Madras High Court
The State Of Tamilnadu vs Tvl.New Era Electricals on 22 January, 2021
T.C.(R).No.1625 of 2008
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 22.01.2021
CORAM :
The Honourable Mr.Justice T.S.SIVAGNANAM
and
The Honourable Ms.Justice R.N.MANJULA
T.C.(R).No.1625 of 2008
The State of Tamilnadu,
Represented by the
Deputy Commissioner(Commercial Taxes),
Coimbatore Division, Coimbatore - 18. ...Petitioner
Vs
Tvl.New Era Electricals,
897, Avinashi Road,
Coimbatore. ...Respondent
PRAYER: Tax Case Revision filed under Section 38 of the TNGST Act,
1959 to revise the order of the Sales Tax Appellate Tribunal (Additional
Bench), Coimbatore dated 20.10.2000 passed in Coimbatore Tribunal
Appeal No.313/99.
For Petitioner: Mr.Md.Shaffiq
Special Government Pleader
For Respondents: Mr.N.Inbarajan
1/10
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T.C.(R).No.1625 of 2008
ORDER
(Made by T.S.Sivagnanam,J)
This Tax Case Revision has been filed under Section 38 of the
Tamil Nadu General Sales Tax Act, 1955 ('The Act' for brevity), initially
before the Tamil Nadu Taxation Special Tribunal at Chennai, which was a
Tribunal constituted as a substitute to deal with sales tax matters.
Subsequently, the jurisdiction of the the Taxation Special Tribunal was
diverted to this Court and the matter is now transferred to this Court to be
heard and disposed of as a tax case revision.
2. The Department has filed this tax case revision, which was
admitted on 17.04.2009 on the following substantial questions of law:
"1. Whether in the facts and
circumstances of the case, the Tribunal is legally
correct in directing the estimation of 1% addition
for non-maintenance of stock book on the
reasoning that the assessee is not a manufacturer?
2. Whether in the facts and
circumstances of the case, the Tribunal is right in
holding that the additional sales tax would be
attracted for the assessment year 1996-97 since
the taxable turnover did not exceed 100 crores as
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T.C.(R).No.1625 of 2008
per amended provision of Section 2(1)(aa)?
3. Whether the order of the Tribunal is
having deleted the consequential surcharge,
additional sales tax and penalty is legally
tenable?"
3. The substantial questions of law which have been raised for
consideration has been answered in Philips India Limited vs The Assistant
Commissioner (CT), Fast Tract Assessment Circle II and others [2004
137 STC 134 (Mad)]. The operative portion of the judgment reads as
follows:
"7. It is true that in the decision in question,
namely Siemens Limited v. State of Tamil Nadu
[1998] 110 STC 313, the Tribunal had observed:
"To give effect to the said intention we proceed to
hold that clause (a) of sub-section (1) of section 2
of the principal Act, namely, Act 14 of 1970 is
ultra vires and should stand deleted. We make it
clear that we are striking down only clause (a) of
section 2(1).
The aforesaid observation of the Tribunal
considered in isolation, supports the contention of
the petitioner to the effect that there was no
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T.C.(R).No.1625 of 2008
provision attracting liability to pay additional
sales tax before 1.8.1996. However, as rightly
observed by the Special Tribunal under the
impugned order, the said observation made in
[1998] 110 STC 313 has to be understood in the
context in which such observation has been made.
It is quite well settled that the effect of a judgment
has to be examined in its totality and in the context
in which it was made and not by referring to a
stray sentence here or there, torn totally out of the
context in which such observation has been made.
It has to be remembered that before the Act was
amended by Act 31 of 1996, the liability to pay
additional sales tax in a graded scale had been
clearly laid down under Section 2(1)(a) of the
Tamil Nadu Additional Sales Tax Act, 1970. Only
after tinkering had been made by the Legislature
by amending section 2(1)(a), making it applicable
to the dealers other than the dealers registered in
Tamil Nadu and by introducing a new provision in
the shape of Section 2(1)(aa), raising exemption
limit regarding the liability to pay additional sales
tax so far as the registered dealers in Tamil Nadu
are concerned to more than Rs.100 crores, the
provision was found offensive. In other
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T.C.(R).No.1625 of 2008
words,Section 2(1), as it originally stood, was not
found offensive, but Section 2(1)(a) as amended by
the Act 31 of 1996 was struck down and the new
provision as contained in Section 2(1)(aa) with
required modifications was held to be applicable
to all concerned. Even though the learned counsel
appearing for the petitioner is correct in his
submission to the effect that striking down of
Section 2(1) (a) did not have the effect of reviving
Section 2(1)(a) as it originally stood, the fact
remains that so long as that provision, namely
Section 2(1)(a) of the unamended Act, was in
statute book, the liability to pay tax as per such
provision was already incurred. In other words,
the liability as envisaged under Section 2(1)(a) as
per the original Act was in existence for the period
from April 1, 1996 till July 31, 1996. At that stage
the liability was incurred as soon as the turnover
exceeded Rs.10 lakhs and as per the original
provision, the extent of such liability varied upon
the taxable turnover as per the original provision.
