STATE OF TAMIL NADU Vs. BALANJA INDUSTRIES

JUDGEMENT

(1.) THIS is a revision case, filed by the State of Tamil Nadu represented by the Deputy Commissioner of Commercial Taxes, Madras Division, against the judgment of the Sales Tax Appellate Tribunal (Main Bench), Madras, dated 10th July, 1978, passed in T.A. No. 1231 of 1977, confirming the order of the Appellate Assistant Commissioner (CT)-II, Madras, with respect to the suppression of the turnover, but cancelling the penalty that had been imposed on the respondent herein by the Appellate Assistant Commissioner (CT)-II, Madras, who confirmed the said penalty that was imposed by the assessing officer.

(2.) THE case of the Revenue-petitioner is that the respondents herein, namely, M/s. Balanja Industries, Mangalore, imported ivory boards from Japan, cleared the goods at Madras Port and sold them to M/s. Makanchand, dealers in papers and boards, at No. 100, Narayana Mudali Street, Madras 1, in bill No. 1 dated 28th April, 1975 for Rs. 91, 521. THE respondents raised the invoice in bill No. Pro-01 dated 28th April, 1975 for the sale value of 31 bales of ivory boards for Rs. 91, 521.10, sales tax and surcharge of Rs. 7, 687. 77, thus making the total value at Rs. 99, 208. 77. Accordingly, the assessing officer brought the sales to tax and also levied penalty of Rs. 10, 983 under section 12(3) of the Act. THE contention that was raised by the respondents herein before the Tribunal was that during the relevant period M/s. Sha Makanchand Hira Chand acted only as a financier that these goods were kept as stock in their account books and that the respondents herein have sold the goods to Sha Makanchand Hira Chand as per the invoice No. 11/76-77 dated 16th March, 1977.

(3.) HE has also pointed out that the Tribunal has wrongly applied the ratio in Kathiresan Yarn Stores v. State of Tamil Nadu 1978 (42) STC 121, 1978 AIR(Mad) 322 Mad.) [FB] 1978 AIR(SC) 12, 1977 (35) FLR 414, 1977 (51) FJR 408, 1977 LIC 1847, 1978 (1) LLJ 29, 1977 (2) LLN 606, 1978 SLJ 183, 1977 (4) SCC 384, 1978 (1) SCR 701, 1977 UJ 699, 1977 SCC(L&S) 560, 1978 (2) MLJ 1, 1977 SCC(L&S) 560, 1977 SCC(L&S) 560, 1978 I(LLJ) 29, 1977 SCC(L&S) 560, 1977 SCC(L&S) 560 [FB], to the facts of the instant case before us which are different from the facts of that case. HE has also submitted that this is not the best judgment assessment on the other hand, it is a case where the respondents herein have not proved that the goods were entrusted to the Madras dealer for safe custody for the finance but they have not denied that the goods were delivered to M/s. Makanchand Hira Chand, No. 100, Narayana Mudali Street, Madras 1, as early as in April, 1975, and the said transaction had taken place more than one and half years prior to the date of assessment order and obtained money on the goods. The assessing authority also found, as a matter of fact, that the respondents have not taken back or cared for the consignment delivered to the Madras dealer, and this aspect of the case falsified the version of the respondents, that they handed over the goods for custody only for the finance and the same clearly proves that the goods were sold against the finance received. This aspect of the case has been confirmed by the Appellate Assistant Commissioner. Further the Madras dealers' account showed transactions as outright purchases and this also afforded as a ground to reject the contention of the dealers. Further the dealers' letter dated 15th April, 1975 addressed to the Madras dealer reads as follows :