Penalty barred on book-based assessments, while export-linked agency finding sustained exemption for packing materials.

Penalty under the Tamil Nadu General Sales Tax Act was held unsustainable because the assessments were made on the assessee's books of account and not on a best judgment estimate, which was the basis required for such levy. The exemption claim under the Central Sales Tax Act for packing materials used in export was also upheld because the appellate authorities found, on facts, that the exporter acted as the buyer's agent under the contractual arrangement. In the absence of perversity, that factual finding was not disturbed. The assessee's position was therefore maintained on both issues.

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Issues: (i) Whether penalty was leviable under the Tamil Nadu General Sales Tax Act, 1959 when the assessments were based on the books of account and not on best judgment estimate; and (ii) Whether the assessee was entitled to exemption under section 5(3) of the Central Sales Tax Act, 1956 in respect of the packing materials sold for use in export through an alleged principal-agent arrangement.

Issue (i): Whether penalty was leviable under the Tamil Nadu General Sales Tax Act, 1959 when the assessments were based on the books of account and not on best judgment estimate.

Analysis: The relevant assessment years were 1996-97 and 1997-98. Penalty could be sustained only where the assessment was made on best judgment estimate. The lower authorities found that the assessments were made on figures available in the books of account and not on material outside the accounts, and therefore the case did not fall within the category attracting penalty under the relevant provisions.

Conclusion: Penalty was not leviable; the finding deleting the penalty was upheld in favour of the assessee.

Issue (ii): Whether the assessee was entitled to exemption under section 5(3) of the Central Sales Tax Act, 1956 in respect of the packing materials sold for use in export through an alleged principal-agent arrangement.

Analysis: The transaction was examined as a question of fact and the appellate authorities found that the exporter acted as an agent of the buyer under the contractual arrangement. In the absence of perversity in that factual finding, there was no basis to disturb the conclusion that the sale fell within the exempt category under section 5(3).

Conclusion: The exemption claim was upheld and the finding was answered against the revenue.

Final Conclusion: The revision failed because both the penalty issue and the exemption issue were resolved against the petitioner, leaving the assessee's position undisturbed.

Ratio Decidendi: Penalty cannot be levied where the assessment is founded on the assessee's books of account rather than on a best judgment estimate, and a factual finding on export-linked agency transaction will not be interfered with unless it is shown to be perverse.

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