STATE OF TAMIL NADU Vs. ALLIED ENGG. INDUSTRIES

JUDGEMENT

(1.) This revision petition is filed by the Revenue as against the order of the Sales Tax Appellate Tribunal for the assessment year 1995-96. The revision is admitted on the following substantial question of law :

(2.) The assessee herein collected eight per cent tax on overhead travelling cleaners, which was used in textile machinery to control the air pollution in textile mills. In respect of the rate of tax on the sale of overhead travelling cleaners, in the clarification issued by the Commissioner of Commercial Taxes in D. Dis. Acts cell.II/55618/96 dated December 3, 1996 on the basis of the G.O. 87 dated March 17, 1993, it was held that the commodity dealt with by the assessee would fall under textile machinery, assessable to tax at four per cent. Admittedly, the assessee collected tax at the rate of eight per cent during the assessment year 1995-96 and the same had been remitted to the Department. It is admitted by the Department that in respect of the immediate preceding year 1994-95, the assessee had collected eight per cent tax; remitted the same and the assessment was also completed by the Revenue accepting the rate of tax at eight per cent. The said assessment had reached finality both at the hands of the Revenue and at the hands of the assessee. However, strangely, in respect of the assessment year 1995-96, the Revenue sought to assess the same based on the Commissioner's clarification in respect of rate of tax at four per cent. The Revenue viewed that collection of rate of tax at eight per cent by the assessee was in contravention of the provisions of the Act warranting levy of penalty under section 22(2) of the Tamil Nadu General Sales Tax Act. Accordingly, notice was issued to the assessee and after hearing the objection, the levy of penalty was made as part of the assessment to the tune of Rs. 5,60,282 which was equivalent to the excess tax collected by the assessee.

(3.) An appeal was preferred by the assessee as against the order of the assessment challenging the levy of penalty under section 22(2) of the Tamil Nadu General Sales Tax Act, apart from the levy of penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act. The first appellate authority sustained the levy of penalty under section 22(2) of the Tamil Nadu General Sales Tax Act, but remanded the levy of penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act. Aggrieved by the same, the assessee went on appeal before the Tribunal.