BAPALAL AND COMPANY Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) FOR the assessment year 1977-78 the petitioners were assessed on April 18, 1979, determining the total turnover as Rs. 1, 52, 03, 546 and the taxable turnover as Rs. 1, 50, 97, 455. A notice was issued under section16 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called "the TNGST Act") proposing to include a turnover of Rs. 1, 42, 054.47, representing the excise duty collected by the petitioners. This turnover had not been disclosed in the returns of the petitioners. After hearing objections of the petitioners a fresh assessment order was passed on June 27, 1979, determining the total turnover as Rs. 1, 53, 45, 600 and the taxable turnover as Rs. 1, 52, 39, 509. The assessing authority also found that the petitioners had wilfully suppressed excise duty collections and accordingly levied a penalty at 1 1/2 times the tax due on the undisclosed turnover. The penalty amount was Rs. 8, 598.

(2.) THE petitioners filed an appeal before the Appellate Assistant Commissioner disputing only the inclusion of the turnover of Rs. 1, 42, 054.47 representing the excise duty collected and the levy on Rs. 1, 41, 459 at the rate of 4 per cent and the balance of Rs. 995 at 9 per cent. THE appellate authority found that a sum of Rs. 1, 204 represented the excise duty collected on labour charges on the sales of synthetic stones. Inasmuch as exemption had been granted in respect of the turnover of synthetic stones, the excise duty collected on the labour charges on the sales of synthetic stones being Rs. 1, 204 could not have been included. He therefore, deleted the sum of Rs. 1, 204. He also reduced the penalty to an amount equivalent to the tax due on the escaped turnover, thus reducing the penalty to Rs. 5, 665. He therefore, directed the turnover of Rs. 1, 39, 855 to be taxed at 4 per cent and the turnover of Rs. 995 to be taxed at 9 per cent. THE petitioner filed a Second Appeal T.A. No. 7 of 1980, before the Tribunal. THE Revenue filed a Miscellaneous Petition No. 306 of 1980 seeking to enhance the rate of tax applicable for the purchase value or ornaments at 4 per cent multi-point, as against a lower rate, adopted by the assessing authority and confirmed by the appellate authority. THE enhancement petition was consequent on the judgment of the Supreme Court in Deputy Commissioner of Sales Tax v. G. S. Pai & Co.1980 (45) STC 58, 1980 (1) SCC 142, 1980 (1) SCR 938, 1980 UJ 210, 1980 AIR(SC) 611, 1980 TaxLR 1603, 1980 UPTC 524, 1980 ELT 343, 1979 KLT 871, 1980 SCC(Tax) 70 holding that ornaments and other articles of gold purchased by the assessee with a view to melting them and making new ornaments or other articles out of the melted gold did not fall within entry 15 of the First Schedule to the Act and were liable to be taxed not at the lesser rate of 1 per cent applicable to "bullion and specie" but at the general multi-point rate under section 3(1) of the Act. THE Tribunal heard the appeal and the enhancement petition and by judgment dated October 31, 1980, dismissed the appeal and allowed the enhancement petition. THE assessee has come up on revision against the said order of the Tribunal.

(3.) THE first contention is easily answered because under the Madras General Sales Tax (Second Amendment) Act, 1969, the excise duty collections are certainly exigible to tax. THE plea that at the time of collection of the excise duties there was a dispute pending in the High Court, cannot avail the petitioners. THE fact remains that in law excise duty collections are taxable and in fact the assessee had paid over the same to the Central Excise Department. THE fact also remains that the assessee did not disclose the turnover of Rs. 1, 42, 054.47 being the excise duty collections in his return. THErefore the power under section16(1) of the TNGST Act was rightly exercised and the turnover was brought to tax. In this connection a reference may be made to the Madras General Sales Tax (Second Amendment) Act, 1969, which received the assent of the Governor on March 4, 1969, and which contains deeming provisions which the assessee cannot get over in this case. While on this point, the judgment of the Supreme Court in McDowell & Company Limited v. Commercial Tax Officer 1986 AIR(SC) 649, 1985 (3) SCR 791, 1985 (3) SCC 230, 1985 (2) CompLJ 137, 1985 (154) ITR 148, 1985 (59) STC 277, 1985 (1) Scale 788, 1985 (47) CTR 126, 1985 (22) TAXMAN 11, 1985 UPTC 747, 1986 TaxLR 2174, 1985 (47) CTR(SC) 126, 1985 SCC(Tax) 391 has to be necessarily referred to. While making it clear that excise duty shall always form part of the sale price, the apex Court has held as follows : "Admittedly, the bills issued by the appellant did not include the excise duty. As already found, payment of excise duty is a legal liability of the manufacturer; its payment is a condition precedent to the removal of the liquor from the distillery and payment by the purchaser is on account of the manufacturer. According to normal commercial practice, excise duty should have been reflected in the bill either as merged in price or being shows separately. As a fact, in the hands of the buyer the cost of liquor is what is charged by the appellant under its bill together with excise duty which the buyer has directly paid on seller's account. THE consideration for the sale is thus the total amount and not what is reflected in the bill. We are, therefore, clearly of the opinion that excise duty though paid by the purchaser to meet the liability of the appellant, is a part of the consideration for the same and is includible in the turnover of the appellant. THE purchaser has paid the tax because the law asks him to pay it on behalf of the manufacturer." THE judgment, then, is a complete answer to the first contention of the learned counsel.