Madras High Court
The State Of Tamil Nadu vs Tvl. New Kamaliya Hotel on 13 March, 2006
Author: P.P.S. Janarthana Raja
Bench: P.P.S. Janarthana Raja
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 13/03/2006
CORAM
THE HON'BLE MR. JUSTICE R. BALASUBRAMANIAN
and
THE HON'BLE MR. JUSTICE P.P.S. JANARTHANA RAJA
Tax Case (Revision) No.205 Of 2006
The State of Tamil Nadu
Rep. by the Deputy Commissioner (CT)
Chennai (North) Division
Greams Road,
Chennai - 600 006. ... Petitioner
-Vs.-
Tvl. New Kamaliya Hotel
Virudhunagar. ... Respondent
Prayer: Revision before the Tamil Nadu Taxation Special Tribunal,
Chennai to revise the order of the Sales Tax Appellate Tribunal (Additional
Bench), Madurai dated 19.2.2004 passed in M.T.S.A.No.26/2003.
!For Petitioner : Mr.T.Ayyasamy,
Senior Standing Counsel
(Taxes)
:O R D E R
(Order of the Court was made by P.P.S.JANARTHANA RAJA, J) This revision is filed against the order of the Sales Tax Appellate Tribunal, Madurai dated 19.2.2004 passed in M.T.S.A.No.26 of 2003, by the State raising the following question of law:
"Whether the Sales Tax Appellate Tribunal is right in approving the reappraisal of evidence made by the first appellate authority dislodging the cogent and convincing reasons given by the assessing officer?
2. The facts leading to the above question of law are as under:
The Deputy Commercial Tax Officer by order dated 24.1.2001 determined the total and taxable turn over of the assessee at Rs.14,72,570/- and Rs.Nil respectively for the year 1999-2000. Subsequently, the Assessing Officer reviewed the assessment by utilising the estimation arrived at by the Enforcement Wing Officials during the course of inspection conducted at the place of business of the assessee on 19.7.1999 . In the above inspection, they watched sales and gathered details of sales of parcel service and at counter of the said hotel. They found that on 19.7.1999 one day sales was to an extent of Rs.6,660/- and they also recovered certain incriminating records during the course of inspection. Based on the incriminating records recovered and the observation of one day sales in the hotel, they calculated the sales in the hotel for the whole year and after deducting the sales done as per accounts, arrived the estimation to an extent of Rs.9,41,457/- as sales in the hotel, which was the sales covered for noninspection period during 1999-2000 and re-determined the total and taxable turn over at Rs.26,69,882/- and brought the same as tax liability under Section 3-D of the TNGST Act. Aggrieved by that order, the assessee preferred an appeal before the Appellate Assistant Commissioner (CT) disputing the difference of Rs.11,97,346/- utilised for assessment under Section 3-D and penalty levied under Section 16(2) of the Act at Rs.90,897/-. The Appellate Assistant Commissioner deleted the entire estimation but only sustained 20% addition to the book turnover and brought the assessee under, below the tax liability. As the total and taxable turnover was fixed below the taxable limit, the penalty levied by the Assessing Officer was also cancelled. Aggrieved by the said order, the Revenue filed an appeal before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madurai. The Tamil Nadu Sales Tax Appellate Tribunal dismissed the appeal filed by the Revenue and confirmed the order of the learned Appellate Assistant Commissioner.
3. The learned Standing Counsel appearing for the Revenue submitted that the Assessing Officer had clearly established that there was sales suppression and purchase suppression and therefore the estimation was just and reasonable and hence it was submitted that the order of the Appellate Assistant Commissioner, deleting the entire additions, but restricted to 20%, requires reconsiderat ion.
4. We heard the counsel. The Assessing Officer made estimates based on the one day sales. Normally, sales may differ from auspicious day and inauspicious day. So, taking the one day average for estimation is not a scientific method sanctioned by law. It is only a crude method which has no substance. At least in order to arrive one day sales, either the Assessing Authority or the Enforcement Wing Officers should have made surveys every month taking into consideration the normal day, auspicious day and inauspicious day. Both the authorities below also found that there was no omission established by the Revenue. Mere one day sales could not be attributed to estimate the whole year without considering the festival season, rainy season and other natural calamities. It is also seen that the first Appellate Authority as well as the second Appellate Authority had considered all the relevant materials and came to the correct conclusion. The Assessing Officer had only relied on the one day sale for making estimation. The Tribunal is correct in holding that the Assessing Officer was wrong in estimating the additions which was solely based on one day sales. We are of the firm view that the Assessing Officer cannot make estimate based on one day sales.
5. In view of the foregoing reasons, we find no error or infirmity in the order of the Tribunal and hence no question of law arises for consideration of this Court. Accordingly the tax case is dismissed. No costs.
Index: Yes Internet: Yes Tr/km To
1. The Deputy Commissioner (CT) Chennai (North) Division Greams Road, Chennai - 600 006
2. Sales Tax Appellate Tribunal Madurai.
3. Deputy Commercial Tax Officer Virudhunagar.