Madras High Court
Mr.Ra.Devaraju vs Tamil Nadu Sales Tax on 23 September, 2024
Author: Anita Sumanth
Bench: Anita Sumanth
W.P.No.23806 of 2008
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 23.08.2024
PRONOUNCED ON : 23.09.2024
CORAM :
THE HONOURABLE DR. JUSTICE ANITA SUMANTH
and
THE HONOURABLE MR. JUSTICE G.ARUL MURUGAN
WP.No.23806 of 2008
and
M.P.No.01 of 2008
Mr.Ra.Devaraju ... Petitioner
Vs
1. Tamil Nadu Sales Tax
Appellate Tribunal,
Additional Bench,
Rep. By its Registrar,
Coimbatore -18.
2. State of Tamil Nadu,
Rep. By Deputy Commissioner (CT)
Coimbatore.
3. Deputy Commercial Tax Officer,
RG Street Circle,
Coimbatore. ... Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of
India praying to issue a writ of Certiorari to call for the records of the
First Respondent order dated 03.03.2008 passed in Coimbatore Tribunal
State Appeal No186 of 2005 and quash the same.
https://www.mhc.tn.gov.in/judis
Page No.1/20
W.P.No.23806 of 2008
For Petitioner : Mr.V.Parthiban
for Mr. P.Haribabu
For R2 & R3 : Mr.V.Prashanth Kiran
Government Advocate
ORDER
(Order of the Court was made by G.ARUL MURUGAN,J.) The petitioner /Assessee has preferred this writ petition challenging the order of the Tamil Nadu Sales Tax Appellate Tribunal dated 03.03.2008 passed in Coimbatore Tribunal State Appeal No.186 of 2005.
2. The petitioner is a registered dealer in Dyes and Chemicals and an assessee under the 3rd respondent bearing Reg. No.1761961. During the surprise inspections conducted on two occasions ie., on 22.10.2002 and 24.12.2002, it was noticed that the petitioner did not maintain the day to day stock account or closing stock inventory for the goods dealt by them and it was also noticed by the Enforcement Officer that there was a stock variation. Petitioner had also, by a sworn statement, admitted that they have not maintained the stock register, bills and stock variation. Since the petitioner had declared the total turnover of Rs.35,02,441/- and total taxable turnover of Rs.26,57,325/- respectively in the returns filed https://www.mhc.tn.gov.in/judis Page No.2/20 W.P.No.23806 of 2008 for the year 2002- 2003 and as stock variations were noticed during the inspection and there was a suppression, the Assessing Officer proceeded to determine the total taxable turnover to the best of his judgement and by an order dated 14.07.2004 assessed a total taxable turnover of Rs.44,27,542/- and Rs.35,82,426/- as against the reported turnover filed by the assessee. The Assessing Officer had assessed the suppression of turnover at Rs.6,16,734/- and had made an addition towards the probable suppression at 50% of the actual suppression for Rs.3,08,367/- and an aggregate turnover of Rs.9,25,101/- was taxed on the asessee. Besides a penalty of Rs.45, 695/- was imposed under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act,1959.
3. Petitioner had claimed before the Assessing Officer that there was a stock transfer of Rs.5,80,000/- from Tvl Trisul Dyes and Chemicals to petitioner's firm, where it was also a sole proprietary concern having obtained registration certificate No.1761014 which was not renewed after 31.03.2001. As such, the Assessing Authority had determined the corresponding taxable turnover of Dyes at Rs.7,79,978 by adding 10% towards freight and gross profit upon the closing stock value of dyes as Rs.7,08,253/- as on 31.03.2001. The turn over was taxed at 8% single point in Assessment Proceedings dated 27.05.2002. Thus according to the https://www.mhc.tn.gov.in/judis Page No.3/20 W.P.No.23806 of 2008 petitioner, from Tvl Trisul Dyes and Chemicals to petitioner's concern, there was a stock transfer to the tune of Rs.5,80,000/- which had to be deducted from the stocks assessed by the Assessing Officer. However, the Assessing Officer had rejected the stand of the petitioner as they did not come forward with such an explanation during the time of inspection and having given the voluntary statement admitting the variation of stock, only as an after thought they have come up with the claim of stock transfer from the sister concern and therefore the petitioner cannot be allowed to reprobate from the sworn statement voluntarily given by him.
