Order: Chitra Venkataraman, J. 1. Tax Case (Revision) Nos.84 and 168 of 2011 are filed at the instance of the Revenue as against the common order of the Tamil Nadu Sales Tax Appellate Tribunal in respect of two assessees, by name, M/s.Golden Leathers and M/s.C.K. Sons Shoes. Following are the substantial questions of law, on which, the above Tax Case (Revisions) were admitted: T.C.(R)No.84 of 2011: "Whether in the facts and circumstances of the case, the Tribunal was right in ignoring the bills of exchange which show the transfer of consideration on the sales of raw skins effected by the assessee to the sister concern M/s.C.K.Sons Shoes?" T.C.(R) No.168 of 2011: "1. Whether on the facts and circumstances of the case, the Appellate Tribunal is right in law in holding that there are no valid materials to hold that there is no transfer of property when admittedly there are evidences to prove their existence in form bills of exchange which were not shown in accounts? 2. Whether on the facts and circumstances of the case, the Appellate Tribunal erred in law in brushing aside the existence of bills of exchange as mere negotiable instrument to draw money from the financier rather than holding that these bill of exchange are also documents of title to goods and form a valuable consideration in the transaction involving the dealer and the goods as per the guidance issued by R.B.I.?" 2. The assessment years under consideration are 1994-95 and 1995-96 respectively. A reading of the orders of the Authorities below shows that the Assessing Authority revised the orders of assessment based on the results obtained in an inspection conducted on 03.05.1994 and 20.2.1996 in the business premises of M/s.Golden Leathers. The place of business of the assessee was inspected by the Enforcement Wing Officials on 09.01.1996, wherein they have recovered statement of bills discounted with Tvl.Upasana Finance Limited, Chennai. Thus on the basis of the materials available, the assessment was revised to assess the turnover relating to the transactions of purchase by the assessee from M/s.Golden Leathers; the Bills of Exchange were discounted with various finance companies. 3. It is seen from the facts narrated that on an appeal filed originally as against the orders of assessment, the first Appellate Authority allowed the appeals, but remanded the same for passing fresh orders on merits. 3. It is seen from the facts narrated that on an appeal filed originally as against the orders of assessment, the first Appellate Authority allowed the appeals, but remanded the same for passing fresh orders on merits. The first Appellate Authority, in his order dated 10.6.1998, pointed out that the sellers stood as guarantors for the loan facility offered to the assessee herein and the transactions were only paper transactions, so as to enable the sister company to get finance from the finance company. The finance company had issued cheque to the sister company. Thus on the remand made, the Assessing Officer once again initiated assessment proceedings. In the course of the proceedings before the Assessing Officer, the assessee produced the original letter of M/s.Upasana Finance Limited, wherein it was stated that they had discounted the bills of M/s.C.K.Sons Shoes - the assessee herein and they had returned the invoice at the request of the customer. In the circumstances, they could not produce the further invoices. The assessee pointed out that they had manufactured shoe uppers, which are exported; since for the business they needed funds, they approached the finance companies; that by discounting the bills, they received finance. Hence, the transactions which are passed through the finance companies were not, in fact, sales transactions, assessable under the provisions of the Act. The Assessing Officer rejected the said submission and pointed out that on verification of the Bills of Exchange (Hundi) drawn by the seller -M/s.Golden Leathers in favour of the dealer, tendered for getting money on its face value, could not be accepted as mere paper transaction. The assessee had paid the price through the finance company honouring the Bills of Exchange. The Assessing Officer pointed out that the finance company paid the money as per the Bills of Exchange and that the transaction had not been accounted for by the assessee in their accounts for the assessment years 1994-95 and 1995-96. Thus, on the turnover suppressed, the Assessing Officer added the gross profit, as available in the books of accounts, apart from adding the cost of the consumables percentage, which was available from the books of accounts and arrived at the turnover for assessment. In assessing the turnover, the Assessing Officer also levied penalty at 150% on the tax due on the transactions suppressed. In assessing the turnover, the Assessing Officer also levied penalty at 150% on the tax due on the transactions suppressed. It is seen from the order of the Assessing Officer that the said penalty amount was calculated, taking into account the additional sales tax liability. 4. Aggrieved by the assessment made, the assessee went on appeal before the Appellate Assistant Commissioner, contending that the Bills were only to accommodate the assessee for getting finance from the finance company; consequently, in the absence of real sale to result in transfer of property and goods, there could not be any assessment. 