STATE OF MADRAS Vs. BOMBAY AMMONIA LTD

JUDGEMENT

(1.) THE assessees are dealers in refrigerators, spare parts, etc. For the year 1964-65, they reported a total taxable turnover of Rs. 6,41,031. 77 to the assessing authority under the Madras General Sales Tax Act, 1959, in their monthly returns. THE assessing authority checked the accounts of the assessee and determined the taxable turnover at Rs. 6,74,742. 65 on 31st January, 1966, by making an addition of Rs. 33,710. 88 to the reported turnover. THE assessees did not prefer any appeal against the said order of assessment. However, on 7th January, 1967, the Deputy Commissioner of Commercial Taxes, Madras Division, issued a notice to the assessees proposing to levy a penalty of Rs. 5,056 on the undisclosed turnover of Rs. 33,710. 88, under section 12 (3) of the Act in exercise of his suo motu powers of revision under section 32 of the Act. THE assessees filed their objections on 23rd January, 1967, questioning the jurisdiction of the Deputy Commissioner to levy the penalty. In addition, they also pointed out that a turnover of Rs. 6,32,142 out of the turnover determined related to works contracts and that, therefore, if the Deputy Commissioner is inclined to revise the order of assessment, he should set right the illegality in the order of assessment by granting exemption from tax on the said turnover. THE Deputy Commissioner, ignoring the objections filed by the assessees, revised the assessment and ordered the levy of penalty of Rs. 3,371 under section 12 (3) of he Act for non-disclosure of a taxable turnover of Rs. 33,710. 88 in their monthly returns. THE Deputy Commissioner had refused to revise that portion of the assessment order relating to Rs. 6,32,142 on the ground that the assessees did not file any appeal in the regular course as contemplated by the provisions of the Act.

(2.) THE assessees thereafter filed an appeal before the Tribunal questioning the propriety of the order of the Deputy Commissioner refusing to consider their claim for exemption in relation to Rs. 6,32,142 and levying a penalty of Rs. 3,371 for non-disclosure of the taxable turnover of Rs. 33,710. 88. THE Tribunal set aside the levy of penalty on the ground that though the turnover of Rs. 33,710. 88 was not disclosed in the monthly returns filed by the assessees, the same was disclosed in the accounts and that the assessment having been made on the basis of the book entries and not on the basis of any best judgment, the levy of penalty under section 12 (3) was not justified. THE Tribunal also considered the claim for exemption in relation to the said sum of Rs. 6,32,142 and held that a turnover of Rs. 5,99,468 really related to works contracts and, as such, the same should be exempted from taxation. Aggrieved against the order of the Tribunal, the revenue has come up before us.

(3.) IN this case, the Tribunal has chosen to take the view that the Deputy Commissioner should have entertained the new claim put forward by the assessees that though the transactions were only in the nature of works contracts, they have been wrongly assessed and hence they should be excluded from the taxable turnover, and dealt with the claim on merits.