4. In the appeal preferred by the Assessee before the Appellate Assistant Commissioner, the stand of the petitioner was accepted. The Appellate Authority found that as the Assessment Order of Tvl Trisul Dyes and Chemicals filed by the petitioner relating to Assessment Year 200 – 2001 shows that taxable stock of dyes available in the business as on 31.03.2001 at Rs.7,08,253/- has been taxed upon its corresponding sales value determined by the very same Assessing Authority at Rs.7,79,978/- at 8% single point, only for the reason that the petitioner had not deposed about this at the time of inspection, the Assessment Authority could not have overlooked the factual position which ought to have been confirmed from the records. Therefore by an order dated https://www.mhc.tn.gov.in/judis Page No.4/20 W.P.No.23806 of 2008 27.04.2005, the Appellate Authority modified the Assessment Order by determining the actual suppression at Rs.14,213/- and granting relief to the dealer for the remaining sum of Rs.6,02,521/-. Further the addition of 50% under the probable suppressions for a turnover of Rs.3,08,367/- and taxed at 10% was deleted and so far as the penalty of Rs.45,695/- imposed under Section 12(3)(b) of the Act, the Assessing Officer was directed to re-quantify based on the orders passed thereon.
5. The Revenue had preferred appeal before the Sales Tax Appellate Tribunal. The Tribunal by an order dated 03.03.2008 allowed the appeal by placing reliance on the decision of this Hon'ble Court in the case of Yousuf Radio Vs. Board of Revenue, Commercial Taxes, Chepauk, Madras 5 reported in 43 SCC 525, wherein it is observed that the Assessee cannot approbate and reprobate and once a voluntary act results in a sworn statement, it should be given effect to and the opportunity should not be given to the Assessee to retract therefrom, unless there is some suspicion and circumstances available. Assailing the orders passed by the Tribunal, the Assessee has preferred the above Writ Petition.
6. Mr.V.Parthiban, the learned counsel appearing for the petitioner https://www.mhc.tn.gov.in/judis Page No.5/20 W.P.No.23806 of 2008 contended that, when the petitioner was able to substantiate by filing cancellation of the registration certificate, the assessment made upon the closing stock and the ledger entries in respect of the Sister concern of the petitioner Tvl Trisul Dyes and Chemicals including the assessment order thereon, the Assessment Officer ought to have looked into all these documents, but however simply by relying on the statement given during inspection had proceeded to pass the assessment order by adding a sum of Rs. 5,28,252/- towards the stock variations.
7.It is his further contention that the order of the Tribunal by holding that there was a suppression of stock and evasion of payment of duty on the escaped turnover is only based on the report of the Enforcement Wing Officers and the stock transfer made from Tvl Trisul Dyes and Chemicals, the petitioner's sister concern where the stock of dyes available on 31.03.2001 has been taxed as determined by the Assessing Authority and only thereafter the stocks had been transferred by making proper entry in the records.
8. The learned counsel further contended that, when the Appellate Authority having rightly found that the records submitted by the petitioner concern in respect of the stock transfer made from Tvl Trisul https://www.mhc.tn.gov.in/judis Page No.6/20 W.P.No.23806 of 2008 Dyes and Chemicals based on the available records and deleted the amounts covered under the stock transfer, the Tribunal had erroneously without adverting to the admitted documents available on record had chosen to restore the Assessment order only based on the statements recorded during inspection.
9. In support of his submissions, the learned counsel relied on the decision of the Division Bench of this Court in the case of The State of Tamil Nadu Vs. Tvl.Mangal Marbles dated 28.03.2018 in T.C.R. No.76 of 2018 and another decision of this Court in S.P.G.Ramasamy Nadar and sons Vs. Commercial Tax Officer -III and Ors reported in [2004] 136 STC 606 (MAD) and sought for intervention of this Court.
