IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 21-07-2011 CORAM THE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN AND THE HONOURABLE MR.JUSTICE M.JAICHANDREN T.C.(A) No.1078 of 2006 M/s.C.Sivasamy Firm, 79, Pudukottai Road, Trichy-20 .. Petitioner. Versus The Deputy Commercial Tax oficer, Thiruverambur Circle. .. Respondent. The Appealwas filed before the Tamil Nadu Taxation Special Tribunal at Chennai to revise the order of the Joint Commissioner, dated 11.9.1995, made in SMR.No.146 of 1995: Ref.No.MM2/64396/94. After the abolition of the Tribunal, the case is transferred to this Court. In Appeal No & year 216/94 dated 9.6.94 on the file of the appellate Assistant Commission (CT) Thrichirapalli-1, and In TNGST No.3366432/92-95 dated 3.2.94 against the proceedings of the Deputy commercial Tax Officer, Thriverambur Circle For Petitioner: Mr.C.Venkatraman For Respondent: Mr.R.Sivaraman (Spl.G.P) (Taxes) O R D E R (Order of the Court was made by CHITRA VENKATARAMAN,J.) This is an appeal against the order of the Joint Commissioner relating to the assessment year 1992-1993. 2. It is seen from the facts herein that based on the survey conducted in the crusher unit of the dealer on 26.8.1991, by the officials attached to the Department to find out the normal requirement of electricity for crushing a given quantity of boulders and its output, the assessment of the dealer was finalised that 8 https://hcservices.ecourts.gov.in/hcservices/ units of electricity was required for crushing for production of 1 unit of Jelly. The assessee pointed out that apart from its own crushing unit it was doing cooly crushing too. In the reply filed to the notice of assessment, dated 1.2.1994, the asssessee contended as follows: “1. Cooly crushing is a regular practice in the line of Trade. 2. The assessee was doing crushing regularly to the people who brings boulds from the quarries. 3. All accounts of the assessee are propertly supported by vouchers. No make belief records created at any time. 4. The consumption of the electricity is crushing boulders into jelly would very due to the following factors: i) Voltage fluctuation in electricity supply would increase current consumption. ii) Boulders of varying sizes and hardness will also consume more electricity. iii) Delay in feeding the crusher continuously with boulders would also account for consumption of more units. iv) Constant wear and tear in jaw plates of crusher would account for fall in output of jelly resulting in consumption of more electricity energy. v) Oversized jellys extracted out of screen have to be fed back again into the crusher for crushing them into proper size and in this process also electricity will be consumed.” The above said contentions were however rejected by the officer taking the view that at the time of survey the assessee had given a statement before the inspecting officers which was binding on the assessee. In the circumstances, the objections raised by the assessee were rejected. 3. Aggrieved by the same, the assessee went on appeal before the Appellate Assistant Commissioner. While agreeing with the Assessing Officer that the claim of cooly crushing could not be accepted, as regards the adoption of the statistical survey to estimate the turnover, the Appellate Assistant Commissioner pointed out that the survey was done long before the assessment year and the survey team had not taken note of the normal wear and tear of the machinery. Apart from that the voltage fluctuation, varying sizes and hardness of boulders, delay in feeding the crusher continuously, feeding of oversized jellys again and again for making them into proper sizes, are all the factors, which ought to have been taken note of while fixing the turnover. Thus, the Appellate Assistant Commissioner adopted 12 units of electricity for crushing 1 unit of jelly. https://hcservices.ecourts.gov.in/hcservices/ Thereby, the first appellate authority re-fixed the turnover at 13,90,500/-, as against the originally fixed turnover of Rs.20,86,200/-. 4. In exercise of the powers under Section 34 of the Tamilnadu General Sales Tax Act, 1959, the Joint Commissioner issued suo motu notice of revision to restore the order of the Assessing Officer. The assessee replied to the notice issued by the Joint Commissioner. In considering the same, the Joint Commissioner pointed out that during the survey conducted, it was found that for one unit of jelly produced the consumption of electricity was 8 units. Thus, with reference to 37088 units of electricity consumed by the assessee, the Assessing Authority had worked out 4637 units of jelly crushed. The Joint Commissioner pointed out that going by the bills available and the consumption details furnished by the assessee himself it was found that for every unit of jelly obtained 9 units of electricity had been consumed. Thus, going by the output turnover and the units of electricity consumed, the Joint Commissioner set aside the order of the Appellate Assistant Commissioner adopting 12 units of electricity for 1 unit of jelly and re-worked the turnover by adopting 9 units of electricity for 1 unit of jelly, thereby, re- fixed the turnover at Rs.18,54,400/-. Aggrieved by the same, the assessee has come on appeal before this Court. 