Government order exemption is institution-specific; concessional sales followed by later disposal attract tax, while disclosed turnover penalty fails.

Sales tax exemption under a Government Order was confined to the specifically named voluntary leprosy institutions and centres, so supplies made to the District Leprosy Officer did not qualify for automatic exemption in the absence of a direct notification linking those purchases to the exempt centres. The turnover brought to tax under section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 was sustained because the assessee had first obtained concessional treatment and then disposed of the goods in a manner attracting the additional levy. Penalty under section 12(3)(b) was not sustainable for the disclosed turnover, as the assessment was not a best judgment assessment and the case fell outside the permissible penalty period.

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Issues: (i) Whether sales made to the District Leprosy Officer were exempt from sales tax under G.O.P. No. 2280 Revenue dated April 30, 1973. (ii) Whether the turnover subjected to levy under section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 was rightly assessed to tax. (iii) Whether penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 was leviable for the assessment year in question.

Issue (i): Whether sales made to the District Leprosy Officer were exempt from sales tax under G.O.P. No. 2280 Revenue dated April 30, 1973.

Analysis: The exemption granted by the Government Order was confined to sales to specifically named voluntary leprosy institutions and specified centres. A later Government Order added further centres, showing that the benefit was institution-specific and not a general exemption for all supplies connected with leprosy treatment. The central purchase arrangement under the later Government Order did not, by itself, establish that supplies to the District Leprosy Officer were automatically sales to the exempt centres. In the absence of a specific Government directive linking the purchases to the notified institutions, the claim to exemption could not be accepted.

Conclusion: The exemption claim was rejected and the levy on the sales to the District Leprosy Officer was upheld.

Issue (ii): Whether the turnover subjected to levy under section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 was rightly assessed to tax.

Analysis: The assessee had first availed the concessional rate on production of form 17 under section 3(3) and thereafter despatched the goods in a manner attracting section 3(4). Once the statutory condition for additional tax under section 3(4) was satisfied, the levy followed as a consequence of the assessee's own mode of disposal of the goods after availing the concessional rate.

Conclusion: The levy under section 3(4) was valid and was sustained.

Issue (iii): Whether penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 was leviable for the assessment year in question.

Analysis: Penalty under section 12(3)(b) was held to be confined to the period up to May 27, 1993, and was linked to best judgment assessment. The assessment year involved was 1994-95, and the turnover had been disclosed by the assessee, with the only dispute being the claim of exemption. Since the case was not one of best judgment assessment and fell outside the permissible period, the statutory basis for penalty was absent.

Conclusion: The penalty could not be sustained and was set aside.

Final Conclusion: The tax liability on the disputed turnovers was maintained, but the penal component was deleted, resulting in only partial relief to the assessee.

Ratio Decidendi: An exemption granted by a Government Order must be confined to the institutions or centres specifically named therein, and penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 cannot be levied for a disclosed turnover in the absence of best judgment assessment and beyond the period for which such penalty was permissible.

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