Madras High Court
M/S.Star Audio vs Commercial Tax Officer on 6 September, 2021
W.P.Nos.33462 of 2005,
13514 & 13515 of 2006
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 06.09.2021
CORAM
THE HON'BLE MR.JUSTICE S.M.SUBRAMANIAM
W.P.Nos.33462 of 2005, 13514 & 13515 of 2006
and
W.P.M.P.Nos.15101 & 15102 of 2006
and
W.P.M.P.No.36378 of 2005
and
W.V.M.P.No.59 of 2010
W.P.No.33462 of 2005
M/s.Star Audio
Represented by Mr.B.Poonam Chand, Partner,
23A, North Boag Road,
T.Nagar, Chennai – 600 017. ..Petitioner
vs
1.Commercial Tax Officer, T.Nagar (East)
Assessment Circle,
46, Greenways Road, III Floor,
Chennai – 600 028.
2.The Special Commissioner and
Commissioner of Commercial Taxes,
Ezhilagam, Chepauk,
Chennai – 600 005.
1/29
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3.The State of Tamil Nadu,
Represented by the Secretary to the Government,
Commercial Taxes & Hindu Religious
Endowment, Government of Tamil Nadu,
Fort St.George, Chennai – 600 009. ..Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India
praying to issue a Writ of Declaration, to declare the impugned Circular
No.Acts Cell-I/76234/2002 dated 16.05.2003 as ultravires the provisions of
Section 3(1) and other relevant sections of the Tamil Nadu General Sales
Tax Act, 1959 and as being ultravires Articles 14, 19(1)(g) and 265 of the
Constitution of India in so far as the petitioner is concerned.
W.P.No.13514 of 2006
M/s.HIT Music
Represented by Mr.K.P.M.M.Meeran
Mohideen, Partner,
No.16, Pandaram Street,
Purasalvakkam, Chennai – 600 007. ..Petitioner
vs
1.Commercial Tax Officer,
Purasalvakkam Assessment Circle,
Chennai.
2.The Special Commissioner and
Commissioner of Commercial Taxes,
Ezhilagam, Chepauk,
Chennai – 600 005.
3.The State of Tamil Nadu,
Represented by the Secretary to the Government,
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Commercial Taxes & Hindu Religious
Endowment, Government of Tamil Nadu,
Fort St.George, Chennai – 600 009. ..Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India
praying to issue a Writ of Certiorari, to call for the records of the First
Respondent in pursuant to the revised assessment order
TNGST/0482113/2002-2003 dated 28.02.2006 and quash the same.
W.P.No.13515 of 2006
M/s.HIT Music
Represented by Mr.K.P.M.M.Meeran
Mohideen, Partner,
No.16, Pandaram Street,
Purasalvakkam, Chennai – 600 007. ..Petitioner
vs
1.Deputy Commercial Tax Officer,
Purasalvakkam Assessment Circle,
Chennai.
2.The Special Commissioner and
Commissioner of Commercial Taxes,
Ezhilagam, Chepauk,
Chennai – 600 005.
3.The State of Tamil Nadu,
Represented by the Secretary to the Government,
Commercial Taxes & Hindu Religious
Endowment, Government of Tamil Nadu,
Fort St.George, Chennai – 600 009. ..Respondents
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Prayer: Writ Petition filed under Article 226 of the Constitution of India
praying to issue a Writ of Certiorari, to call for the records of the First
Respondent in pursuant to the revised assessment order
TNGST/0482113/2003-2004 dated 28.02.2006 and quash the same.
For Petitioners : Mr.V.S.Manoj
For Mr.K.Vaitheeswaran
[in all W.Ps]
For Respondents : Mr.V.Veluchamy
Government Advocate
[in all W.Ps]
COMMON ORDER
W.P.No.33462 of 2005
The writ on hand is filed, to quash the Circular dated 16.05.2003 as
ultravires to the provisions of Section 3(1) and other relevant Sections of the
Tamil Nadu General Sales Tax Act, 1959 [hereinafter referred to as 'TNGST
Act'] and as being ultravires to Articles 14, 19 (1) (g) and 265 of the
Constitution of India.
