k; tUlg;gb) thpf;Fhpa tpw;gid njhif &. 8>74>559.00 ------------------------1994-95y; fzf;Fg;gb Kjy; tpw;gidj; njhif &.81>62>554.00 1.cs;khepy tpw;gid &.1979871.00 2.ntspkhepy tpw;gid &.4435130.00 3. Form XX nlypthp Nehl;gb tpw;gid (tpw;gid gpy; Nghlg;gl Ntz;bwJ &.395000.00 nkhj;jk; &.68>10>001.00 ----------------------tpj;jpahrk; (-) &.13>52>553.00 -----------------------,e;j tpj;jpahrj;jpw;F vd;dhy; tpsf;fk; $w ,aytpy;iy. ”

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W.P.No.16962 of 2008

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A perusal of the above statement furnished by the petitioner clearly brings out the fact that they had not been maintaining requisite registers. The deponent has also admitted to the stock variations found during inspection as he was unable to substantiate the differences. The assessment had thus been based on the statement adduced by the petitioner during inspection as well as the admitted variations in stock. The factum of suppression thus emanated from the materials found during the inspection.

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The appellate authority had, in view of the subsequent stand taken by the writ petitioner, and materials produced subsequently, interfered with the orders of assessment and allowed the appeal. However, the Tribunal by taking note of the fact that the petitioner had voluntarily come forward and given the statement that they have not maintained stock register and there was a variation in stock, held that the voluntary statement adduced by the petitioner cannot be allowed to be retracted at later stage by taking a different stand, unsubstantiated by records.

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In the order of assessment, the assessing authority has also added a component of estimate over and above the actual suppression, which was contested on the ground that no estimate can be made over and above the actual suppression detected. The Tribunal has confirmed the estimated suppression as well. Though learned counsel for petitioner would attempt to state that no materials have been found to support the

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W.P.No.16962 of 2008

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addition of an estimate over and above the actual suppression detected, we find that there is sufficient material that emanates from the statement of Mr.Marshalal, the partner of the petitioner firm to support such an estimate.

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In that statement, which has been extracted supra, the assessee has set out a detailed computation of the suppression of turnover. In such an instance, we find no justification to intervene in the order of the tribunal as sufficient material is available on record to establish suppression over and above the actual suppression found.

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Coming to the levy of penalty under Section 16(2) of the Act, petitioner would rely on the judgments in the State of Tamil Nadu v Sri Shanmughananda and Co., [104 STC 61] and State of Tamil Nadu v Sri Ram Packages [ 47 STC 59]. The argument put forth is that no penalty under Section 16(2) of the Act can be levied in cases where the additions are based on the accounts.

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It is true that in the aforesaid two cases, this Court has held that levy of penalty under Section 16(2) would be permissible only in the case where the assessment was a best judgment assessment, not relying solely on the accounts furnished by dealer. However, the facts of those two cases would be distinguishable from the present as in the matter before us, there has been an inspection conducted on 4.4.1995 and actual suppression has been noticed, which has been brought to tax.

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The statement recorded from the assessee would also indicate suppression over and above that detected by the authorities in 6/11

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W.P.No.16962 of 2008

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the course of inspection. While the assessee may have maintained accounts, the same are clearly unreliable. It is not merely the factum of the turnover being reflected in the accounts that would be germane for the levy of penalty but whether the turnover which is reflected in those accounts has been correctly identified and brought to tax. The facts in the present case reveal suppression not just detected during the course of inspection but over and above the same.

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Hence the accounts maintained by the assessee have not been the basis of assessment and the assessing authority has framed the assessment on the amount represented by the actual suppression detected during the inspection as well as a component of estimated turnover , duly supported by the statement on record. The arguments on this count are thus rejected and the decision in the case of Sri Shanmughananda and Co. (supra) and Sri Ram Packages (supra) are distinguished on facts.

