STATE OF TAMIL NADU REP BY THE DEPUTY COMMISSIONER CHENNAI DIVISION Vs. TVL GUPTA IRON AND STEEL COMPANY

JUDGEMENT

(1.) The above tax case revision petitions are filed by the Revenue challenging the order of the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai dated 26.7.2000 made in S.T.A.Nos.11 and 13 of 1998 for the assessment years 1989-90 and 1992-93 and raising the following substantial question of law:

(2.) The facts giving rise to the present revision petitions are as follows. The respondent-Tvl.Gupta Iron & Steel Company are the dealers in iron and steel. For the assessment year 1989-90, the assessee reported Nil taxable turnover and total turnover of Rs. 57,87,441.69. Their place of business was inspected by the officers of Enforcement Wing on 26.2.90 and based on the details gathered from the assessee during spot enquiry and the verification of records in the assessment circle, it was noticed that certain purchases were made by the assessee from non-existing dealers and whose registration were cancelled prior to the purchase. The details of the non-existing dealers are Tvl.Omega Enterprises, S.M.Traders and Steel Syndicate. Similarly for the assessment year 1992-93, it was noticed that the purchases were made from non-existing dealers. Based on the inspection, notices were issued to the assessee and revised assessment orders together with penalty under Section 12(3) at the rate of 150 per cent of the tax due were confirmed by holding that the assessee did not prove the bona fide of the purchase and there were no materials to prove the genuineness of the purchase and that such purchases were made from non-existing dealers namely, Santhi Traders and Selvam Traders whose registration had been cancelled prior to the date of purchase.

(3.) Questioning the assessment orders, the assessee preferred two appeals before the Appellate Assistant Commissioner(CT), Chennai, who also found that the alleged purchases were made by the assessee from non-existing dealers whose registration were cancelled prior to the purchases. Nevertheless, the Appellate Assistant Commissioner found that the assessee can be taken to have purchased the goods representing 50 per cent of the escaped turnover from local dealers and therefore to that extent the sale should be taken to be second sale. Accordingly, the first appellate authority adopted the ratio of 50:50 for the disputed turnover, namely, as first sale and second sale respectively and ordered exemption on the turnover in respect of the second sales on the ground that all the purchases had been made from local dealers. Simultaneously, the first appellate authority also reduced the penalty in respect of the assessment year 1989-90 and no penalty was imposed in respect of the assessment year 1992-93.