2. The petitioner is engaged in the business of selling/marketing of
pre-recorded audio cassettes and is registered under the provisions of the
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TNGST Act, 1959 and Central Sales Act, 1956.
3. The petitioner purchases pre-recorded audio cassettes from
suppliers in Tamil Nadu, who are also duly registered under the TNGST Act
and the said suppliers charge Sales Tax under TNGST Act in respect of the
sales of pre-recorded audio cassettes.
4. The petitioner acquires audio rights from the artists themselves or
from the film producers in Tamil Nadu to publish, manufacture, sell,
distribute and broadcast the devotional songs and songs of cine films. The
petitioner entrusts the master copy received from the producers to the
cassette manufactures and supply pre-recorded cassettes. The cassette
manufactures purchase blank cassettes from registered dealers within the
State after payment of Sale tax and record the devotional songs / film songs
etc., on the blank cassettes and sell the pre-recorded cassettes to the
petitioner, charging the total value of the pre-recorded cassettes and the
Sales tax.
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5. The petitioner states that the sales, which are made by the
petitioner, are therefore second sales of pre-recorded audio cassettes, which
are exempt from payment of tax as pre-recorded audio cassettes are only
subject to tax at the point of first sale.
6. The first respondent after duly verifying first sale invoices in
respect of pre-recorded audio cassettes, has allowed the second sale
exemption in respect of earlier assessment years.
7. Under these circumstances, the exemption granted in respect of the
earlier assessment years under Section 16 of the TNGST Act has been
withdrawn.
8. The contention of the respondents are that the transaction between
the petitioner company and the cassette manufacturers are “works contract”
and cannot be construed as first sale. In the regard, the impugned Circular
has been issued. Thus, the petitioner is constrained to move the present writ
petition.
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9. The learned counsel for the petitioner mainly contended that the
nature of manufacturing and selling the recorded cassettes to the petitioner
would reveal that the same amounts to first sale and not “works contract”.
Admittedly, the petitioner purchased the copyright from the Film Producers,
Music Directors etc., and allowing the cassette manufactures to purchase the
blank cassettes and record the songs and thereafter, sell the same to the
petitioner and such sale would become a first sale, wherein tax has been
paid. Therefore, the selling of the recorded cassettes by the petitioner to the
end users cannot be construed as a first sale and it must be treated as second
sale for all purposes, which is exempted under the provisions of the TNGST
Act.
10. The learned counsel for the petitioner relied on the judgment of
the Hon'ble Supreme Court of India in the case of Gramophone Co., of
India Ltd. Vs. Collector of Customs, Calcutta, reported in 1999 (114)
E.L.T. 770 (SC), wherein the Hon'ble Apex Court considered the activities
involved in the manufacture of pre-recorded audio cassettes with reference
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to the provisions of the Central Excise Act. Paragraphs 10, 11, 12 and 13 of
the said judgment are extracted hereunder:
“10. According to the appellant the various activities
involved in the manufacture of a pre-recorded audio cassette
are as under:
(i) preparation of a master tape in the studio;
(ii) manufacture of plastic cassette parts, like cassette
body, leather case, etc. from plastic raw material with the help
of injection-moulding facility;
(iii) assembling of cassette parts to make a C-O tape;
(iv) high-speed transfer of music signals from 1/2"
master tape to 1/8" pancakes;
(v) assembling of recorded pancakes into cassettes;
(vi) polymeric plate-making for printing machines;
(vii) printing of information on cassette body;
(viii) printing of inlay cards;
(ix) testing and cellowrapping of the finished cassettes.
The machines which were the subject of the contract dated 6-
11-1989 were required for the fourth-mentioned item, namely,
high-speed transfer, of music signals from 1/2" master tape to
1/8" pancakes.
11. The term “manufacture” is not defined in the
Customs Act. In the allied Actnamely the Central Excise Act,
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1944 also, the term “manufacture” is not to be found defined
though vide clause (f) of Section 2 an inclusive definition is
given of the term “manufacture” so as to include certain
processes also therein.
