GOVINDAN ENGINEERING FOUNDRY Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THIS judgment shall dispose of two tax case appeals, they being T. C. Appeal Nos. 19 and 20 of 1995, as the issue involved is identical. By these appeals, under section 37 of the Tamil Nadu General Sales Tax Act (in short, "the TNGST Act"), the assessee challenges the orders passed by the Joint Commissioner dated November 4, 1994 (in T. C. No. 19 of 1995) and September 12, 1994 (in T. C. No. 20 of 1995), which he had passed under his suo motu revisional powers. In these orders, the Joint Commissioner had set aside the orders passed by the Appellate Assistant Commissioner and restored the orders passed by the assessing authority. The Joint Commissioner also inflicted penalty under section 9 (2) of the Central Sales Tax Act (in short, "the CST Act") read with section 12 (2) of the TNGST Act. Some facts, which are common to both the appeals, would be necessary to understand the controversy.

(2.) THE assessee is a partnership firm, carrying on the business under the name and style of Tvl. Govindan Engineering Foundry, Trichy, Tamil Nadu. THE assessee has a branch, operating under the same name and style at Chittoor in Andhra Pradesh. THEre is one other partnership concern, carrying on business in the name of M/s. Balaji Mills Stores, Chittoor High Road, Chittoor, Andhra Pradesh.

(3.) AT the outset, the learned counsel for the appellant pointed out that the basis of the finding given by the revisional authority in the impugned orders was that the Chittoor branch was not the branch office of the assessee as the Chittoor branch had three partners, viz. , M/s. T. Govindan, T. Kesavan and G. Purushothaman while the Trichy branch had only two partners, viz. , M/s. T. Govindan and T. Kesavan. Learned counsel pointed out that the revisional authority has proceeded on the incorrect factual basis that the dealing was between two different partnership firms and, therefore, it could not be said to be a branch transfer from Trichy to Chittoor. In support of his contention, learned counsel also filed additional typed set of papers wherein he has relied upon the copy of the partnership deed dated April 29, 1983; copy of form D1 inspection report of Deputy Commercial Tax Officer; copy of the assessment order for the year 1989-90 under the Andhra Pradesh General Sales Tax Act as also the tax clearance certificate issued by the Income-tax Officer, City Ward, Trichy. From all these papers, learned counsel very forcefully contends that there was no question of their being two firms and the Chittoor branch was nothing but the branch office of the assessee-firm. Learned counsel, therefore, urges that a finding that the transaction between the Trichy branch and Chittoor branch was between two different legal entities is absolutely incorrect and thereby the order of the revisional authority has immensely suffered. We must say that the learned counsel is correct in his contention that this transaction was in between the assessee and its branch office at Chittoor. Learned counsel for the department could not take any exception to any voluminous documentary evidence produced. We have tried to see the record which was produced before us and that also does not suggest that the transaction of sale between the Trichy branch and Chittoor branch was between two different entities. We were also taken through the finding in the revisional order where the Joint Commissioner has given a finding that the goods had moved in pursuance of the orders by the Chittoor branch to the Trichy branch and, therefore, this transaction would fall as an inter-State sale, The authority seems to have relied upon the decision in Mehta Group of Industries v. State of Haryana [1989] 75 STC 428 (P&h ). We are convinced that there has been a factual mistake. However, the further question would still persist as to whether merely because of that could the assessee straight away succeed ? In our opinion, there is something more in this matter which we shall presently show.