Additional sales tax demand fails where turnover never crosses the statutory threshold and notices are mechanically issued.

Additional sales tax liability depended on the dealer's taxable turnover crossing the statutory threshold under the Tamil Nadu Additional Sales Tax Act, 1970, and the admitted position that the turnover did not cross that limit meant the demand could not be sustained under the Central Sales Tax Act, 1956. The demand notices were also invalid because they were issued without proper assessment procedure, without addressing the dealer's reply, and with mechanical application of mind. The notices were therefore quashed, and the amount collected under protest was held refundable, with interest if refund was delayed.

---

---

Issues: Whether additional sales tax could be demanded under the Central Sales Tax Act, 1956 when the dealer's taxable turnover had not crossed the threshold prescribed under section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970, and whether the consequential demand notices and recovery were liable to be set aside with refund of the amount collected under protest.

Analysis: The statutory scheme made liability to additional sales tax contingent upon the dealer's taxable turnover exceeding the prescribed limit of twenty five crores of rupees under section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970. The petitioner's assertion that the turnover never crossed that limit was not disputed in the counter. On that footing, the demand could not be sustained by invoking section 8(2)(b) of the Central Sales Tax Act, 1956. The demand notices were also issued without adopting the proper assessment procedure and without dealing with the petitioner's reply, showing lack of application of mind and mechanical action.

Conclusion: The demand notices were illegal and were quashed. The petitioner was entitled to refund of the amount collected under protest, with interest if the refund was delayed.

---