Heard Mr.P.Rajkumar, the learned counsel appearing for the petitioner and Mr.R.Tholgappian, the learned Government Advocate appearing for the respondent.
2. The petitioner is a registered dealer registered under the provisions of the Tamil Nadu General Sales Tax Act, 1959. Various food items and drinks are served in the hotels and restaurants, in the name of the petitioner, namely, M/s.Hotel Saravana Bhavan. Out door catering is also undertaken by the petitioner. It also prepares and serves ready to eat food items like idly, dosai, vadai, noodles, fried rice, meals, cold and hot beverages, soft drinks, ice creams, mineral water, etc. Generally, the food items and drinks are made ready and served, based on the orders placed by the customers. Only items like packaged bottled drinks and ice creams, purchased from local dealers, are kept in ready form.
3. While so, the respondent had issued the impugned notice, dated 30.7.2007, with regard to the levy of tax, under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959, which is as follows: "Tvl.Saravana Bhavan, Foods and Drinks, No.19, Vadapalani Andavar Koil Street, Vadapalani, Chennai, were finally assessed on a total and taxable turnover of Rs.68,92,81,882/- and Rs.65,71,73,259/-, respectively in the proceedings cited.
2. The place of business was inspected by the Enforcement Wing Officers, (North), Chennai, and noticed the following facts:
i) The dealers had purchased edible oil from the locally registered dealers in 2000-2001 to the tune of Rs.2,30,97,197/- and consumed them in the preparation of foods, sweets, savories etc., During the said year, the sale of edible oil was covered under the conditional exemption upto 100 crores granted by the Government as per G.O.Ms.No.109, CT & RE Department, dated 7.4.1998, with effect from 27.3.1998 and extended upto Rs.300/- crores per annual from 1.4.1999 in G.O.Ms.92 CT Department, dated 2.6.2000. This conditional exemption was withdrawn by the Government in G.O.Ms.No.110 CT Department, dated 30.11.2001. Therefore the vegetables oils, which were purchased from locally registered dealers and used in the manufacturing of sweets, savories, bakery items and other goods items did not suffer any tax in the year of assessment 2000-2001. Such purchase of vegetable oil would attract liability under Section 7-A of the TNGST Act. Further the dealers had purchased pulses, grams, chillies, coriander tamarind, jaggery, turmeric and asafetida from the local dealers and used the goods in the preparation of food items. Such items are also exempted from tax (i.e. conditional exemption the sales turn over does not exceed Rs.300/- crores in a year] under entry 81[a][b][c] and [d] in part-B of III Schedule to the TNGST Act, 1959, with effect from 17.7.1996. The tax not suffered such goods used in the preparation of foods items by the dealers are liable to tax under Section 7-A of the TNGST Act.
3. It was therefore proposed to revise the assessment for the year 2000-2001 under TNGST and assess the turnover which would attract liability under 7-A of the TNGST Act.
Actual suppression on the purchase Turnover of edible oil consumed in the preparation of food by the dealers which would attract liability under Section 7-A of the TNGST Act Rs.2,30,97,197/- - 4% Actual suppression on the purchase turnover of chillies, coriander, turmeric, Tamarind and asafetida which would attract liability under Section 7-A of the TNGST Act Rs.2,10,10,436/- 4%
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Total of suppression noticed Rs.4,41,07,635/-
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4. Levy of tax under section 7-A on the purchase turnover of edible oil (ie. Covered under the conditional exemption at the time of purchase) which were used in the manufacturing activities was upheld by the Tamil Nadu Special Tribunal by their judgment pronounced in the case of Tvl. Ruchi Soya Industries Limited (reported in 10 TNCTJ 2004-2005)
5. It was also proposed to levy penalty under section 16(2) of the TNGST Act at the appropriate rate on the tax due of the taxable turnover proposed to be assessed above due wilful non disclosure of the assessable turnover.
6. Further, verification of the notice revealed that a turnover of Rs.2,10,10,436/- was proposed to be assessed at 4% which is not in order. The above purchase turnover pertains to the purchases of pulses and grams; chillies, coriander, turmeric, Tamarind and asafetida. Of which pulses and grams, being declared goods are liable to tax at 4% and others viz., chillies, coriander, turmeric, Tamarind and asafetida, being not specified elsewhere in any of the schedule, are liable to tax at 12% as residuary item of goods. In response to the notice though the dealers filed their objections, they failed to furnish the break up figures for the purchase pulses and grams and separately for the purchases of chillies, coriander, turmeric, Tamarind and asafetida. In the absence such break up figures, it is to be estimated at the proportionate ratio of 3:1 on pulses, grams and chillies, coriander, turmeric, Tamarind and asafetida.
7. Thus in partial modification of this office notice, dated 19.1.2007, it is proposed to revise the assessment for the year 2000-2001 under TNGST and assess the turnover which would attract liability under 7-A of the TNGST Act as shown below:
Actual suppression on the purchase Turnover of edible oil consumed in The preparation of food by the Dealers which would attract liability Under section 7-A of the TNGST Act Rs. 2,30,97,197/- 4% Actual suppression on the purchase Turnover of pulse and grams which would attract liability Under section 7-A of the TNGST Act at the proportionate ratio as in para 6 above on Rs. 2,10,10,436/- Rs. 1,57,57,827/- 4% Actual suppression on the purchase Turnover of chillies, coriander, turmeric, Tamarind and asafetida which would Attract liability under section 7-A of the TNGST Act at the proportionate ratio as in para 6 above on Rs. 2,10,10,436/- Rs. 52,52,609/- 12%
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8. It is also proposed to levy penalty under section 16(2) of the TNGST Act at the appropriate rate on the tax due of the taxable turnover proposed to be assessed above due willful non disclosure of the assessable turnover.
9. The dealers may file their objections, if any, to the above proposal to this office within 10 days of receipt of this notice, failing which final orders would be passed."
4. Even though the prayer in the writ petition is for a larger relief, at this stage of the hearing of the writ petition, the learned counsel appearing on behalf of the petitioner had submitted that it would suffice if the petitioner is permitted to file its objections before the respondent, within a specified time limit, based on which the respondent could pass appropriate orders on merits.
5. In view of the request made by the learned counsel for the petitioner and as there is no serious objection raised by the learned counsel appearing on behalf of the respondent, the petitioner is permitted to file its objections before the respondent, with regard to the impugned notice, dated 30.7.2007, within a period of four weeks from the date of receipt of a copy of this order and on receipt of the said objections, the respondent is directed to pass appropriate orders thereon, on merits and in accordance with law. Accordingly, the writ petition is disposed of, with the above directions. No costs.
csh To The Commercial Tax Officer, Vadapalani-I Asst. Circle, Chennai 600 106