With effect from 1.8.1996, the exemption limit was
raised to Rs.100 crores and by virtue of the
decision of the Tribunal, such exemption was
equally applicable to all concerned. In view of the
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T.C.(R).No.1625 of 2008
above, the contention of the learned counsel for
the petitioner that there was no liability during the
period April 1, 1996 to July 31, 1996 is not
acceptable.
8. Even assuming that there was no liability to pay
and there was no provision regarding payment of
additional sales tax between April 1, 1996 and
July 31, 1996, the annual turnover of the
petitioner for the assessment year 1996-97 was
admittedly more than Rs.100 crores. It is
immaterial that the taxable turnover for the period
from August 1, 1996 to March 31, 1997 did not
exceed Rs.100 crores. Even assuming that the
liability to pay additional sales tax arose only with
effect from August 1, 1996, the contention that the
taxable turnover after the said date alone could be
considered is also not tenable. The Assessing
Officer was justified in coming to a conclusion
that the taxable turnover for the period between
April 1, 1996 and March 31, 1997 being more
than Rs.100 crores, the petitioner was liable to
pay additional sales tax even as per the amended
provision as contained in Section 2(1)(aa).
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T.C.(R).No.1625 of 2008
9......
10. Learned senior counsel has contended that
under the impugned proceedings reference has
been made to Section 55 of the TNGST Act for the
purpose of effecting rectification, but jurisdiction
under section 55 is not available to be exercised
as the matter relates to Tamil Nadu Additional
Sales Tax Act, 1970. This submission overlooks the
basic concept that the levy of additional sales tax
under section 2(1)(aa) of the Tamil Nadu
Additional Sales Tax Act, 1970 is actually
collection of sales tax at a higher rate from the
dealers having turnover over a particular limit.
This position is now clear in view of the Supreme
Court decision reported in 34 STC 73 (S. KODAR
v. STATE OF TAMIL NADU). Moreover, Section
2(1)(b) specifically lays down that the provisions
of the TNGST Act shall apply in relation to the
additional tax payable under Section 2(1)(aa) as
they apply in relation to the tax payable under the
TNGST Act. Apart from the above, Section 4 of the
Additional Sales Tax Act contains the rule making
power by the Government to carry out the
purposes of the Act. Even though certain rules
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T.C.(R).No.1625 of 2008
have been framed relating to some aspects of the
assessment to be made and no specific rule is
available for the purpose of effecting rectification,
Rule 9 of the Tamil Nadu Additional Sales Tax
Rules, 1970 provides that the provisions of the
Tamil Nadu General Sales Tax Rules, 1959 shall
apply mutatis mutandis to the additional tax
leviable under section 2 of the Act.
11. A combined reading of these provisions make it
amply clear that the provision under Section 55 of
the TNGST Act and the relevant rules would be
applicable for the purpose of effecting
rectification. The Tamil Nadu Additional Sales Tax
Act, 1970 is not a self contained code. It merely
supplements Tamil Nadu General Sales Tax Act. It
is necessary to read and construe the Tamil Nadu
General Sales Tax Act and the Tamil Nadu
Additional Sales Tax Act together. The observation
made by the Supreme Court in [1983] 53 STC 1
(Ashok Service Centre v. State of Orissa) in the
context of Orissa Sales Tax Act and Orissa
Additional Sales Tax Act is equally applicable in
the present context. It has been held in [1999] 113
STC 496 (Mad.) (Kirloskar Brothers Ltd. v. State
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T.C.(R).No.1625 of 2008
of Tamil Nadu that the provisions under Section 55
of the TNGST Act can also be availed for the
purpose of rectification of assessment under the
Central Sales Tax Act and the ratio of the said
decision would equally apply to the assessment of
additional sales tax."
4. In the light of the above, the substantial questions of law raised
for consideration are answered in terms of the decision in Philips India
Limited and accordingly, the tax case revision stands disposed of. No costs.
(T.S.S.,J.) (R.N.M.,J.)
22.01.2021
Index: Yes/No
Internet: Yes/No
Speaking order/Non speaking order
hvk
To
1. The Deputy Commissioner (Commercial Taxes),
Coimbatore Division,
Coimbatore - 18.
2. Sales Tax Appellate Tribunal
(Additional Bench), Coimbatore.
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T.C.(R).No.1625 of 2008
T.S.SIVAGNANAM,J
AND
R.N.MANJULA,J
hvk
T.C.(R).No.1625 of 2008
22.01.2021
https://www.mhc.tn.gov.in/judis/
