STATE OF TAMIL NADU Vs. THANGADURAI

JUDGEMENT

(1.) THIS revision is filed by the State against the decision of the Sales Tax Appellate Tribunal, deleting the quantum of penalty levied by the assessing authority under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959, while sustaining the assessment made on the respondent-assessee. The assessee in this case was treated as a dealer in the groundnut oil by the assessing authority, rejecting the assessee's contention that he is only a broker and not a dealer in respect of the entire transaction in the assessment year. On this basis the assessing authority, in the course of best judgment, finalised the assessment holding that the assessee is liable to pay sales tax at a turnover of Rs. 66,532 and also a penalty of Rs. 4,039. The assessee disputed the entire assessment as also the levy of penalty before the Appellate Assistant Commissioner. The assessment having been sustained by the Appellate Assistant Commissioner, the matter was taken to the Tribunal by the assessee. The Tribunal, though sustained the turnover of Rs. 66,532, had cancelled the order of penalty on the ground that the assessee has been disputing the entire assessment on the ground that he is only a broker and not a dealer, and therefore, he has no turnover to be assessed. His case was that he never handled the goods nor had he ever stocked the goods and that the entire transaction with which he was concerned was only a transaction as a broker. The Tribunal held that though there are valid grounds for sustaining the assessment, having regard to the absence of proper explanation by the assessee in relation to some slips recovered from the assessee's place of business during surprise inspection, they are not sufficient grounds for levying a penalty which would normally be based on willful suppression of the turnover. According to the Tribunal since the assessee has always contended that he is not liable to be taxed as he is only a broker and thus wanted to escape from his liability to tax in respect of the entire transaction, he cannot be taken to have intended to suppress the transaction. In this view, the Tribunal held that there is no room for the levy of penalty under section 12(3) as the assessee's conduct in not able to explain the slips recovered from his place of business will merely amount to a stock discrepancy and not actual suppression of turnover.

(2.) THOUGH the learned Government Pleader contends that the Tribunal has given inconsistent reasons while dealing with the question of assessment and dealing with the question of penalty, and therefore, interference is called for with the order of the Tribunal. However, we are of the view that the considerations to be taken in connection with the assessment are different from the considerations which have to weigh in the matter of levy of penalty. In the matter of assessment the assessee's non-explanation for certain incriminating document may be taken into account holding that certain figures referred to in the document will represent the turnover of the assessee's business. But in the matter of levy of penalty the fact that the assessee is not able to explain certain documents will not ipso facto lead to the fact that the assessee has wilfully suppressed the turnover. As has been held by this Court in Kathiresan Yarn Stores v. State of Tamil [1978] 42 STC 121 (FB) in order that penalty may be imposed, it must be possible first to come to the conclusion that there was actually a turnover and further that the turnover was not disclosed by the assessee and that merely because the assessment is a best judgment assessment the levy of penalty is not automatic. Since the assessee in this case has been contending that he has no turnover at all for the purpose of tax he cannot be said to be guilty of concealment of the portion of the turnover assessed. We, therefore, feel that the order of the Tribunal does not call for our interference. Therefore, the revision is dismissed.