10. Per contra, Mr.V.Prashanth Kiran, the learned Government Advocate argued that, when the inspection was carried out in the petitioner's premises on 22.10.2002 and 24.12.2002, the variations in the stock were noticed and also the non-availability of the stock register was admitted by the Assessee and when the Assessee had given a voluntary statement admitting the variations in the stock and non-maintaining of stock accounts and the bills by way of sworn statement, the Assessee cannot be allowed to reprobate from the voluntary statement made only to https://www.mhc.tn.gov.in/judis Page No.7/20 W.P.No.23806 of 2008 escape from the Assessment. It is his further contention that, when no explanation was available with the petitioner on the date of inspection which had been admitted, the Assessee has only as an afterthought has brought in the claim of the stock transfer from the sister concern that too by way of interpolation of records as rightly noticed by the Tribunal.
11. The learned Government Advocate by placing reliance on the decision of this Hon'ble Court in the case Yousuf Radio Vs. Board of Revenue, Commercial Taxes, Chepauk, Madras 5 reported in (1979) 43 STC 525, contended that the Assessee cannot approbate and reprobate and contended that the Tribunal had rightly taken not of this legal position and had set aside the order of the Appellate Authority restoring the Assessment Order which is perfectly justified and needs no interference and sought for dismissal of the Writ petition.
12. Heard the rival submissions and perused the materials available on record.
13. The petitioner Assessee, who is a registered dealer in Dyes and Chemicals had declared a total taxable turnover of Rs.35,02,441/- and Rs. 26,57,325/- respectively in the returns for the year 2002 and 2003. In the https://www.mhc.tn.gov.in/judis Page No.8/20 W.P.No.23806 of 2008 returns, they had claimed exemption as 2nd sales of Dyes and Chemicals which was found admissible. However, the place of business was inspected by the Enforcement Wing on 22.10.2002 and also on 24.12.2002 and during inspection it was noticed that no stock book of accounts were maintained and the sales bills have not been raised serially. Further from the opening stock as on 01.04.2002 there was purchase of dyes from 01.04.2002 to 22.10.2002 for a sum of Rs.17,31,898/- and the corresponding sales was for a sum of Rs.18,92,120/- and there was an excess of Rs. 1,60,222/- and further the actual stock held was for Rs.3,68,030/- and therefore there was a stock variation for a sum of Rs.5,28,252/-.
14. At the time of inspection, the petitioner had given a voluntary statement on 22.10.2002, wherein he had clearly admitted that they have not maintained the daily stock register and also the bills have not been raised in serial and when the actual stock was verified with the sales from the opening stock, there was a stock variation for a sum of Rs.5,28,252/- and he has no explanation to give for the variation in stock found in the premises. The sworn statement voluntarily given by the petitioner has been recorded which forms part of the assessment file. https://www.mhc.tn.gov.in/judis Page No.9/20 W.P.No.23806 of 2008
15. As there was stock variation to the tune of Rs.5,28,252/- found in the place of business of the petitioner and since no proper records for the day to day stocks has been maintained and the bills have not been raised in a serial, the Assessing Officer proceeded to assess the turn over to the best of his judgement and passed the Assessment Order on 14.07.2004 by determining the total turnover of Rs.44,27,542/- and total taxable turnover of Rs.35,82,426/- for the assessment year 2002 -2003 as against the reported total turnover of Rs.35,02,441/- and total taxable turnover of Rs.26,57,325/- respectively.