5. The First Appellate Authority pointed out that the assessee had not filed any proof as regards the export and the drawing of money from finance company by Bill discounting of only regular financial transactions which had been properly accounted for in M/s.Golden Leathers; the drawings had no relationship to the business transactions of the assessee with M/s.Golden Leathers; consequently, the assessment could not be upheld. In the circumstances, the assessment on this transaction was cancelled. However, the first Appellate Authority upheld the assessment on certain other turnover, with which we are not concerned in the present Tax Case (Revisions). 6. Aggrieved by this, the Revenue went on appeal before the Tamil Nadu Sales Tax Appellate Tribunal, which confirmed the order of the Appellate Assistant Commissioner. The Tribunal pointed out that Bills of Exchange was a recognised mode of transactions; it being an accommodation given, the assessment was bad in law. It referred to the bill discounting agreement that the assessee had with the finance company and pointed out that the assessee stood as a guarantor for the amount drawn by the sister concern – M/s.Golden Leathers. It further pointed out that in the absence of proper evidence, the assessment made could not be upheld. It further pointed out that the dealers had used the bills of exchange as negotiable instruments to draw money from the financier for their business. The Bills of Exchange or Hundi did not specify the name of the goods or commodity, the invoice number and date; consequently, the assessment was cancelled. Aggrieved by this, the Revenue has preferred the above Tax Case (Revisions). 7. The Bills of Exchange or Hundi did not specify the name of the goods or commodity, the invoice number and date; consequently, the assessment was cancelled. Aggrieved by this, the Revenue has preferred the above Tax Case (Revisions). 7. It is seen from the order of the Authorities below that the transactions which were subjected to tax were based on the materials recovered at the time of inspection of both the assessee's premises as well as its sister concern – M/s. Golden Leathers. The inspection revealed discounting of Hundis with finance company. Evidently, these Hundis were with reference to the sale of dressed skins by M/s.Golden Leathers to M/s.C.K.Sons Shoes. The assessee, no doubt, submitted an affidavit from M/s.Upasana Finance Limited and the statement of accounts on the amounts drawn and paid and the cheque received towards drawal of funds from M/s.Upasana Finance Limited. But we do not find any justifiable ground to accept the order of the Tribunal solely on the basis that the financial transactions with M/s.Upasana Finance Limited or any other finance company would ultimately decide the character of the transaction between the purchaser and the seller. All the dealings that the finance company had, would show, would be the arrangement that the dealer had with the finance company for bill discounting. Beyond that, the agreement with the finance company, in no way, could be taken in as the basis for deciding whether at all there was any transaction of purchase or sale between the parties herein. The Tribunal pointed out that except the bills of exchange documents and the details of the amount drawn, there was nothing to show the sale or purchase, for the purpose of assessment. Even here, we differ from the view of the Tribunal. The assessee does not deny the fact that M/s.Golden Leathers had issued invoices in the name of the assessee herein in respect of the sale of dressed skins. The question as to whether there had been a taxable sale or not, hence, must be looked at from the facts other than the bill discounting transaction which the Golden Leathers had with the finance company and the purchase ledger extract in respect of finished leathers. This, however, does not supply the necessary proof that the assessee had no transaction at all with M/s.Golden Leathers, except as a paper transaction. 8. This, however, does not supply the necessary proof that the assessee had no transaction at all with M/s.Golden Leathers, except as a paper transaction. 8. In the circumstances, we find that the Tribunal totally misdirected itself in dismissing the Revenue's appeal in the matter of assessment on the purchase of dressed hides and skins on the basis of the vendor's transaction with the finance company. Consequently, we allow the Tax Case (Revisions) filed by the Revenue, thereby set aside the order of the Tribunal, upholding the assessment made. 9. It is relevant to point out that when the assessee was confronted with the documents, the proper course for the assessee was to place necessary materials to show that these transactions were only paper transactions. In the absence of any such proof and the burden not being discharged by the assessee, we have no hesitation in restoring the assessment. We, however, accept the plea of the assessee that in the matter of calculating penalty, the Assessing Officer ought not to have taken in the Additional Sales Tax liability to work out the penalty at 150%. Having regard to the fact that in respect of the assessment years under consideration, no penalty could be levied in respect of additional sales tax liability, in view of the decision of this Court reported in (2010) 36 VST 1 (SC) (State of Karnataka Vs. Azad Coach Builders (petitioner) Ltd.). 10. In the light of the above, we allow the above Tax Case (Revisions) filed by the Revenue to the extent stated above. No costs.