STATE OF TAMIL NADU Vs. ANNAI INDUSTRIES

JUDGEMENT

(1.) THE assessing authority rejected the accounts of the respondent-assessee for various reasons stated in the assessment order. Some of the basic reasons for rejecting the accounts was that the assessee-respondent was alleged to have manufactured polythene lumps out of waste polythene bags and papers but had not maintained production-cum-stock register. THE assessing authority also found that the gross profit shown by the assessee was too low. However, the assessing authority opined that the assessee-respondent had used waste plastic bags and papers purchased from hawkers without bills and it consumed the same in the manufacture of polythene lumps and therefore, the purchases were liable to tax under section7-A of the Tamil Nadu General Sales Tax Act, 1959, at 4 per cent. THE assessee went up in appeal before the Appellate Assistant Commissioner. THE grievance projected before the Appellate Assistant Commissioner is related to the tax liability under section7-A of the Act as also to the addition of 5 per cent made to the taxable turnover for the defects noticed by the assessing authority. THE Appellate Assistant Commissioner confirmed the assessment under section 7-A on the turnover of Rs. 31, 054 but reduced the addition for the defects and held that an addition of 2 per cent as against 5 per cent to the taxable turnover for the defects found by the assessing authority would suffice. Second appeal was preferred before the Tamil Nadu Sales Tax Appellate Tribunal (Second Additional Bench), Madras. By an order dated April 2, 1982, the Tribunal upheld the contention of the assessee that assessment under section7-A of the Act was not justified. It was held that there was no manufacture of a commercially different product by the melting of the waste polythene bags and papers. After recording this finding, the Tribunal also found that the rejection of the accounts of the assessee for not maintaining the production-cum-stock register and showing a low profit was not justified. It was held that since the assessee-respondent was not manufacturing any new product, the necessity to maintain manufacturing accounts did not arise. Consequently the addition of 2 per cent for the defects noticed to the taxable turnover was also set aside. THE Revenue is in revision.

(2.) THERE is no dispute before us that the assessee purchased waste polythene bags and papers from hawkers in circumstances in which no tax was payable under section 3, 4 or 5 on the sale of those polythene bags and papers to the assessee. The question, however, arises whether the purchase turnover of waste polythene bags and papers would attract section7-A of the Act.

(3.) THE tax revision case, therefore, fails and is dismissed. THEre shall, however, be no order as to costs.