TaxTMI 
TaxTMI 
2019 (3) TMI 1479
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....2014, for the assessment year 1997-98. 3.The impugned order passed by the Tribunal is a common order for both the assessment years. However, the First Appellate Authority, viz., the Deputy Commissioner (CT) Appeals, Chennai, passed separate orders for both the assessment years and for the assessment year 1996-97, the order in A.P.No.160 of 2001 is dated 26.12.2001 and for the assessment year 1997-98, the order in A.P.No.82 of 2001 is dated 05.09.2005. 4.These tax case revisions have been filed raising the following common substantial question of law:- "Whether in the facts and circumstances of the case and in law, the Hon'ble Sales Tax Appellate Tribunal committed an error of law in confirming the demand of sales tax on the full value indicated in the Central Excise invoices raised by the Petitioners on M/s.Tuticorin Alkhali Chemicals and Fertilizers Ltd., when in fact for the supply of Carbon Dioxide, the Petitioners had only collected the central excise duty component from M/s.Tuticorin Alkhali Chemicals and Fertilizers Ltd., and when that alone constituted a turnover under Section 2(r) of the Tamil Nadu General Sales Tax Act, 1959?" 5.The petitioner, M/s.Southern Petroc....
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....collected only the same from TAC. During the course of assessment, the Assessing Officer raised an objection stating that the assessee ought to have paid sales tax on the full value of the invoice, though the petitioner did not collect the price. At that juncture, the assessee without prejudice to their contention, is stated to have filed Form XVII declaration for the full value contained in the central excise invoice and this, according to the assessee, was filed under protest and without prejudice to their submission that there is no sale at all. The Assessing Officer completed the assessment, vide orders dated 13.07.2001 and 02.05.2002 respectively confirming the demand of full value of the invoice. The assessee filed appeals before the first appellate authority, who by orders dated 26.12.2001 and 05.09.2005, confirmed the orders passed by the Assessing Officer. The assessee preferred appeals to the Tribunal under Section 36 of the Act and the Tribunal, by common order dated 15.12.2014, dismissed the appeals. This is how the assessee is before us by way of these tax case revisions. 10.Mr.N.Prasad, learned counsel for the assessee submitted that the Tribunal committed a serious....
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.... assessee had filed Form XVII declaration. Further, it is submitted that the Tribunal in paragraph 9 of its order, has accepted the fact that turnover is the amount received from the buyer and the turnover was only the excise duty and having held so, erred in adopting the cost construction method for levy of sales tax. Further, it is submitted that the Tribunal ignored the important documents placed by the assessee more particularly, the Chartered Accountant's certificates and affidavit and excise invoices, which clearly establish that except the excise duty component, the assessee has not received any further amount. 14.The learned counsel has drawn our attention to the order passed by the first appellate authority in the assessee's own case for the assessment years 1993-94 and 1994-95 in A.P.Nos.62 and 59 of 2001 dated 02.04.2002. In the said order, the First Appellate Authority has categorically held that the Assessing Officer failed to establish that the assessee has received consideration for the sale and relied upon the decision of the Hon'ble Supreme Court in the case of Neyveli Lignite Corporation Ltd. (supra). Further, the first appellate authority held that t....
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....the reasons for invoking the power under Section 12A of the Act. 18.Further, it is submitted that in such circumstances, the Assessing Officer would be entitled to make best judgment assessment and in the instant case, the value of the product was available with the assessee supported by invoices/bills and therefore, there is a need for estimation, as there is suppression and all these have led to the best judgment assessment. 19.To explain as to what would constitute best judgment assessment, reliance was placed on the decision of the Hon'ble Supreme Court in the case of The Commissioner of Sales Tax, Madhya Pradesh vs. M/s.H.M.Esufali, H.M.Abdulali, Siyaganj, (1973) 2 SCC 137. Further, the learned counsel has elaborately referred to the assessment orders to impress upon this Court that there was reasonable material to suspect and consequently, best judgment assessment was drawn. Thus, the learned counsel submitted that the order passed by the Tribunal may be confirmed. 20.In reply, the learned counsel appearing for the assessee would contend that the contentions raised by the Revenue pointing out the relationship between the parties, the value of CO2 supplied, the pipeline....
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....ndustan Steel Ltd. vs. State of Orissa, [1970] 25 STC 211 (SC); and the decision of this Court in Nokia India Private Ltd., vs. Deputy Commissioner, (2015) 79 VST 137 (Mad.), to which, one of us (TSSJ) was a party. Therefore, it is submitted that the impugned assessments can never be taken as a best judgment assessment, as there is no satisfaction recorded by the Assessing Officer as required under Section 12A and the entire proceedings are purely on surmises and conjectures. On the above grounds, the learned counsel prays for interference of the order passed by the Tribunal. 23.Heard the learned counsels for the parties and carefully perused the materials placed on record. 24.The place of business of TAC was inspected by the Central Enforcement Wing Officers on 18.11.1999 and 19.11.1999 and it was found out that the assessee had effected sales of CO2 to TAC against Form XVII declaration under Section 3(3) of the Act and on perusal of the balance sheet and other records, it was found that the seller, viz., the assessee, had paid tax at the rate of 3% only on the excise duty payable on the assessable value of CO2, which was supplied through pipeline from the assessee to TAC. The ....
