2008 (9) TMI 876 - HC - VAT and Sales Tax

High Court affirms Tribunal's ruling on rolling shutter taxation under Sales Tax Act

The High Court of Madras upheld the Sales Tax Appellate Tribunal's decision that the turnover of rolling shutters constituted a works contract and was ... Sale of rolling shutters by the assessee - whether taxable as works contract under section 3-B of the ? Held that:- From the facts, it is clear that the revision petitioners are dealers in rolling shutters and they have manufactured the rolling shutters in their factory and erected the same in the customer's place. The contention of the assessee is also that they have sold tax suffered goods like guide channel, frame, ball bearing etc., to the customers has also not been established. On the other hand, the manufacture of the rolling shutters by the assessees themselves under their trade name has been established by materials. In such circumstances, no irregularity in the order of the appellate Tribunal in coming to the conclusion that the sale of rolling shutters by the assessee is taxable as works contract under section 3-B of the Act. Now, coming to the imposition of penalty under section 12(5)(iii) of the Act, which was obtaining during the relevant period, if the assessing authority is satisfied that the return filed by the dealer is incorrect and incomplete, he may impose penalty, which penalty shall not been less than 50% and shall not be more than 150% of the difference in tax payable on the turnover disclosed in the return and determined by the assessing authority. Hence, the imposition of tax under section 12(5)(iii) of the Act is legally sustainable. Revision dismissed. Issues Involved:1. Assessment of turnover of rolling shutters as works contract.2. Validity of penalty under section 12(5)(iii) of the TNGST Act.3. Taxability of sale of shutters fabricated with tax-paid goods at different rates.4. Levying penalty under section 12(3) of the TNGST Act.Issue 1: Assessment of turnover of rolling shutters as works contract:The High Court of Madras addressed the challenge to the orders of the Sales Tax Appellate Tribunal regarding the assessment of turnover of rolling shutters as works contract. The revision petitioners, who were dealers in rolling shutters, contended that the shutters were made of goods that had already suffered tax. The Court noted the findings of the assessing officer that the shutters were manufactured in the factory premises of the dealers and then delivered to customers, constituting a works contract. The Court referred to relevant case law and upheld the Tribunal's decision that the sale of rolling shutters was taxable as a works contract under section 3-B of the Act.Issue 2: Validity of penalty under section 12(5)(iii) of the TNGST Act:Regarding the imposition of penalty under section 12(5)(iii) of the TNGST Act, the Court explained that if the return filed by a dealer is deemed incorrect and incomplete, a penalty ranging from 50% to 150% of the tax difference can be imposed. The Court found the imposition of penalty in this case legally sustainable, as the assessing authority had the power to penalize inaccuracies in the filed returns.Issue 3: Taxability of sale of shutters fabricated with tax-paid goods at different rates:In a separate case, the Court considered whether the sale of shutters fabricated with tax-paid goods should be taxed at 4% as declared goods or at higher rates. The Court referred to a Division Bench decision and upheld the Tribunal's ruling that shutters, even if made from tax-paid goods, constitute a commercially distinct commodity from the raw materials and are subject to taxation at higher rates of 8% and 11%.Issue 4: Levying penalty under section 12(3) of the TNGST Act:The Court also reviewed the imposition of penalty under section 12(3) of the TNGST Act in cases related to the assessment of rolling shutter sales turnover. The assessing officer's finding that the shutters were a commercially distinct commodity taxable under section 3-B of the Act was upheld. The Court dismissed the revisions against the penalty imposed, as it found no grounds to interfere with the decisions of the authorities and the Tribunal.In conclusion, the High Court of Madras dismissed the revisions in various cases related to the assessment and taxation of rolling shutters as works contracts, the validity of penalties under different sections of the TNGST Act, and the taxability of shutters manufactured with tax-paid goods at varying rates.