JOTHI ENGINEERING WORKS Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) This Tax Case (Appeal) is filed by the assessee as against the order of the Joint Commissioner suo motu revising the order of the Appellate Assistant Commissioner as regards the cancellation of penalty made under Section 23 of the Tamil Nadu General Sales Tax Act.

(2.) The assessment year under consideration is 1988-89. It is seen from the facts narrated that the assessee purchased tyres and tubes during 1988-89 by availing concessional rate of tax under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959. The purchase of tyres and tubes were used by the assessee as component parts in the manufacture of animal driven vehicles. Holding that the assessee was not entitled to claim concessional rate of tax, as animal driven vehicles were multi-point items, proceedings were initiated to tax the differential rate of tax on the purchase of tyres and tubes. Aggrieved by this, the assessee went on appeal before the Appellate Assistant Commissioner. In the course of the appeal, the Departmental Representative pointed out that having regard to the violation of Form XVII, penalty was to be levied under Section of 23 of the Tamil Nadu General Sales Tax Act. The first Appellate Authority applied the decision of this Court reported in (Elgi Equipments Private Limited V. State of Tamil Nadu, 1977 40 STC 310) and held that Section 23 contemplated levy of penalty only on the contravention of declaration of Form XVII and not when the item was used as a component part of some other goods not specified in the First Schedule; consequently, the first Appellate Authority allowed the appeal. Finding the order erroneous, the Joint Commissioner invoked the suo motu revisional powers and accordingly issued notice.

(3.) The assessee resisted the proposal by placing reliance on the decision cited above. After hearing the assessee, the Joint Commissioner pointed out that the decision reported in (Elgi Equipments Private Limited V. State of Tamil Nadu, 1977 40 STC 310) was reversed by the Full Bench of this Court in the decision reported in (Madras Electricial Conductors (P) Ltd. V. State (Mad), 1996 101 STC 126 wherein this Court had held that the Explanation to Section 3(3) provided that for the purpose of Section 3(3), "component part" means an article which forms an identifiable constituent of the finished product, which along with the others goes to make up the finished product and which is identifiable visually or by a mechanical process and not by a chemical process. Thus, overruling the decision reported in (Elgi Equipments Private Limited V. State of Tamil Nadu, 1977 40 STC 310), this Court upheld that levy of penalty under Section 23 of the Tamil Nadu General Sales Tax Act. Applying the said decision, the Joint Commissioner set aside the order of the Appellate Assistant Commissioner and thus held that for misuse of Form XVII, penalty was leviable under Section 23 of the Tamil Nadu General Sales Tax Act. Thus the suo motu revision proposal to direct the Assessing Officer to initiate fresh proceedings was upheld. Aggrieved by this, the present Tax Case (Appeal) has been filed.