Sale of unredeemed articles by auctioneers taxable under sales tax: Madras HC

Triplicane Permanent Fund Ltd Vs Tamil Nadu Sales Tax Appellate Tribunal (Madras High Court)

Madras High Court held that sales tax leviable on consideration received on sale of unredeemed articles by the auctioneers under Tamil Nadu General Sales Tax Act, 1959. Further, penalty u/s. 12(3)(a) leviable for non-filing of returns.

Facts- The petitioner is the Triplicane Permanent Fund. The issue that arose for assessment in respect of assessment years (AY) 1994-95, 1995­96, 1996-97, 1997-98 and 1998-99 is the taxability of the consideration received on sale of unredeemed articles by the auctioneers in terms of the Tamil Nadu General Sales Tax Act, 1959. The assessee’s contention at the stage of assessment was that it is the auctioneer that would be so liable.

Conclusion- Hon’ble Supreme Court in the case of Karnataka Pawn Brokers’ Association and others v. State of Karnataka and others has held that any activity incidental or ancillary to the main business will also come within the definition of “business” under the Sales Tax Act and, therefore, the contention that the sale of unredeemed goods, being incidental to the business of pawnbroker was not liable to sales tax, cannot be accepted.’

Held that the levy of penalty under Section 12(3)(a), in the case of non-filing of returns, is, in our view, automatic. Admittedly, in the present case, the petitioner has not filed the returns and hence, the basis of assessment would be irrelevant.