O R D E R

S.VAIDYANATHAN, J.

AND C.SARAVANAN, J.

This Writ Petition has been filed against the impugned order dated

05.10.2004 passed by the first respondent Sales Tax Appellate Tribunal [hereinafter referred to as “Appellate Tribunal”] in Coimbatore Tribunal State Appeal No.60/03 [hereinafter referred to as “CTSA No.60/03”]. 2. By the impugned order, the first respondent Appellate Tribunal has allowed CTSA No.60/03 filed against the order of the second respondent Appellate Assistant Commissioner dated 05.11.2002 in Appeal No.92/02.

3. By the said order dated 05.11.2002, the second respondent Appellate Assistant Commissioner had ealier allowed Appeal No.92/02 filed by the appellant against the assessment order dated 27.02.2002 of the third respondent Deputy Commercial Tax Officer bearing reference TNGST No.2384066/2000-2001.

4. The third respondent Deputy Commercial Tax Officer, vide above assessment order dated 27.02.2002, had determined the total taxable turnover of Rs.14,83,446/- as against the total turnover of Rs.8,17,26,820 for the assessment year 2000-2001. The petitioner had received a sum of Rs.7,49,80,793/- towards dyeing and processing charges on job basis. The petitioner purchased raw materials such as Dyes, Chemicals and other consumable like furnace oil etc. from outside the State against Form 'C' and within the State against Form 'XVII' and also without Form 'XVII' in connection with its business. It was concluded that on perusal of Form 'XVII-A' filed, it showed that the petitioner had issued Form XVII for use in manufacture of goods for the purchase of consumables, i.e. furnace oil to the tune of Rs.10,24,025/-

during 2000-2001 for being used for dyeing fabrics.

5. It was therefore concluded that the activity undertaken by the petitioner on job work basis for dyeing fabrics did not amount to manufacture of goods for sale by the consumer and therefore, the petitioner was not eligible to procure furnace oil against Form XVII under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959.

6. It was concluded that there was no sale by the petitioner and therefore it was proposed to invoke first proviso to Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 to levy difference of tax at 13%, i.e. 16% - 3%, on the aforesaid turnover of Rs.10,24,025/-. It was also concluded that the petitioner had availed the concessional rate of tax under Section 3(5) of the Tamil Nadu General Sales Tax Act, 1959 by wrongly issuing Form XVII Declaration for purchasing machineries as per Form XVII-A during the period 2000-2001.

7. Thus, a notice was issued to the petitioner on 07.02.2002, to which, the petitioner replied on 13.02.2002 which ultimately culminated in the assessment order dated 27.02.2002. The taxable turnover of the petitioner was determined as under:-

TAXABLE TURNOVER Last purchase value of Industrial salt Rs.14,83,446.00 at 4%

Tax due under section 3(2) Rs. 59,338.00 Paid Rs.1,26,844.00 Excess (+) Rs.67,506.00 A notice in Form C is issued.

LIABILITY UNDER SEC. 3(3)

Purchase value of furnace oil purchased during 2000-01 Rs.10,24,025.00 Difference tax at 13% Rs. 1,33,123.00 Purchase value on Machinery purchased in 2000-01 Rs.8,66,040.00 Difference tax at 8% Rs.69,283.00 Tax due Rs.2,02,406.00 Tax paid Rs. Nil Balance Rs.2,02,406.00 A notice in Form “B3” is issued.

Penalty under Sec.23 at 150% on the difference tax Rs.2,02,406.00 Penalty due Rs.3,03,609.00 Paid Rs. Nil Balance Rs.3,03,609.00 A notice in Form 54 is issued.

8. The second respondent Appellate Assistant Commissioner, by his order dated 05.11.2002 in A.P.No.92/2002, modified the assessment order dated dated 27.02.2002 on the strength of Circular dated 05.01.2001 bearing reference No.02/91364/2000 of the Principal Commissioner and Commissioner of Commercial Taxes and thereby reduced the penalty to 5% under Section 23 of the Tamil Nadu General Sales Tax Act, 1959. The relevant portion of the order of the second respondent Appellate Assistant Commissioner dated 05.11.2