IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 22.09.2011 Coram The Honourable Mrs.Justice CHITRA VENKATARAMAN and The Honourable Mr.Justice M.JAICHANDREN TC(R). Nos.9 and 10 of 2011 Britannia Industries Limited MTH Road Padi, Chennai 50 ... Petitioner in both appeals [Appellant] -vs- The State of Tamil Nadu rep. By the Assistant Commissioner (CT) Fast Track Assessment Circle – III Chennai 600 006 ... Respondent in both appeals [Respondent] Tax Case Revision filed under Section 38 of the TNGST Act 1959 Nos. 9 and 10 of 2011 to revise the common order of the Sales Tax Appellate Tribunal (Main Bench), Chennai dated 9th August 2010, in T.A.Nos. 27 of 2005 and 228 of 2007 respectively [1] against the order of the Deputy Commissioner [CT] Appeals 3rd Floor Wavoo complex, 191 NSC Bose Road, Chennai dated 19.8.2004 and 22.9.2007 in Appeal No.and year 22/2004 and AP.No.56/05. [2] against the order of the Asst. Commissioner [CT] Fast Track Asst. Circle III, Chennai dated 29.4.2004 and 27.5.2005 and made in T.No.1320020/99-2000 and TNGST No.1320020/2000-2001. For Petitioner : Mr.N.Sriprakash [in both the TCRs.] For respondent : Mr.R.Sivaraman, Special Government Pleader [in both the TCRs.] https://hcservices.ecourts.gov.in/hcservices/ COMMON ORDER (Order of the Court was made by CHITRA VENKATARAMAN,J) T.C.Nos. 9 and 10 of 2011 are at the instance of the assessee relating to assessment years 1999-2000 and 2000-01 respectively. 2. It is seen from the documents placed before this Court that the assessee was originally assessed for the said assessment years under the provisions of Tamil Nadu General Sales Tax Act. On verification of the records, it was seen that the assessee purchased edible oil from a registered dealer and that the edible oil was used as raw material for manufacture of biscuits. The assessee had placed these details before the Enforcement Wing Officers on 5.3.2004. As per notification in G.O. No. 109 CT & RE dated 7.4.98, the sale of edible oil was exempted if the sales turnover of the dealer was not more than Rs.100 crores. This turnover limit was subsequently raised under G.O. No. 93/CT dated 2.6.2002 effective from 1.4.99 to Rs.300 crores. Considering the said Government Order, the Assessing Authority viewed that the purchase of edible oil which had not suffered tax for use in the manufacture, attracted charge under Section 7A of the Tamil Nadu General Sales Tax Act. Accordingly, assessments were re-opened under Section 16(1)(a) of the Tamil Nadu General Sales Tax Act. After giving opportunity to the assessee, the assessment was thus confirmed. Aggrieved by the said assessment, the assessee went on appeal before the Deputy Commissioner (Appeals), who upheld the assessment. However, as regards the turnover of Rs.10,64,222/-, being the difference in the turnover relating to purchase of edible oil, the same was remanded back to the Assessing Officer for fresh consideration to examine as to whether the said turnover had any basis for inclusion in the purchase turnover taxable under Section 7-A(1)(a) read with Section 16(1) of the Act. As regards penalty, the Deputy Commissioner (Appeals) refixed the same. 3. In respect of assessment year 2000-01, similar exercise was taken by the Assessing authority to revise the assessment, which was also taken on appeal before the Deputy Commissioner (Appeals), who confirmed the assessment made under Section 7-A of the Tamil Nadu General Sales Tax Act. Aggrieved by the same, the assessee went on appeal before the Sales Tax Appellate Tribunal wherein the assessee contended that in respect of exempted transactions under G.O. there could be no liability at all under Section 7-A of the Tamil Nadu General Sales Tax Act. Given the object of introduction of Section 7- A of the Act, the reassessment made on the assessee was not sustainable. The Tribunal pointed out that considering the restricted nature of exemption notification, Section 7-A of the Act stood attracted to the facts of the case. Thus, the appeals filed by the assessee were rejected. However, as regards levy of penalty, the Tribunal set aside the same by holding that the assessee could not be https://hcservices.ecourts.gov.in/hcservices/ held guilty of wilful non-disclosure of assessable turnover. Aggrieved by the same, the assessee is on revision before us by raising the following substantial questions of law:- (i) Whether the circumstances in which the petitioners had effected purchases from M/s.Ruchi Soya Industries Limited was a circumstance in which no tax was payable under Section 3 of the Act? (ii) Whether Section 7-A of the Act has operation in cases where a sale is exempted by a notification under Section 17 of the Act? (iii) Whether the power under Section 17 of the Act can be utilised for shifting liability to a purchaser to pay tax under Section 7-A of the Act? (iv) Whether the Notification had exempted the transaction of sale as a result of which the purchases by the petitioners also stood exempted? 