12. “Manufacture” came up for the consideration of the
Constitution Bench in Ujagar Prints v. Union of India [(1989)
3 SCC 488 : 1989 SCC (Tax) 469 : (1988) 38 ELT 535] . It
was held that if there should come into existence a new article
with a distinctive character and use, as a result of the
processing, the essential condition justifying manufacture of
goods is satisfied. The following passage in the Permanent
Edition of Words and Phrases was referred to with approval
in Delhi Cloth and General Mills [Union of India v. Delhi
Cloth and General Mills Co. Ltd., AIR 1963 SC 791, 795] AIR
at p. 795:
“‘Manufacture’ implies a change, but every change is not
manufac-ture and yet every change of an article is the result of
treatment, labour and manipulation. But something more is
necessary and there must be transformation; a new and
different article must emerge having a distinctive name,
character or use.”
13. In a series of decisions [to wit, Decorative
Laminates (India) (P) Ltd. [Decorative Laminates (India) (P)
Ltd. v. CCE, (1996) 10 SCC 46 : (1996) 86 ELT 186] , Union
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of India v. Parle Products (P) Ltd. [1994 Supp (3) SCC 662 :
(1994) 74 ELT 492] Laminated Packings (P) Ltd. [Laminated
Packings (P) Ltd. v. CCE, (1990) 4 SCC 51 : (1990) 49 ELT
326] and Empire Industries Ltd. [Empire Industries
Ltd. v. CCE, (1985) 3 SCC 314 : 1985 SCC (Tax) 416 : (1985)
20 ELT 179] ] the view taken consistently by this Court is that
the moment there is transformation into a new commodity
commercially known as a distinct and separate commodity
having its own character, use and name whether it be the
result of one process or several processes, manufacture takes
place; the transformation of the goods into a new and different
article should be such that in the commercial world it is known
as another and different article. Pre-recorded audio cassettes
are certainly goods known in the market as distinct and
different from blank audio cassettes. The two have different
uses. A pre-recorded audio cassette is generally sold by
reference to its name or title which is suggestive of the
contents of the audio recording on the cassette. The appellant
is indulging in a mass production of such pre-recorded audio
cassettes. It is a manufacturing activity. The appellant's
activity cannot be compared with a person sitting in the market
extending the facility of recording any demanded music or
sounds on a blank audio cassette brought by or made available
to the customer, which activity may be called a service. The
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Tribunal was not right in equating the appellant's activity with
photoprocessing and holding the appellant a service industry.”
11. The issue considered by the Hon'ble Supreme Court in the above
cited Gramophone Company case is that “Recording of blank audio
cassettes of duplicating is a manufacturing activity and not an activity of
service industry”. It is held that the pre-recorded audio cassettes is generally
sold by reference to its name or title which is suggestive of the contents of
the audio recording on the cassettes. The activity of recording the audio
cassettes is a manufacturing activity and cannot be termed as a activity of
service industry, because pre-recorded audio cassettes are certainly distinct
and different routes from blank audio cassettes. Accordingly, the Hon'ble
Supreme Court of India set aside the order passed by the CEGAT and the
case was remanded back to the Assistant Commissioner for denovo
consideration, treating the appellants as a manufacturing activity. Thus, the
issue involved is not relatable to sell or “works contract”, which is to be
considered in the present case with reference to the provisions of the
TNGST Act.
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12. The learned Counsel for the petitioner reiterated that the
processing procedures involved in the manufacture of pre-recorded audio
cassettes was considered by the Hon'ble Supreme Court and in the present
case, admittedly, the petitioner is a copyright holder as far as the master
recording is concerned, who in turn, allows a third person to purchase blank
cassettes and record the songs etc., in a large scale manner and sell those
recorded cassettes again to the petitioner alone and the petitioner is selling
those recorded cassettes to the end users and therefore, selling of the
recorded cassettes by the petitioner is a second sale.
13. The learned Government Advocate appearing on behalf of the
respondents assisted by Mr.V.S.Velavan, State Tax Officer, Investigation-II,
Chennai, disputed the said contentions by stating that the first transaction
between the petitioner and the cassette recording company/person is a
“works contract” and it involves a processing and does not amounts to sale.
