M/S.Woodkraft[India] Pvt. Ltd. Vs the Secretary

WP No. 7299 of 2007 1. M/s Prime Interiors Rep. By Its Proprietor, Mr.M.G.Chandrasekar, No.314, III Main 7th Cross, Dumbur Layout, Bangalore Petitioner(s) Vs 1. The Secretary Sales Tax Appellate Tribunal, Additional Bench, Coimbatore 2.The Deputy Commercial Tax Officer, Avinashi Road Circle, Coimbatore Respondent(s) WP No. 14109 of 2008 1. M/s.Woodkraft [india] Pvt. Ltd., Rep. By Is Director, Mr. Karan Goel, Mysore Road, Bangalore 26. Petitioner(s) Vs 1. The Secretary, Sales Tax Appellate Tribunal, Addl. Bench, Coimbatore. 2.The Deputy Commercial Tax Officer, Avinashi Road Circle, 2/12

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

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W.P. Nos.14108 of 2008 and etc. batch

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Coimbatore.

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WP No.	7297 of 2007	Respondent(s)
1. M/s Prime Interiors
Rep. By Its Proprietor,
Mr.M.G.Chandrasekar,
No.314, Iii Main 7th Cross,
Dumbur Layout, Bangalore
		Petitioner(s)
	Vs
1. The Secretary
Sales Tax Appellate Tribunal,
Additional Bench, Coimbatore
2.The Deputy Commercial Tax
Officer, Avinashi Road Circle,
Coimbatore
WP No.	7298 of 2007	Respondent(s)
1. M/s Prime Interiors
Rep. By Its Proprietor,
Mr.M.G.Chandrasekar,
No.314, Iii Main 7th Cross,
Dumbur Layout, Bangalore
		Petitioner(s)
	Vs
1. The Secretary
Sales Tax Appellate Tribunal,
Additional Bench, Coimbatore 3/12

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W.P. Nos.14108 of 2008 and etc. batch

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2.The Deputy Commercial Tax Officer, Avinashi Road Circle, Coimbatore

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Respondent(s)

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WP No. 14108 of 2008

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PRAYER

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Calling for the records of the 1st respondent Appellate Tribunal passed in CTA.No.163/2004 dated 12.12.2005, quash the same as illegal and contrary to the provisions of law.

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WP No. 7299 of 2007

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PRAYER

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Call for the records of the 1st respondent-Appellate Tribunal passed in CTA No.161/2004 dated 12.12.2005 quash the same.

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WP No. 14109 of 2008

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PRAYER

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calling for the records of the 1st respondent-Appellate Tribunal passed in CTA.No.164/2004 dt. 12.12.2005, quash the same as illegal and contrary to the provisions of law.

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WP No. 7297 of 2007

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PRAYER

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To call for the records of the 1st respondent-Appellate Tribunal passed in CTA No.162/2004 dated 12.12.2005 quash the same

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WP No. 7298 of 2007

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PRAYER

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To call for the records of the 1st respondent-Appellate Tribunal passed in CTA No.184/2004 dated 12.12.2005 quash the same.

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In all Writ Petitions

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For Petitioner(s): Mrs.R.Hemalatha

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For Respondent(s): R1 Tribunal

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Ms.Amirta Poonkodi Dinakaran Govt.Advocate for R2

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W.P. Nos.14108 of 2008 and etc. batch

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COMMON ORDER

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(Order of the Court was made by Mohammed Shaffiq J.)

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The present writ petitions have been filed praying for a writ of certiorari,

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challenging the orders of the Sales Tax Appellate Authority, insofar as claim of petitioners that goods procured from Bangalore would be covered under

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Section 3-B (2)(a) of the Tamil Nadu General Sales Tax Act, 1959, (hereinafter

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referred to as the “TNGST”) and thus not liable to tax was rejected by the Tribunal.

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Petitioners are engaged in execution of interior works. During the

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relevant assessment years petitioners were engaged execution of works

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contract at Coimbatore. The relevant assessment year and the date of

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assessment are extracted hereunder:

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*S.No*	*W.P.No.*	*Petitioner Name*	*Assessmen* *t year*	*Date of* *Assessment* *Order*
1	W.P.No.7297/2007	M/s. Prime Interiors	1998-99	27.08.2002
2	W.P.No.7298/2007	M/s. Prime Interiors	1996-97	27.08.2002
3	W.P.No.7299/2007	M/s. Prime Interiors	1997-98	27.08.2002
4	W.P.No.14108/2008	M/s.Woodkraft[India]Pvt	1996-97	27.08.2002
5	W.P.No.14109/2008	M/s.Woodkraft[India]Pvt	1997-98	27.08.2002

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W.P. Nos.14108 of 2008 and etc. batch

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It is submitted by the learned counsel for the petitioners that for the purpose of executing works contracts, goods were procured from State of

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Tamil Nadu as well as from outside the State. Insofar as the goods procured

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from Tamil Nadu are concerned, it is submitted that the goods suffered

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appropriate taxes under the TNGST Act, petitioners thus claimed the benefit under Section 3-B(2)(b) of the TNGST Act. Insofar as the goods procured from outside the State of Tamil Nadu, it was submitted that these are all inter-State transactions and therefore, would be covered under Section 3-B (2)(a) of the TNGST Act and thus not liable to tax. However, the same was rejected and an order of assessment came to be passed wherein the purchases from outside the State were found to be liable to tax under the TNGST Act. Penalty under Section 12(3)(a) of the TNGST Act at 150% of the tax was imposed. Aggrieved, petitioners preferred appeal before the First Appellate Authority. First Appellate Authority confirmed the order of assessment, on the premise that the property in the goods stood transferred during the course of execution of works contract and passed within the State of Tamil Nadu.