16. The Assessing Officer had rejected the claim of the Assessee to drop the addition made in the sales suppression and the 50% probable omission only by making the claim that there was stock transfer for a sum of Rs.5,80,000/- from Tvl Trisul Dyes and Chemicals to the petitioner's concern. The Assessee has pleaded that for Tvl Trisul Dyes and Chemicals, which is a sister concern, a separate registration was obtained by the proprietor of the petitioner Mr. Ra.Devaraju in Registration Certificate No.1761014 in the name of Tvl Trisul Dyes and Chemicals, which was not renewed after 31.03.2001 and therefore the registration certificate was cancelled on 19.10.2001 by the proceedings of the Commercial Tax Officer, R.G.Street Assessment Circle. It is their claim https://www.mhc.tn.gov.in/judis Page No.10/20 W.P.No.23806 of 2008 that there was a closing stock of dyes and chemical valued at Rs. Rs.7,08,253/- with the Tvl Trisul Dyes and Chemicals as on 31.03.2001 and since the registration was cancelled from 01.04.2001, the Assessing Officer had determined the corresponding taxable turnover of dyes at Rs.7,79,978/- by adding 10% towards freight and gross profit upon the closing stock value of dyes as on 31.03.2001 and turn over was taxed at 8% single point in Assessment Proceedings dated 27.05.2002 and only out of this closing stock of tax suffered dyes available with Tvl Trisul Dyes and Chemicals and the same was carried over to the petitioner's concern and as such there was a stock transfer of dyes to the value of Rs.5,80,000/- as on 01.04.2002.
17. The Assessing Officer had not accepted the claim made by the Assessee since he found that, when the petitioner has not come up with such a claim during the time of inspection and having voluntarily admitted the stock variation and given a sworn statement, cannot as an afterthought reprobate and retract from the statement only to escape from the assessment by introducing a new stand. However, the claim of the Assessee found favour with the Appellate Authority and the Appellate Authority was of the view that when once the Assessee was able to justify his claim based on the materials available on record by filing the stock https://www.mhc.tn.gov.in/judis Page No.11/20 W.P.No.23806 of 2008 register, the cancellation of the registration certificate and the Assessment Order passed in respect of the sister concerned namely Tvl Trisul Dyes and Chemicals, the Assessing Authority ought to have gone by the documents rather than ignoring the claim of the Assessee which is supported by documents, merely by relying on the statements given by them during inspection. The Appellate Authority also by observing that simply because the Assessee had earlier given a statement, that cannot be put against them when the Assessee is able to substantiate his claim by filing sufficient materials and thereby had partially allowed the appeal by modifying the Assessment Order by granting relief to a sum of Rs.6,02,521/- to the Assessee and assessing the actual suppression at Rs.14,213/- and also deleting further addition of Rs. 3,08,367/- towards the probable suppression.
18. The Tribunal in the appeal filed by the Revenue, by an order dated 03.03.2008 had set aside the orders of the Appellate Authority and restored the Assessment Order mainly on the ground that, once the Assessee has admitted the stock variation and by voluntary act has given a sworn statement admitting the discrepancies, the Assessee cannot be allowed to approbate or reprobate at the later stage. https://www.mhc.tn.gov.in/judis Page No.12/20 W.P.No.23806 of 2008
19. The Tribunal had analyzed the statement furnished by the Assessee, which is the part of the assessment file. The statement of the Assessee is as follows:
