REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. 5134-5135 OF 2002

Sree Krishna Electricals  ...Appellant

Versus

State of Tamil Nadu & Anr. …Respondents

J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. Challenge in this appeal is to the judgment of a Division Bench of the

Madras High Court dismissing the writ petitions filed by the appellant.  The

appellant is a dealer registered under the Tamilnadu General Sales Tax Act,

1959 (in short the ‘Act’). The appellant was assessed to tax on the sale of

wet  grinders.  Though  the  appellant  claimed  that  he  was  not  selling  wet

grinder but only parts thereon, the claim was found to be untrue and tax and

penalty  were  imposed  for  the  Assessment  years  1992-93  and  1993-94.

Appellant’s  stand  was  that  he  was  entitled  to  relief  on  the  basis  of  a

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judgment of the High Court  in  State of  Tamil Nadu v.  Suguna Agencies

(1991) 81 SCC 33). According to the Revenue authorities, the judgment was

referred  to  in  a  later  judgment  of  the  High  Court  in  S.  Durai  v.  Joint

Commissioner of Commercial Taxes Chepauk, Madras (1994) 95 STC 372

where a different view was taken.   

2. Both these cases are cases in which similar  claims were made that

though the assessee had purchased parts required to be put together to form

wet grinder whatsoever has been sold by the assessee was not wet grinder

but parts thereof. In the first case the High Court accepted the finding of the

Tribunal that what had been sold was the parts of the wet grinder.  In the

later case the High Court found that the authorities had recorded a finding

that what was sold was in fact was a complete wet grinder which was a new

commodity and not merely parts thereof.   

3. The High Court  was of  the  view in  the present  case that  the later

decision apply to the facts of the present case.  As regards the penalty the

assessee took the stand that the penalty has been imposed mechanically and

there was no warrant for it as the assessee had disclosed the turnover for

which he had claimed exemption. The High Court was of view that there

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was not complete disclosure and the fact that he had disclosed the sale of

what  he  has  termed  as  parts  does  not  amount  to  full  disclosure.   The

assessments made in the case of the assessee were in fact the best judgment

assessment which permitted the imposition of penalty.  Accordingly the writ

petitions were dismissed.

4. Learned  counsel  for  the  appellant  submitted  that  the  High  Court

should have compared the factual scenario and should have held that the

decision in Suguna’s case (supra) is applicable to the facts of the case.

5. Learned counsel for the respondent on the other hand supported the

judgment of the High Court.

6. We find that the authorities have factually adjudicated the issues.  In

S. Durai’s case (supra) on which reliance was placed by the High Court to

dismiss the writ petitions is held that what was sold was in fact a complete

wet grinder which was a new commodity and not merely parts thereof. The

High  Court  has  observed  that  the  factual  scenario  was  identical.  The

conclusions arrived at by the revenue authorities and the High Court that in

fact what was sold was a complete wet grinder which was a new commodity

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and not merely parts thereof.  This being a factual finding, there is no scope

for interference in these appeals so far levy of tax is concerned.

7. So far as the question of penalty is concerned the items which were

not  included  in  the  turnover  were  found  incorporated  in  the  appellant’s

accounts books. Where certain items which are not included in the turnover

are  disclosed  in  the  dealer’s  own  account  books  and  the  assessing

authorities  includes  these  items  in  the  dealers’  turnover  disallowing  the

exemption penalty cannot be imposed. The penalty levied stands set aside.

8. The appeals are accordingly disposed of.  

……..…………………….………J. (Dr. ARIJIT PASAYAT)

…………………………….……..J. (LOKESHWAR SINGH PANTA)

New Delhi, April 21, 2009

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