Additional sales tax liability and recovery on monthly returns upheld where the rules authorised arrears recovery without separate assessment or demand notice.

Additional sales tax was held leviable on turnover in raw hides and skins and dressed hides and skins where the taxable turnover crossed the statutory slab, and the declared-goods ceiling was not breached on the relevant periods; the challenge to liability therefore failed. A composite demand and recovery without a separate provisional or final assessment, and without a separate notice of demand, were upheld because the rules required a monthly-return assessee to pay additional tax on the return basis and authorised recovery of arrears when payment was not made. The impugned demand was sustained and the writ petition failed.

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Issues: (i) Whether additional sales tax was leviable on the petitioner's turnover in respect of raw hides and skins and dressed hides and skins, having regard to the statutory ceiling on the cumulative tax burden on declared goods; (ii) Whether the impugned composite demand could be issued and recovered without a separate provisional or final assessment and without a notice of demand.

Issue (i): Whether additional sales tax was leviable on the petitioner's turnover in respect of raw hides and skins and dressed hides and skins, having regard to the statutory ceiling on the cumulative tax burden on declared goods.

Analysis: Section 2 of the Tamil Nadu Additional Sales Tax Act, 1970 levies additional tax where the taxable turnover exceeds the prescribed slab, and the proviso limits the burden on declared goods so that the cumulative effect of tax does not exceed 4 per cent. On the facts found, the petitioner's turnover exceeded Rs. 10 lakhs and, for the relevant periods, additional sales tax was generally within the permissible limit, except for periods where the underlying sales tax itself had reached 4 per cent in respect of raw hides and skins. The Court treated the liability to additional tax as established for the periods covered by the demand.

Conclusion: The levy of additional sales tax was upheld in principle for the relevant periods and the petitioner's challenge to liability failed.

Issue (ii): Whether the impugned composite demand could be issued and recovered without a separate provisional or final assessment and without a notice of demand.

Analysis: Rule 4(2) of the Tamil Nadu Additional Sales Tax Rules, 1970 requires a dealer filing monthly returns to pay additional tax on that basis and provides for recovery without notice of demand if payment is not made. As the petitioner was a rule 18(3) assessee under the Tamil Nadu General Sales Tax Rules, 1959, the tax was payable along with the monthly returns, and the department was entitled to recover the arrears when payment was not made after the earlier stay stood vacated. The composite demand was therefore not contrary to the statutory scheme.

Conclusion: The composite demand and the mode of recovery were held to be valid.

Final Conclusion: The writ petition failed in entirety and the impugned demand was sustained, with no order as to costs.

Ratio Decidendi: A dealer liable to file monthly returns and pay additional sales tax under the statutory scheme can be proceeded against for recovery of arrears without a separate assessment or notice of demand where the rules expressly authorise such recovery on the basis of the returns.

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