,d;W 22/10/02 fhiy 11/40 kzpf;F jh';fSk; j';fSld; te;j cjtp tzpf thp mYtyh;fSk; v';fsJ filf;F te;jpUe;J jzpf;iff;F te;Js;sij j';fis ,d;dbud bjhptpj;jPh;fs;/ jzpf;if rkak; filapy; vdJ fil CHpah; jpU/rk;gj;Fkhh;
kw;Wk; gpd;dh; ehBk; cld; ,Ue;njhk;/ 1/ btspkhepyf; bfhs;Kjy; kw;Wk; cs; khepyf; bfhs;Kjy;fs;
cs;snghjpYk; jpdrhp ,Ug;g[f; fzf;F nghlg;gltpy;iy 2/ mf;nlhgh; khj;jpw;fhd gpy;fs; thpirahf nghlg;gltpy;iy/ tpLjy;fSld; nghlg;gl;Ls;sJ 3/ jzpf;ifapd; nghJ ,Ue;j ,Ug;g[f; fzf;F tptu';fis Muk;g ,Ug;g[f;fzf;F tptu';fis Muk;g ,Ug;g[ bfhs;Kjy;
kw;Wk; tpw;gida[ld; rhpg;ghh;f;fgl;lnghJ jdpna fhl;lg;gl;Ls;s ml;ltizpay; Rl;lpf; fhl;lg;glthW U:/5.28.252/-?f;F bfhs;Kjy;
tpLjy; fhzg;gl;lJ. ,jw;F jw;nghJ vd;dhy; tpsf;fk; mspf;f ,aytpy;iy/
20. Admittedly the petitioner's place of business was inspected by the Authorities on 22.10.2002 and 24.12.2002 and it was noticed that the https://www.mhc.tn.gov.in/judis Page No.13/20 W.P.No.23806 of 2008 Assessee had not maintained the day to day stock accounts or the closing stock inventory for the goods dealt by them and the sales bills have not been maintained in series. There was also a stock variation found in the opening stock and the materials available in the place of business with the corresponding sales to a tune of Rs.5,28,252/-. The Assessee did not offer any explanation for the same but rather on his own had voluntarily given a sworn statement admitting the above position. The Assessing Officer had rightly proceeded to pass the Assessment Order to the best of his judgement.
21. It is only the subsequent claim of the Assessee that in respect of the business carried on by the sister concern in the name of Tvl Trisul Dyes and Chemicals, for which separate registration certificate was taken and the registration was cancelled there was a stock available as on 31.03.2001. As rightly observed by the Assessing Officer, the Assessee could have offered that explanation during the time of inspection, but however having admitted the discrepancies and having no plausible explanation available at the time of inspection, the Assessee only as an afterthought had introduced new claim that the stock already taxed at the hands of Tvl Trisul Dyes and Chemicals due to their closure was available and there was a stock transfer to the tune of Rs.5,80,000/- to the https://www.mhc.tn.gov.in/judis Page No.14/20 W.P.No.23806 of 2008 petitioner's concern.
22. The assessee once having voluntarily given sworn statement in respect of the discrepancies as he had no explanation, later he cannot be allowed to approbate and reprobate only to escape from the Assessment made against them. In fact, in the instant case, even though the petitioner had claimed availability of stock and submitted records in respect of Tvl Trisul Dyes and Chemicals, which had been closed before the Assessing Officer, but the computerized list of purchases as available in the assessment file had been verified and found that it does not contain the value of stock transfer of goods to the petitioner but in the end of the purchase list, Rs.5,80,000/- was found to be added in the ink which was rejected as it amounted to a clear manipulation.
23. When the records submitted before the Authorities were found to be with interpolation and admittedly this theory of stock transfer was only introduced at the later stage by the Assessee who did not have any explanation available at the time of inspection and as such had voluntarily given a sworn statement admitting that there is difference in stock to the value of Rs.5,28,252/- and he has no explanation to offer, the Assessee is only making an attempt to retract from the sworn statement furnished https://www.mhc.tn.gov.in/judis Page No.15/20 W.P.No.23806 of 2008 earlier which cannot be allowed to be done and the statement must be given effect to.
