Madras High Court
Tvl.Swastik Dye Chem Industries vs The Commercial Tax Officer on 24 October, 2024
Author: Anita Sumanth
Bench: Anita Sumanth
T.C.No.1326 of 2006
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 24.10.2024
CORAM
THE HON'BLE DR.JUSTICE ANITA SUMANTH
AND
THE HON'BLE MR.JUSTICE G.ARUL MURUGAN
T.C.No.1326 of 2006
Tvl.Swastik Dye Chem Industries,
No.117/15, Broadway,
Chennai-1. ... Appellant
versus
1.The Commercial Tax Officer,
Esplanade-II Assessment Circle,
Kuralagam Annexe,
1st Floor, Chennai - 600 001.
2.The Sales Tax Appellate Tribunal,
City Civil Court Buildings,
Second Floor,
Chennai - 600 104. ... Respondents
PRAYER: Appeal filed under Section 38 of the Tamil Nadu General Sales
Tax Act, 1959 against the order of the Tamil Nadu Sales Tax Appellate
Tribunal, Chennai (Addl. Bench), dated 15.10.1999 in T.A.No.1034 of
1998.
For Appellant : Mr.C.P.Sivamohan
For Respondent : Ms.Amirtha Dinakaran
Government Advocate
1/8
https://www.mhc.tn.gov.in/judis
T.C.No.1326 of 2006
JUDGMENT
[Judgment of the Court was made by G.ARUL MURUGAN, J.]
The appellant, who is a registered dealer in dyes, preferred the above
appeal challenging the order of the Tamil Nadu Sales Tax Appellate
Tribunal dated 15.10.1999. The question of law raised is as to whether the
levy and collection of additional sales tax as per 2(1)(a) of the Tamil Nadu
Additional Sales Tax Act, 1970 [in short, 'TNAST Act'] is illegal in view of
the decision of the Special Tribunal in the case of Siemens Limited Vs.
State of Tamil Nadu (110 STC 313).
2. The appellant had suffered an order of assessment vide
proceedings of the Assessing Officer dated 15.07.1997 for the assessment
year 1996-97, by which additional sales tax was levied for a turnover of
Rs.69,28,115/- upto July, 1996. In the appeal preferred by the assessee
challenging the additional sales tax levied, the Appellate Assistant
Commissioner, by order dated 19.06.1998, confirmed the levy of additional
sales tax in the first appeal. The order of the Appellate Assistant
Commissioner was also further confirmed by the order of the Appellate
Tribunal in the Second Appeal, by order dated 15.10.1999.
https://www.mhc.tn.gov.in/judis
3. Assailing the same, the present appeal has been preferred by
the assessee.
4. Heard the learned counsel for the appellant and the learned
Government Advocate for the respondent and perused the materials
available on record.
5. The appellant dealer was assessed a turnover of Rs.69,28,115/-
upto July 1996, towards the additional sales tax under the Act in the
assessment year 1996-97. The main challenge of the appellant in respect of
the levy of additional sales tax is based on the contention that since the
turnover had not exceeded the threshold of Rs.100 Crores during the year in
question, the levy of additional sales tax imposed on the appellant is not
sustainable.
6. It is the contention of the learned counsel for the appellant that
in view of the amendment to the provisions of the Act, particularly Section
2(1)(a) of the TNAST Act, the threshold for the levy of additional sales tax
https://www.mhc.tn.gov.in/judis
is enhanced from Rs.10.00 lakhs to Rs.100 Crores. As per the amendment
the original threshold of Rs.10.00 lakhs would stand in regard to casual
traders or agents of non-resident dealers or local branches of a firm or
company outside India and enhanced the threshold to Rs.100 Crores in
respect of other dealers.
7. An identical issue in respect of the liability of the dealers to
pay additional sales tax for the period from 01.04.1996 to 31.07.1996 where
the turnover was in excess of Rs.10.00 lakhs even though the total turnover
of the concerned assessee in the year was less than Rs.100 Crores came for
consideration in the case of Indian Rayon & Industries Limited Vs. The
Commercial Tax Officer and another in W.P.No.15039 of 2008 and by
order dated 22.10.2024, we had confirmed the order of the Tribunal holding
that the assessing authority is bound to apply the provisions of the Act
strictly from the date of insertion into the Act for the purpose of assessment.