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W.P. Nos.14108 of 2008 and etc. batch

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Aggrieved, petitioner preferred an appeal before the Sales Tax

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Tribunal. The Appellate Tribunal again confirmed the order of the First Appellate Authority while finding that the transactions are not inter-state in

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character thus ineligible for deduction in terms of Section 3-B(2)(a) of the TNGST Act, cannot be sustained inasmuch as the goods are standard goods.

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Importantly, the inter-state movement cannot be considered as being intended

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for use in execution of any particular contract. In other words, it was found by

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the authorities below that there was not even a conceivable link much less inextricable between the inter-state movement and the deemed sale. Thus,

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the transactions were treated as inter-state works contract (deemed sale) and

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liable to tax.

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It is against this order of the Tribunal that the petitioners have

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preferred these writ petitions. The case of the petitioners is that the purchase

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of materials from outside the State of Tamil Nadu, namely Karnataka, were

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meant for being used in execution of works contract within the State of Tamil

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Nadu, such purchases constitute inter-state transactions, thus would be

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eligible for the benefit of deduction under Section 3-B (2)(a) of the TNGST Act.

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W.P. Nos.14108 of 2008 and etc. batch

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To the contrary, it was submitted by Ms.Amirtha that, to constitute a

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inter-State transaction within the meaning of 3-B(2)(a), it may be necessary for the petitioners to demonstrate that there was a sale/deemed sale and inter-

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State movement of goods and that such sale/deemed sale occasioned the inter-State movement. She would submit that the expression “occasion”

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employed in Section 3(a) of CST Act has been construed by this Court as well as the Hon'ble Supreme Court of India on numerous occasions and it has been consistently held that there must be conceivable if not inextricable link between the movement and the inter-State sale/deemed sale. She would also submit that these goods are standard goods and could be diverted. She would

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also submit that there is no evidence whatsoever, which has been let in, to show a conceivable if not an extricable link between inter state movement and

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deemed sale (works contract). In view thereof, she would submit that the order of the Tribunal finding that these are not inter-State transactions of work contract falling under Section-3B(2)(a) of the Act, may not warrant interference.

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W.P. Nos.14108 of 2008 and etc. batch

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Having considered the rival submissions, we find that, question

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whether a particular transaction is an inter-State sale or an intra-State sale is

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essentially a mixed question of fact and law. As submitted by the learned

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counsel for the respondents, there appears to be no materials whatsoever which has been let in by the learned counsel for the petitioners before the

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Assessing Authority as well as the Appellate Authorities, to indicate that there

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is atleast some conceivable link between the inter-State movement and the

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sales/deemed sale. The above finding being essentially a question of fact

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would not warrant interference unless shown to be perverse which is not the

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case. In view thereof, we are of the view that the order of the Tribunal does

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not warrant interference.

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Now coming to the issue of penalty, we find that while the assessing

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authority and the First Appellate Authority have proceeded to treat the

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assessment as original assessment and proceeded to levy penalty under

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Section 12(3) of the TNGST Act, however, Tribunal found that the assessment

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in fact falls under Section 16 of the TNGST Act and had proceeded to confirm

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the levy of penalty under Section 16(2) of the TNGST Act.

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W.P. Nos.14108 of 2008 and etc. batch

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We find that insofar as penalty under Section 16(2) of the TNGST Act,

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Tribunal ought to have seen that neither the Assessing Authority nor the Appellate Authority had any occasion to examine the question as to whether

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there was any willful non-disclosure of turn-over. Levy of penalty under Section 16(2) can be invoked only if the Authority is satisfied that the escape

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from assessment is due to willful non-disclosure of assessable turn-over. We

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find that there is no finding either by the Assessing Authority as well as the

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First Appellate Authority nor the Tribunal that there was escapement of turn-

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over due to willful non-disclosure of assessable turn-over by the petitioners, which may prove fatal.

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In this regard it may be relevant to refer to the judgment in the case

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of Ramankutty Nadar Vs. State of Madras1, wherein it was held that in the

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absence of finding of willful non-disclosure, levy of penalty under Section 16(2) of the TNGST Act cannot be sustained. The above view was reiterated

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in the case of Regional Assistant Commissioner of Sales Tax, Indore Vs.

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Malwa Vanaspati and Chemical Co. Ltd2 and V.S.Prabhakaran and Co

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1 31 STC 44

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2 1968 21 STC 431

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W.P. Nos.14108 of 2008 and etc. batch

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Vs. State of Kerala3.

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Since we find that there is no finding recorded by the lower

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authorities in the above aspect, levy of penalty under Section 16(2) of the TNGST Act by the Tribunal cannot be sustained. Accordingly, the orders made

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in CTA.Nos.161 to 164 & 184 of 2004, dated 12.12.2005 are modified on the above terms and the Writ Petitions are partly allowed. No costs. Consequently,

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the connected miscellaneous petitions, if any, are closed.

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(S.M.SUBRAMANIAM J.)(MOHAMMED SHAFFIQ J.) 13-10-2025

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gd Index:Yes/No Speaking/Non-speaking order Internet:Yes Neutral Citation:Yes/No

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To :

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

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2.The Deputy Commercial Tax Officer, Avinashi Road Circle, Coimbatore.