Admittedly, the petitioner is the copyright holder of the master recording
and who in turn, entrusts the large scale recording to be processed to another
person and such a person after recording the songs etc., in the blank
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cassettes in a large scale manner and returning all the cassettes to the
petitioner. Though they raise invoices, such invoices are relatable to
purchase of certain materials for the execution of “works contract” and
therefore, the process involved and the return of the goods after completion
of process of recording the songs would not amount to a sale within the
provisions of the TNGST Act and thus, the sale by the petitioner to the end
users will become a first sale, wherein the Department is entitled to levy tax
as per the provisions of the TNGST Act.
14. Even in the counter affidavit filed by the respondents, they have
referred the judgment of the Hon'ble Supreme Court of India in the case of
Tvl. Gramaphone Co., of India Vs. Collector of Customs (cited supra),
wherein the respondents have stated as follows:
“5........It was held that the moment there is
transformation into a new commodity commercially known and
recognized as a distinct and separate commodity, it should be
considered that manufacture has taken place and thereby
recording of a blank cassette gives rise to a new product. In
other words, the Apex Court has held that blank cassettes / CDs
become commercially new products when they are recorded
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and known as pre recorded cassettes / CDs. The members of the
petitioners' Association are all engaged in similar type of sales
of pre recorded cassettes / CDs. On scrutiny of their
transactions, it was found out that they were owners of master
copy having the audio right for taking copies from the master
copy. As blank cassettes / CDs and pre recorded cassettes / CDs
are commercially different goods, sale on blank cassettes / CDs
are liable to tax and when they are recorded and sold as pre
recorded cassettes / CDs, then such sale also will be liable to
tax as different goods. Originally, these dealers were allowed
exemption from tax as second sales on the ground that such
cassettes / CDs were purchased from local registered dealers.
But later on, it was found out that these dealers being copy
right owners sent master copy to certain parties who after
recording them made sale of pre recorded cassettes / CDs and
charged tax as pre recorded cassettes / CDs. The dealers in
their turn on having made such taxable purchases, claimed
exemption from tax as second sale of pre recorded cassettes /
CDs.
6....Such dealer who undertake this work of recording did
not have the right to sell recorded cassettes / CDs to persons
other than audio right holder. Thus, this transaction of
recording audio and supply of such recorded cassettes would
only be works contract in nature but the contractors treated the
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transactions as first sale of pre recorded cassettes / CDs at a
lower price. But the assessee who is audio right owners sell pre
recorded cassettes / CDs at a much higher price and claimed
exemption as second sales. Thus, it was considered that the sale
at the hands of the audio right owners is to be first sellers of pre
recorded cassettes / CDs since earlier transaction is works
contract only liable to tax under Section 3B of the Tamil Nadu
General Sales Tax Act, 1959. In the above circumstances, the
second respondent issued a circular dated 16.05.2003 against
which the present writ petition has been filed.
7.....The petitioners alone have the copy right which
cannot be sold by the persons who supply pre recorded
cassettes since the master copy belonged only to the petitioners.
Using the master copy, the petitioners get the pre recorded
cassettes manufactured by others. The petitioners become the
first sellers liable to tax as first sellers.
8.......Challenging the revision of assessment made under
Section 16 of the Tamil Nadu General Sales Tax Act, 1959, it is
submitted that in the instant case, the State would derive tax,
once when sale of blank cassettes / CDs are sold and, again,
when pre recorded cassettes / CDs are sold. The petitioners by
adopting the ingenuous method of avoiding payment of tax
twice i.e., at the stage of blank cassettes / CDs and again, at the
stage of pre recorded cassettes / CDs made supply of blank
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cassettes to convert as pre recorded with the aid of the master
copy and then making them sale of pre recorded cassettes / CDs
so that they could claim exemption at their hands as second
sales on those purchases. This is clear evasion of tax and
therefore, Section 16 of the Act has correctly invoked in this
case.