4. Learned counsel for the petitioner made substantial submission on the scope of Section 7-A, that being in the nature of anti tax evasion measure, the said provision has relevance only for those cases where there was leakage of tax. Since, the phrase 'tax payable' would include situation covered under Section 17 of the Act also, the question of levy of purchase tax did not arise. 5. We do not think that the contention taken by the learned counsel for the assessee survives any more for our consideration since the same was considered by this Court in the decision reported in [2008] 12 VST 546 – RUCHI SOYA INDUSTRIES LTD. v. CTO, to which, one of us is a party. A contention similar to what is now argued was made by the learned counsel herein in the said reported decision relating to the very same assessment year 1999-2000, 2000-01. The contentions was rejected by this Court after elaborately considering to the scope of Section 7A of the Act. Referring to Section 3(2) as applicable to the assessment year under consideration, this Court held that goods falling under I Schedule suffer tax within the State at the point specified therein. Hence, where the goods does not suffer tax at the point of first sale for some reason or other, as per second proviso to Section 3(2), the said goods are brought under the net of taxation. The second proviso to Section 3(2) states that in the case of goods taxable at the point of first sale, the tax shall be payable at least once either by the first seller or by the second earliest of the successive dealers who is liable to tax under the section. This proviso does not shift the liability, but only the payability to tax. In the circumstances, this Court held that Section 7A of the Act stood attracted to cases of conditional exemption and there was no shift in the policy of taxation. 6. Given the fact herein that edible oil sold to the assessee had enjoyed the exemption under the Government Order by reason of the https://hcservices.ecourts.gov.in/hcservices/ sellers' turnover being below Rs.300 crores limit and that the goods sold to the assessee was consumed in the manufacture of biscuits thus the edible oil is no longer available for further tax treatment as per proviso to Section 3(2), rightly the assessment was brought to tax under Section 7A of the Act. Given the object of introduction of Section 7A, to plug the leakage and to prevent evasion of tax, even though there is no 'evasion of tax' as such in the sense in which 'evasion' is understood, applying the decision reported in [1975] 36 STC 191 – STATE OF TAMIL NADU v. M.K.KANDASWAMI AND ORS., we reject the submission of the assessee that the exemption granted is a circumstance which ought to have been taken note of as excluding the charge under Section 7-A of the Act. As already pointed out the decision reported in [2008] 12 VST 546 – RUCHI SOYA INDUSTRIES LTD. v. CTO, considered the similar line of argument and rejected the same. As against the said decision viz., [2008] 12 VST 546 – RUCHI SOYA INDUSTRIES LTD. v. CTO, Special Leave Petitions were filed by the assessee, and the same were dismissed by the Apex Court in C.C. 13571 to 13574 of 2008 by order dated 13.10.2008. 7. We do not think, the question merits any fresh consideration. In the circumstance, Tax Case (Revision) Nos. 9 and 10 of 2011 are dismissed. No costs. Sd/- Asst. Registrar /true copy/ Sub Asst. Registrar. bg To 1.The Assistant Commissioner (CT) Fast Track Assessment Circle – III, Chennai 600 006 2. The Sales Tax Appellate Tribunal (Main Bench), Chennai 3. The Deputy Commissioner [CT] Appeals 3rd Floor, Wavoo Complex, 191, NSC Bose Road, Chennai. 2 ccs to The Spl. Govt. Pleader[Taxes], SR 59580, 59581 TC(R). Nos. 9 and 10 2011 gv[co] gp/20.10 https://hcservices.ecourts.gov.in/hcservices/