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....h, deferred payment or other valuable consideration. 28.Section 2(r) of the Act defines "turnover" to mean the aggregate amount for which goods are bought or sold, or delivered or supplied or otherwise disposed of in any of the ways referred to in Clause (n) of Section 2, by a dealer either directly or through another, on his own account or on account of others whether for cash or for deferred payment or other valuable consideration. The definition of "sale" and "turnover" are widely couched and "sale" includes every transfer of the property in goods, be it in the course of business for cash, deferred payment or valuable consideration. "Turnover" also has been widely defined to mean the aggregate amount for which goods are bought or sold, or delivered or supplied or otherwise disposed of whether for cash or for deferred payment or other valuable consideration. 29.Admittedly, the agreement entered into between the assessee and TAC dated 17.08.1998 is a supply agreement for supply of CO2, which is lying in excess with the assessee. The agreement also speaks about the advance paid by TAC to the assessee for not only the supply of CO2, but also Ammonia. There is also a reference to a....
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....e for payment of tax applying the definitions under the Act. 32.Having held so, we have to decide the question of law raised in these revisions as to whether the Tribunal was right in confirming the demand of sales tax on the full value indicated in the central excise invoices raised by the assessee on TAC. 33.Chapter II of the Central Excise (Valuation) Rules, 1975 deals with "determination of value". Under the Rules, value would mean the value under Section 4 of the CEA, 1944. Rule 6 deals with cases where the value of the excisable goods under assessment cannot be determined under Rule 4 or Rule 5. There are three sub-Clauses under Rule 6 of which, sub-Clause (b) would be relevant for the case on hand, which reads as follows:- Rule 6(b):- Where the excisable goods are not sold by the assessee but are used or consumed by him or on his behalf in the production or manufacture of other articles, the value shall be based - (i) on the value of the comparable goods produced or manufactured by the assessee or by any other assessee: Provided that in determining the value under this sub-clause, the proper officer shall make such adjustments as appear to him reasonable, taking in....
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....n the measure for levy of excise duty, and there is no such provision in Section 3 of the U.P. Trade Tax Act, 1948. Thus, it was held that in the case of excise law, the taxable event is manufacture, which is not related to commercial transaction. On the other hand, commercial transaction is the basis of the pricestructure in sales tax laws. The levy of excise duty is on manufacture, while levy of sales tax arises at the stage beyond manufacture, viz, the sale of the article. Bearing in mind the distinction between the levy of central excise duty and the levy of sales tax we have proceeded to examine the cases on hand. 36.It is the submission of the learned Special Government Pleader that though the Assessing Officer has not specifically referred to Section 12A, which governs power to the Assessing Officer to make assessments of sales shown in the accounts and low price at best of judgment basis, essentially this is what the Assessing Officer has done. In this regard, the learned counsel has referred to the decision in the case of Jayalakshmi Traders (supra). It is true that in the assessment orders, the Assessing Officer does not refer to Section 12A of the Act. 37.Be that as ....
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....s of the assessee's case are entirely different. 39.The assessee admits that the value of CO2 sold for the purposes of payment of central excise is a particular amount. Further, the assessee specifically states that what was collected from TAC was only the excise duty component. Therefore, unless there was clinching material available with the Assessing Officer to show that the statement made by the assessee was false or incorrect, the question of invoking the power under Section 12A does not arise. In fact, the first appellate authority in the assessee's own case in A.P.Nos.61 and 59 of 2001, dated 02.04.2002, for the assessment years 1993-94 and 1994-95, allowed the assessee's appeals. Though we do not approve the finding in the said decision that there was no sale, the first appellate authority noted that there was no suppression of any turnover or that the assessee sold the product at abnormally low price. In the preceding paragraphs, we have noted the distinction between the assessment of the duty under the CEA, 1944 and tax under the Sales Tax Act. As held by the Hon'ble Supreme Court, levy of excise duty is on manufacture, while levy of sales tax arises at t....
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....2 for the purposes of calculation of central excise to be adopted as the sale price for the purposes of levy of sales tax under the TNGST Act. 42.The submission of the learned counsel for the assessee with regard to the relationship of the parties is convincing in the sense that surplus CO2 produced by the assessee is fed to TAC, it sister concern, for manufacture of a product. For such purposes, dedicated pipeline has been laid. Therefore, merely because the assessee and TAC are sister concerns, no adverse inference can be drawn with regard to the transaction relating to the transfer of the excess CO2 by the assessee to TAC. As held by the Hon'ble Supreme Court in the case of M/s.H.M.Esufali, H.M.Abdulali, Siyaganj, (supra), the Assessing Officer is to make an assessment to the best of his judgment against a person, who is in default as regards supplying information, he must not act dishonestly, or vindictively or capriciously because he must exercise judgment in the matter and he must make what he honestly believes to be a fair estimate of the proper figure of assessment. The Assessing Officer should have material before him to find out how much tax had escaped assessment an....