9.......Provisions relating to levy Excise duty are different
from that of the levy of sales tax. Even persons who are doing
job work have to pay excise duty. In the instant case, it was
proposed to bring to the tax net, the turnover relating to sale of
cassettes and CDs by the petitioner for the reason that the
petitioners are copy right owners and hence, others who bring
out pre cassettes using the master copy cannot sell them as first
sellers, as they have no right to sell the copy right. Only the
petitioners have such right. Hence, the contention of the
petitioners is not acceptable.
10.......The petitioners being the copy right owner of pre
recorded cassettes cannot claim exemption as second sales and
they will be liable to pay tax as first sellers of pre recorded
cassettes. In respect of the cassettes manufactured using the
master copy of the petitioners, the supplier cannot be treated as
first sellers because the copy right cannot be sold by the
manufactures, but could be done only by the petitioners.”
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15. The respondents have contended that the provisions under the
Central Excise Act are different and the application of TNGST Act for
levying of Tax for sale cannot be compared with the provisions of the
Central Excise Act and therefore, the analogy adopted by the petitioner in
this regard is not in consonance with the provisions of the Statute.
16. Considering the arguments as advanced by the respective learned
counsels appearing on behalf of the parties to the lis, let us look into the
definition for “works contract” under Section 2 (u) of the Tamil Nadu
General Sales Tax Act, 1959. “works contract” includes any agreement for
carrying out for cash, deferred payment or other valuable consideration, the
building, construction, manufacture, processing, fabrication, erection,
installation, fitting out, improvement, modification, repair or
commissioning, of any movable or immovable property.”
17. Thus, any agreement for manufacturing or processing also to be
construed as “works contract” within the meaning of Section 2(u) of the
TNGST Act. Section 3 (B) enumerates Levy of tax on the transfer of goods
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involved in works contract. Thus, it speaks about levy of tax in respect of
the transfer of goods involved in works contract. As far as the case on hand
is concerned, whether the transaction between the petitioner and the cassette
recorder in the present case is a first sale or a works contract.
18. The processing and the transactions are not in dispute between the
parties. To make it more clear, the petitioner is the copyright holder of
master copy of songs etc., purchased from the Artisan / Music Director etc.,
Such master recording was handed over to cassette manufacturers based on
agreement/contract on certain terms and conditions for the purpose of
recording such songs etc., by purchasing the blank cassettes and supply the
recorded cassettes to the petitioner for the purpose of sale in the open
market.
19. In this backdrop, the purchase of copyright of master copy from
the creator may not have any implications in this case. The handing over of
the master copy to another third party for the purpose of multiplying the
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recording in order to sell the product in the open market, is the subject
matter to be considered.
20. It is not in dispute that the petitioner has allowed the cassette
manufacturers to use the master copy for the purpose of large scale
recording by purchasing blank cassettes from open market. Thus, the other
person is purchasing or manufacturing blank cassettes in large scale and by
using the master copy, recording the songs etc., and again selling the
recorded cassettes only to the petitioner and admittedly, he is not permitted
to sell the recorded cassettes in the open market. Therefore, the other person
is purchasing the master copy for the purpose of execution of the recording
of cassettes by purchasing / manufacturing blank cassettes and handing over
or selling the recorded cassettes to the petitioner. Therefore, the nature of
contract is “works contract” as the definition of “works contract” under
Section 2(u) categorically enumerates that manufacture, processing through
an agreement is a “works contract”.
21. The definition of sale under Section 2(n)(iv) stipulates that “a
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transfer of the right to use any goods for any purpose (whether or not for a
specified period) for cash, deferred payment or other valuable
consideration.”
22. Here, in the present case, the right was not given to use goods for
any purpose and it is given for a particular purpose that recording the songs
in blank cassettes and after recording, such recorded cassettes are to be
supplied only to the petitioner. Therefore, the cassette manufacturer's
services are utilized to process the recording system and after processing the
recording system, the recorded cassettes are handed over or sold to the
petitioner and the materials utilized for such recording of cassettes cannot
be construed as a sale and even in case, an invoice is raised in this regard
i.e., part and parcel of the “works contract” and cannot be construed as a
sale. The invoice, if at all raised by the cassette manufacturers, that is
relatable to the purchase of blank cassettes from open market or
manufacturing of cassettes, which cannot be a sale within the meaning of
the provisions of the TNGST Act.