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In this regard, we have had occasion to deal with an identical issue in W.P.No.23806 of 2008 dated 23.09.2024, the relevant portion of which is extracted below:-

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“23. When the records submitted before the Authorities were found to be with interpolation and admittedly this theory of stock transfer was only introduced at the later stage by the Assessee who did not have any explanation available at the time of inspection and as such had voluntarily given a sworn statement admitting that there is difference in stock to the value of Rs.5,28,252/- and he has no explanation to offer, the Assessee is only making an attempt to retract from the sworn statement furnished earlier which cannot be allowed to be

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W.P.No.16962 of 2008

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done and the statement must be given effect to.

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24. As rightly contended by the learned Government Advocate, it is useful to refer the decision of this Honble Court in Yousuf Radio Vs. Board of Revenue, Commercial Taxes, Chepauk, Madras reported in 43 STC 525 and the relevant portions are extracted hereunder:

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There is a fallacy in this argument. The courses of taxation under the Income-tax Act and the Sales Tax Act are entirely different. Whilst in the former, the income of a dealer is assessed to tax and is expected to be quantified by the Income-tax Officer under the Income-tax Act in accordance with the provisions of that Act, the Tamil Nadu General Sales Tax Act ordains the assessing authorities functioning thereunder to bring to tax sales as such either found in the books of account or agreed to be so by the assessee or otherwise proved to be so by circumstantial evidence. This is a case in which the assessee has admitted in a sworn statement that the two sums of Rs. 73,000 and Rs. 72,000 representing sales for the two assessment years in question represented unbilled cash sales. Excepting, as pointed out by the Board of Revenue, to avoid assessment proceedings made under the Tamil Nadu General Sales Tax Act, we see no particular bona fides in the gesture or the attitude of the appellant in having retracted from a sworn statement, which was the result of a voluntary act on the part of the assessee. It is not even alleged that at the time when the sworn statement was made by him, he was compelled or coerced to make it. On the other hand, he wanted to escape the fangs of the Income-tax Act by suitably retracting from his sworn statement and stating that they were cash credits and not the total of unbilled cash sales. Obviously, it suited him to do so before the income-tax authorities. Having had the advantage, which we are not sure whether he did have, the retraction of the sworn statement is pressed into service before us was attempted before the Appellate Assistant Commissioner. An assessee cannot reprobate and approbate. If that could be done and if it is possible in law, then

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every assessee can escape at every possible inconvenient stage from the force of the taxing provisions because he could make suitable statements at opportune moments to help his cause and get out of the net of taxation. Once a voluntary overt act results in a sworn statement, it Should be given effect to and an opportunity ought not to be given to the assessee to retract therefrom unless there is some suspicion, proved and circumstantial, available at the time when such a statement was made. No such significant circumstance is present in the instant case. Therefore, we are of the view that for the simple reason that it suited the assessee to retract from his statement before the income-tax authorities, that situation should not prevail and cause the assessing authorities under the Tamil Nadu General Sales Tax Act also to accept such retraction and the result thereof. We agree with the Board of Revenue that such to retract from the sworn statement was made possibly to avoid the inclusion of the aforesaid amounts in the assessable turnover under the Tamil Nadu General Sales Tax Act and the Board of Revenue was right in having included the amounts as the turnovers for the relevant years. `

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25. In the instant case, as the Assessee did not have any plausible explanation to offer after inspection for the variation in stock, had admitted the discrepancies in the stock available and had voluntarily given sworn statement that there is no explanation available with them. Therefore the voluntary sworn statement offered by the Assessee has to be given effect to and the Assessee cannot be allowed to approbate and reprobate at the later stage.

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26. In view of the settled position, the view expressed by the Appellate Authority that the materials submitted by the Assessee to substantiate their claim has to be considered rather then relying on the statement given by them during the inspection cannot be sustained and the Tribunal by taking note of these aspects has rightly arrived at a decision and set aside the order of the Appellate Authority by restoring the Assessment Order, which

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in our considered opinion needs no interference and thus sustained.”

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In light of the discussion above, we find no error or infirmity in the order passed by the first respondent dated 04.01.2008. In such view of the matter, the order passed by the first dated 04.01.2008 is confirmed and this writ petition is dismissed. No costs. Connected miscellaneous petition is closed.

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Index:Yes/No Neutral Citation:Yes/No ssm

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