The main legal point established in the judgment is that the excise duty component on the clearances of petroleum products forms part of taxable turnover for the purpose of levy of General Sales Tax.

JUDGMENT :

(Prayer: Writ Petitions filed under Article 226 of the Constitution of India, praying for the issuance of a Writ of Certiorari, calling for the records of the respondent herein in his TNGST Nos.44684/1984-85, 084727/1985-86 dated 29.02.2012 and 27.08.2012 respectively and quash the same.)

1. The petitioner is the Indian Oil Corporation Ltd., and challenges proceedings of the Deputy Commissioner, Large Tax Payer Unit dated 29.02.2012 and 27.08.2012 for the periods 1984-85 and 1985-1986 passed in terms of the provision of the Tamil Nadu General Sales Tax Act, 1959 (in short 'Act').

2. The petitioner has restricted its challenge only to the levy of penalty under Section 12(5)(iii) of the Act. Though the impugned proceedings have been challenged by way of statutory appeal, the specific ground that has been raised in this writ petition is a legal ground that goes to the root of the matter and hence, I am of the view that the mere fact that levy has been challenged in appeal will not be a bar to the maintainability of the writ petitions. Moreover, even though the levy of penalty was challenged before the first Appellate Authority, a copy of the order passed by the First Appellate Authority that has been placed on record, makes it clear that he has not dealt with the issue on merits perhaps because of pendency of these writ petitions. Thus, the writ petitions are held to be maintainable.

3. On merits, the penalty has been challenged on the question of whether the excise duty component on the clearances of petroleum products would be includable in taxable turnover for the purpose of levy of General Sales Tax.

4. The first decision available on this issue is one of a Division Bench of the Kerala High Court in Deputy Commissioner of Sales Tax Vs. Burmah Shell Oil Storage [(1981) 48 STC 37] that was in favour of the assessee holding that excise duty paid directly by the buyer to the Central Sales Tax Department on petroleum product removed from the bonded warehouse would not form part of taxable turnover. This was confirmed by a Full Bench of the Kerala High Court in Madras Rubber Factory Ltd. Vs. State of Kerala (74 STC 56). A subsequent Full Bench of the same High Court in Hindustan Petroleum Corporation Ltd. Vs. State of Kerala [89 STC 106] overruled the earlier decision in [(1981) 48 STC 37] holding that the excise duty component would form part of taxable turnover.

5. The aforesaid decision was confirmed by the Supreme Court on 09.10.1996 in the case of Deputy Commissioner of Sales Tax (Law) Vs. Hindustan Petroleum Corporation Ltd (118 STC 311). On 19.12.1997, a Full Bench of the Supreme Court in the case of State of Kerala Vs. Madras Rubber Factory Ltd. [108 STC 583] reversed the Full Bench judgment of the Kerala High Court in 74 STC 56 holding the same in line with the judgment of the Supreme Court in 118 STC 311.

6. Thus the prevailing position is adverse to the assessee. Coming to the levy of penalty, the provisions of Section 12(5)(iii) read as follows:

Sec.12(5) The assessing authority may, in the order of assessment or by a separate order direct that the dealer shall, in addition to the tax assessed under sub-section (4), pay by way of penalty, a sum-

(iii) which, in the case referred to in clause (iii) of sub-section (4), shall not be less than fifty per cent but shall not be more than one hundred and fifty per cent of the difference in tax payable on the turnover disclosed in the return and that determined by the assessing authority.

7. The levy of penalty is subject to discretion to be exercised by the officer having regard to whether the dealer would be liable for such levy or not. The petitioner has also produced a copy of an order of the Sales Tax Appellate Tribunal in a batch of cases in which it is also part, in support of the position that the Tribunal has taken a view that no penalty be levied in identical circumstance for earlier assessment years. This order has not been challenged by the Revenue and has become f