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23. In the present case, except the petitioner, no other person is
allowed to sell the product in the open market. After any sale, the purchaser
must be allowed to use it in the manner he likes and such usage of recorded
cassettes cannot be controlled by the seller unless there is any specific
violation of copyright, patent rights etc., However, in the present case, the
master copy was allowed to be utilized only for the purpose of recording of
blank cassettes by the cassette manufacturers and after recording, he is not
permitted to sell the product in the open market, but to handover the
recorded cassettes only to the petitioner company, who in turn, reserve their
rights to sell the product in the open market. Thus, such sale by the
petitioner in the open market cannot be construed as a second sale, but to be
taken as the first sale for the purpose of levying tax under the provisions of
the TNGST Act.
24. As far as the Gramaphone Company case (cited supra) is
concerned, the said case was decided with reference to the provisions of the
Central Excise Act and as considered earlier, the issue involved was also not
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connected with the “works contract” or sale, and not relatable to the
provisions of the TNGST Act.
25. Under these circumstances, this Court would like to rely on the
Three Judges Bench judgment of the Hon'ble Supreme Court of India in the
case of M/s.Larsen & Toubro Limited & Another Vs. State of Karnataka
& another, in Civil Appeal No.8672 of 2013, decided on 26th September
2013 and His Lordship R.M.Lodha, J, while speaking for the Bench, made
the following observations:
“57. Following the above amendment in the Constitution,
the sales tax legislations in various States were amended and
provisions were made for imposition of sales tax in relation to
works contract. The constitutional validity of the Forty-sixth
Amendment by which the legislatures of the States were
empowered to levy sales tax on certain transactions described
in clauses (a) to (f) of clause 29-A of Article 366 of the
Constitution as well as the amendments made in the State
legislations were challenged in Builders’ Association4. The
Constitution Bench of this Court upheld the constitutionality of
the Forty-sixth Amendment. The Court observed that the object
of the new definition introduced in clause 29-A of Article 366 of
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the Constitution was to enlarge the scope of the expression “tax
of sale or purchase of goods” wherever it occurs in the
Constitution so that it may include within its scope any transfer,
delivery or supply of goods that may take place under any of the
transactions referred to in sub-clauses (a) to (f). The
Constitution Bench*** explained that clause 29-A refers to a
tax on the transfer of property in goods (whether as goods or in
some other form) involved in the execution of a works contract.
The emphasis is on the transfer of property in goods – whether
as goods or in some other form. A transfer of property in goods
under sub-clause (b) of clause 29-A is deemed to be a sale of the
goods involved in the execution of a works contract by the
person making the transfer and a purchase of those goods by a
person to whom such transfer was made.
90. The Court in Hindustan Shipyard case also set out
three categories:
(a) the contract may be for work to be done, for
remuneration and for supply of materials used in the execution
of work for a price,
(b) contract for work in which the use of the materials is
accessory or incidental to the execution of the work and
(c) contract for supply of goods where some work is
required to be done as incidental to the sale. Having regard to
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the recitals of the contract, the Court then concluded that the
contracts in question involved sale of respective vessels within
the meaning of clause (m) of the Andhra Pradesh General Sales
Tax Act and were not merely the works contract as defined in
clause (t) thereof.
94. For sustaining the levy of tax on the goods deemed to
have been sold in execution of a works contract, in our opinion,
three conditions must be fulfilled:
(i) there must be a works contract,
(ii) the goods should have been involved in the execution
of a works contract, and
(iii) the property in those goods must be transferred to a
third party either as goods or in some other form. In a building
contract or any contract to do construction, the above three
things are fully met. In a contract to build a flat there will
necessarily be a sale of goods element. Works contracts also
include building contracts and therefore without any fear of
contradiction it can be stated that building contracts are species
of the works contract.”
The Hon'ble Apex Court in the above Paragraph 94, have categorically held
that three conditions must be fulfilled.