When admittedly the turnover of the assessee was beyond Rs.10.00 lakhs,
for the period from 01.04.1996 to 31.07.1996, the assessee cannot avoid the
liability under the TNAST Act. The relevant portion of the order is
extracted hereunder:
https://www.mhc.tn.gov.in/judis
“4.The amendment to the provisions of Section 2(1)(a) of the
TNAST Act as introduced stated that the original threshold of Rs.10.00
lakhs would stand in regard to casual traders or agents of non-resident
dealers or local branches of a firm or company outside India, and
enhanced the threshold to Rs.100 Crores in respect of other dealers.
5.The amendment was itself challenged before the Tamil Nadu
Taxation Special Tribunal which by its order in Siemens Ltd. V. State of
Tamil Nadu (110 STC 313) held the same to be ultravires striking down
clause (a) of Section 2 (1) of the TNAST Act. Hence parity was brought
amongst all dealers in the threshold to be maintained for the levy of AST.
The extant position in law hence, is that the threshold for levy of AST in
terms of Section (2) of the TNAST Act stood amended, enhancing the
threshold from Rs.10.00 lakhs to Rs.100 Crores with effect from
01.08.1996. There is no dispute on this position.
6.The petitioner presses into service the observations of the
Division Bench of this Court in the case of Philips India Limited V.
Assistant Commissioner (CT), Fast Tract Assessment Circle II and others
(137 STC 134). That was a case where that assessee had turnover in
excess of Rs.100 Crores for the period 01.04.1996 and 31.03.1997. While
interpreting the order of the Tribunal in Siemens Ltd., the Division Bench
of this Court states as follows:
'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, 1996 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).'
7.The petitioner seeks to argue, based on the observations at
paragraph 8 above, there should be no liability for AST at all based on
the factual position that the entirety of its turnover was less than Rs.100
crores.
https://www.mhc.tn.gov.in/judis
8.Mr.Haja Nazirudeen, learned Additional Advocate General
assisted by Mr.G.Nanmaran, learned Special Government Pleader for the
Commercial Taxes Department, would disagree with the interpretation
put forth reiterating the settled position that an amendment must be given
effect to from its effective date and not retrospectively, unless specifically
provided. For this purpose, he would press into service the decision of this
court in State of Tamil Nadu V. National Time Co. (39 VST 247).
9.Having heard the rival contentions of both parties, we agree
with the contention put forth by the Commercial Taxes Department. The
amendment to the TNAST is effective from 01.08.1996. As a result of this
amendment, the threshold for the levy of AST stood enhanced from
Rs.10.00 lakhs to Rs.100 Crores.
10.It is true that if the turnover of the writ petitioner is taken for
the year in entirety, it would be less than a sum of Rs.100 Crores.
However for the purpose of assessment, the assessing authority is bound
to apply the provisions of the Act strictly from their dates of insertion into
the Act. Hence for the period 01.04.1996 to 31.07.1996, as the turnover of
the petitioner is in the region of Rs.15.66 Crores, which is far in excess of
Rs.10.00 lakhs, the petitioner cannot avoid liability under the TNAST
Act.”
8. In the instant case, admittedly the turnover of the appellant for
the period from 01.04.1996 to 31.07.1996 is to the tune of Rs.69,28,115/-,
which is in excess of Rs.10.00 lakhs. In view of the above referred decision,
the appellant assessee cannot avoid the liability under the Act.
9. In view of the same, we do not find any error or infirmity in the
conclusion arrived at by the Tribunal and accordingly, we confirm the order
dated 15.10.1999.
https://www.mhc.tn.gov.in/judis
10. In the result, this Tax Case stands dismissed. There shall be no
order as to costs.
[A.S.M.J.,] [G.A.M.J.,]
24.10.2024
Speaking order / Non-speaking order
Index : Yes / No
Neutral Citation : Yes / No
sri
To
1.The Commercial Tax Officer,
Esplanade-II Assessment Circle,
Kuralagam Annexe,
1st Floor, Chennai - 600 001.
2.The Sales Tax Appellate Tribunal,
City Civil Court Buildings,
Second Floor,
Chennai - 600 104.
https://www.mhc.tn.gov.in/judis
Dr. ANITA SUMANTH, J.
AND
G.ARUL MURUGAN, J.
sri
24.10.2024
https://www.mhc.tn.gov.in/judis
