MYSORE CHEMICAL SUPPLIES Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THESE two tax appeals have been filed by the very same assessee in respect of two different years 1973-74 and 1976-77 challenging the common order dated July 16, 1981, passed by the Joint Cornmissioner-II in exercise of his suo motu powers under section34 of the Tamil Nadu General Sales Tax Act, 1959, hereinafter referred to as "the Act".

(2.) THE appellants are dealers in chemicals and saltpetre and during the assessment years in question, they effected regular sales as well as acted as commission agents. So far as the assessment year 1973-74 is concerned, the assessing authority originally assessed them under section12 of the Act on a total and taxable turnover of Rs. 13, 28, 162 and Rs. 11, 49, 416, respectively, by an order dated March 24, 1975. THEreupon, it was found out that the assessee, who received saltpetre for sales on commission basis from non-resident principals have transferred to their own account from agency goods and sold the same at a premium and that those sales also constituted sale within the meaning of the Act but has escaped assessment. Consequently, proceedings were initiated under section16 of the Act to revise the earlier assessment made and after giving due opportunity, a turnover to the tune of Rs. 5, 38, 999 was also brought to tax subjecting the same to levy at 3 1/2 per cent. So far as the assessment year 1976-77 is concerned, while making the assessment the claim made by the assessee in respect of a turnover of Rs. 2, 18, 511 as being exempt on the ground that they were agency transactions on behalf of non-resident principals, came to be rejected and the said turnover was also subjected to tax by an order dated November 2, 1977. THE assessing authority held that the assessee appropriated the goods of the principals to their own account and sold them as their own goods.

(3.) MR. C. Natarajan, learned counsel appearing on behalf of the appellants, submitted that the turnovers in question represented merely agency sales on behalf of their non-resident principals to whom proper accounts have been rendered in terms of their agency agreement and inasmuch as the entire transactions were with the prior authority as well as ratification of the principals, the conclusion of the revisional authority that there had been in effect two sales in the course of the dealings and that the sales effected by them were really sales in their own behalf after appropriating the agency goods to their own account, cannot be sustained either in law or on facts. According to the learned counsel, the conclusions of the revisional authority are opposed to law and vitiated by a wrong understanding of the vital facts and, therefore, deserve to be set aside in the above appeals. On behalf of the Revenue MR. R. Lokapriya, vehemently contended that the assessing authority and the revisional authority were right in placing reliance upon the decisions reported in 1966 (18) STC 325 (Mad.) (L. S. Chandramouli and Company v. State of Madras) and 1973 (32) STC 350 (Mad.) (C. V. Ramaswamy Gounder and Sons v. State of Madras) which, according to the learned counsel, squarely apply to the case on hand in favour of the Revenue and consequently no interference is called for in the above appeals in favour of the appellants.