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26. In the present case, there was a “works contract” between the
petitioner and the cassette manufacturers to use the master copy for the
purpose of recording the blank cassettes in large scale. Secondly, there is an
execution of works contract and such execution is done on certain terms and
conditions of the agreement. Thirdly, in the present case, the goods were
transferred to the petitioner, who has supplied the master copy and not sold
in the open market admittedly. It would have been supplied in the sale form
or in any other form. In the present case, it was supplied in the other form by
recording the blank cassettes by utilizing the master copy and therefore, all
the three conditions stipulated by the Hon'ble Supreme Court of India in the
above case has been complied with in respect of the facts and circumstances
of the present case. Thus, the judgment of the Hon'ble Three Judges Bench
of the Hon'ble Supreme Court of India in the case of M/s.Larsen & Toubro
Limited (cited supra) would be aptly applicable with reference to the nature
of transactions occurred in the case of the petitioner. Contrarily, the
activities involved in the manufacture of pre-recorded audio cassettes with
reference to the Gramophone case (cited supra) may not have application
https://www.mhc.tn.gov.in/judis/
W.P.Nos.33462 of 2005,
13514 & 13515 of 2006
as the issue raised before the Hon'ble Supreme Court are not connected with
the sale or “works contract” and levy of tax under the provisions of the
TNGST Act as in the present case.
27. This Court is of the considered opinion that for the purpose of
levying tax with reference to the provisions of the tax law, the nature of
transactions are of paramount importance for forming an opinion, whether
such transaction amounts to sale or “works contract” or otherwise. In the
present case, there is no dispute with reference to the transaction between
the petitioner and the cassette manufacturers for recording of blank audio
cassettes and supply of the recorded cassettes to the petitioner. Thus, this
Court has no hesitation in forming an opinion that the first sale as claimed
by the petitioner cannot be considered as a first sale, but to be construed as
“works contract” and the sale by the petitioner in the open market is to be
taken as the first sale for the purpose of levy of tax under the provisions of
the TNGST Act.
28. Accordingly, the impugned Circular passed by the respondents in
https://www.mhc.tn.gov.in/judis/
W.P.Nos.33462 of 2005,
13514 & 13515 of 2006
Circular No.Acts Cell-I/76234/2002 dated 16.05.2003 is confirmed and the
writ petition in W.P.No.33462 of 2005 stands dismissed. No costs.
Consequently, connected miscellaneous petitions are closed.
W.P.Nos.13514 & 13515 of 2006
29. In view of the fact that this Court passed orders in W.P.No.33462
of 2005, confirming the validity of the Circular dated 16.05.2003 issued by
the respondents, these writ petitions deserve no further consideration and
accordingly, the writ petitions in W.P.Nos.13514 & 13515 of 2005 stand
dismissed. No costs. Consequently, connected miscellaneous petitions are
closed.
06.09.2021
Kak
Internet:Yes/No
Index:Yes/No
Speaking / Non-Speaking order
To
1.Commercial Tax Officer, T.Nagar (East)
Assessment Circle,
46, Greenways Road, III Floor,
Chennai – 600 028.
https://www.mhc.tn.gov.in/judis/
W.P.Nos.33462 of 2005,
13514 & 13515 of 2006
2.The Special Commissioner and
Commissioner of Commercial Taxes,
Ezhilagam, Chepauk,
Chennai – 600 005.
3.The Secretary to the Government,
Commercial Taxes & Hindu Religious
Endowment, Government of Tamil Nadu,
Fort St.George, Chennai – 600 009.
4.Commercial Tax Officer,
Purasalvakkam Assessment Circle,
Chennai.
5.Deputy Commercial Tax Officer,
Purasalvakkam Assessment Circle,
Chennai.
https://www.mhc.tn.gov.in/judis/
W.P.Nos.33462 of 2005,
13514 & 13515 of 2006
S.M.SUBRAMANIAM, J.
Kak
W.P.Nos.33462 of 2005, 13514 & 13515 of 2006
06.09.2021
https://www.mhc.tn.gov.in/judis/