5. Learned counsel appearing for the assesee pointed that the consumption of electricity, by itself, cannot be a ground for estimating the turnover. The Joint Commissioner who initiated suo motu proceedings to restore the order of the Assessing Officer, adopted 9 units of electricity for 1 unit of jelly obtained. The said conclusion was arrived at by taking the total electricity consumption and the output turnover as contained in the books of accounts. In so calculating the turnover, the Joint Commissioner fell into the same error as had been submitted by the Assessing Officer. In the circumstances, the learned counsel for the assessee submitted that except for the statistical survey done in the earlier assessment year, there was no survey done or an inspection conducted during the material assessment year under consideration. Even applying the statistical survey report obtained in the earlier year, there is hardly any attention paid to the wear and tear of the machinery to assume 9 units of electricity for 1 unit of jelly. 6. A reading of the order of the Appellate Assistant Commissioner shows that on considering the various aspects relating to the voltage fluctuation, the age of machine, the wear and tear and the repeated feeding of the over sized jellys for making proper sizes, the first Appellate Authority adopted 12 units of electricity for crushing 1 unit of jelly. Whatever be the correctness or otherwise of the https://hcservices.ecourts.gov.in/hcservices/ Appellate Assistant Commissioner's order adopting 12 units of electricity, we do not find either in the notices or in the revisional order any material which could reasonably be relied upon by the Joint Commissioner for the purpose of invoking the suo motu revisional process to hold that the order of the Appellate Assistant Commissioner was without any material. 7. Though the notice of revision proposed to reject the Appellate Assistant Commissioner's order to restore the assessment based on the statement of the assessee, yet the Joint Commissioner has not chosen rightly so, to confirm the turnover as arrived at by the Assessing Officer. However, when he took up the revision for passing orders, referring to the consumption details, as furnished by the assessee, he held that even according to the book results, for every unit of jelly obtained, 9 units of electricity was consumed. Thus, taking the total consumption of electricity, the average amount consumption per unit of jelly obtained came to 9.05 units. So holding, the Joint Commissioner re-worked the turnover at Rs.1,85,400/-. Thus, over and above the amount turnover by the Appellate Assistant Commissioner at Rs.13,90,500/-, a further addition of Rs.4,63,900/- was ordered by the Joint Commissioner. 8. As rightly pointed out by the learned counsel for the appellant, if one reads the order of the Appellate Assistant Commissioner, there is atleast some reason to justify the adoption of 12 units to 1 unit of jelly. But if one reads the order of the Joint Commissioner except for the arithmetical calculations based on the consumption of electricity there is hardly any material to arrive at the turnover at Rs.18,54,400/-. Admittedly, except for the survey results conducted in the earlier year, no incriminating materials were found to arrive at this turnover. On balancing these orders that are before us, we find that the Appellate Authority orders appear to be more rational than the order before us. In the circumstances, we have no hesitation to set aside the orders and restore the order of the Appellate Assistant Commissioner. The Tax Case Revision is allowed. No costs. Sd/ Asst. Registrar /true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ csh To 1. The Joint Commissioner Tamilnadu Taxation Special, Tribunal at Chennai. 2. Appellate Assistant Commissioner (CT), Tirchirapalli-1. 3. The Deputy Commercial Tax Officer, Thiruverambur Circle. + 1 cc to the Special Court Pleader Sr.44446 + 1 cc to Mr. C Venkatraman, Sr.43891 T.C.(R) No.1078 of 2006 UG(CO) Eu 15.9.11 https://hcservices.ecourts.gov.in/hcservices/