24. As rightly contended by the learned Government Advocate, it is useful to refer the decision of this Hon'ble Court in Yousuf Radio Vs. Board of Revenue, Commercial Taxes, Chepauk, Madras 5 reported in 43 STC 525 and the relevant portions are extracted hereunder:
There is a fallacy in this argument. The courses of taxation under the Income-tax Act and the Sales Tax Act are entirely different. Whilst in the former, the income of a dealer is assessed to tax and is expected to be quantified by the Income-tax Officer under the Income-tax Act in accordance with the provisions of that Act, the Tamil Nadu General Sales Tax Act ordains the assessing authorities functioning thereunder to bring to tax sales as such either found in the books of account or agreed to be so by the assessee or otherwise proved to be so by circumstantial evidence. This is a case in which the assessee has admitted in a sworn statement that the two sums of Rs. 73,000 and Rs. 72,000 representing sales for the two assessment years in question represented unbilled cash sales. Excepting, as pointed out by the Board of Revenue, to avoid assessment proceedings made under the Tamil Nadu General Sales Tax Act, we see no particular bona fides in the gesture or the https://www.mhc.tn.gov.in/judis attitude of the appellant in having retracted from a sworn Page No.16/20 W.P.No.23806 of 2008 statement, which was the result of a voluntary act on the part of the assessee. It is not even alleged that at the time when the sworn statement was made by him, he was compelled or coerced to make it. On the other hand, he wanted to escape the fangs of the Income-tax Act by suitably retracting from his sworn statement and stating that they were cash credits and not the total of unbilled cash sales. Obviously, it suited him to do so before the income-tax authorities. Having had the advantage, which we are not sure whether he did have, the retraction of the sworn statement is pressed into service before uf as was attempted before the Appellate Assistant Commissioner. An assessee cannot reprobate and approbate. If that could be done and if it is possible in law, then every assessee can escape at every possible inconvenient stage from the force of the taxing provisions because he could make suitable statements at opportune moments to help his cause and get out of the net of taxation. Once a voluntary overt act results in a sworn statement, it Should be given effect to and an opportunity ought not to be given to the assessee to retract therefrom unless there is some suspicion, proved and circumstantial, available at the time when such a statement was made. No such significant circumstance is present in the instant case. Therefore, we are of the view that for the simple reason that it suited the assessee to retract from his statement before the income-tax authorities, that situation should not prevail and cause the assessing authorities under the Tamil Nadu https://www.mhc.tn.gov.in/judis General Sales Tax Act also to accept such retraction and the Page No.17/20 W.P.No.23806 of 2008 result thereof. We agree with the Board of Revenue that such to retract from the sworn statement was made possibly to avoid the inclusion of the aforesaid amounts in the assessable turnover under the Tamil Nadu General Sales Tax Act and the Board of Revenue was right in having included the amounts as the turnovers for the relevant years. `
25. In the instant case, as the Assessee did not have any plausible explanation to offer after inspection for the variation in stock, had admitted the discrepancies in the stock available and had voluntarily given sworn statement that there is no explanation available with them.
Therefore the voluntary sworn statement offered by the Assessee has to be given effect to and the Assessee cannot be allowed to approbate and reprobate at the later stage.
26. In view of the settled position, the view expressed by the Appellate Authority that the materials submitted by the Assessee to substantiate their claim has to be considered rather then relying on the statement given by them during the inspection cannot be sustained and the Tribunal by taking note of these aspects has rightly arrived at a decision and set aside the order of the Appellate Authority by restoring the Assessment Order, which in our considered opinion needs no interference and thus sustained.
https://www.mhc.tn.gov.in/judis Page No.18/20 W.P.No.23806 of 2008
27. In such view of the matter, we find no merits in the Writ Petition and accordingly dismissed. Consequently, connected miscellaneous petition is closed. No costs.
(A.S.M.,J) (G.A.M.,J)
23.09.2024
Index: Yes/No
Neutral Citation : Yes/No
sma
To
1. Tamil Nadu Sales Tax
Appellate Tribunal,
Additional Bench,
Rep. By its Registrar,
Coimbatore -18.
2. State of Tamil Nadu,
Rep. By Deputy Commissioner (CT)
Coimbatore.
3. Deputy Commercial Tax Officer,
RG Street Circle,
Coimbatore.
https://www.mhc.tn.gov.in/judis
Page No.19/20
W.P.No.23806 of 2008
Dr.ANITA SUMANTH,J
AND
G.ARUL MURUGAN,J.
sma
Judgment made in
W.P.No.23806 of 2008
23.09.2024
https://www.mhc.tn.gov.in/judis
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