AMRUTANJAN LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE assessee M/s. Amrutanjan Limited, is the petitioner herein. The assessee is carrying on business at No. 42/45, Luz Church Road, Madras. The assessee granted commission to the stockists in the form of incentive at 5 per cent on the basic value of their products and claimed exemption from the payment of tax on turnover. They are fully supported by credit notes. The rebate was allowed in accordance with the regular practice of the dealer and so it was proposed to be allowed in full by the assessing officer. According to the assessing officer the scrutiny of the connected invoices and credit notes revealed the fact that the tax and surcharge portion of it (on the basic value) have not been actually refunded, to the stockists, but retained by the dealers. It was also ascertained that the basic value of the products which was sought to be allowed does not include the sales tax, surcharge and excise duty. As the sales tax and surcharge portion of the amount have not been refunded along with the basic value, it was held that the dealers have collected the sales tax and surcharge on the rebate for which exemption was allowed. According to the assessing officer, it amounts to contravention of the provisions of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the TNGST Act") and penalty is warranted under section22(2) of the Act. In respect of such discount also the dealers have adopted the same procedure as followed in the matter of rebate on the basic value. The sales tax and surcharge portion on the cash discount have not been refunded. No evidence was produced to prove that the sales tax and the cash discount was refunded. The exemption claimed on the cash discount was granted. In view of the above facts, it was proposed by the assessing officer to recover the portion of the sales tax and surcharge on the turnover of the rebate and cash discount by way of penalty under section22(2) of the Act.

(2.) ON appeal, the Appellate Assistant Commissioner confirmed the penalty levied under section22(2) of the Act, amounting to Rs. 36, 969. On further appeal, the Tribunal held that according to the facts arising in this case, the assessee gave rebate and cash discount only at the end of the assessment year and, therefore, the collection of sales tax and surcharge on the amount claimed as exemption cannot be considered as illegal. But the Tribunal pointed out that the assessee has not produced any evidence to show that the excess tax and surcharge collected were refunded to the stockists and dealers. Therefore, the Tribunal held that,

(3.) ON the other hand, learned Government Advocate (Taxes) submitted as under :