2008 (9) TMI 877 - HC - VAT and Sales Tax

Madras High Court upholds jurisdiction in transferred case, affirms tax treatment under Societies Act

M/s Vasim Tanning Company Versus The State of Tamil Nadu represented by the Deputy Commissioner Tax Officer

The Madras High Court had jurisdiction to proceed with a case transferred from the Special Tribunal. The Supreme Court's guidance on the interpretation of ... Whether the Tribunal was right in confirming the order of the Assessing Officer, who treated the purchase of Wattle Extract from Tamil Nadu Leather Development Corporation Limited as the last purchase without referring to the clarification of the Secretary to Government by his clarification dated 06.12.1988? Held that:- The petitioner, being an incorporated body, it clearly fell within the expression 'unincorporated association' referred to in sub-clause (e) of article 366(29A) of the Constitution. Section 2(n)(v) of the Tamil Nadu General Sales Tax act, 1959, treats the supply of goods by an unincorporated association, to its members for cash, deferred payment, or other valuable consideration, as a sale. The provisions for levy of tax on the supplies effected as in this case, were clearly to be found in section 2(n)(v) of the Tamil Nadu General Sales Tax Act, which was in conformity with article 366(29A)(e) of the Constitution and thereby confirmed the order of the Special Tribunal made in the above referred case reported in All India Skins and Hides Tanners and Merchants Association and Others vs. Commercial Tax Officer, Periamet Assessment Circle and Others [2001 (12) TMI 844 - MADRAS HIGH COURT]. Thus the issue is squarely covered by the decision reported above. Revision dismissed. Issues:Jurisdiction of the Madras High Court to try the case transferred from the Special Tribunal under the Special Tribunal Repealing Act.Interpretation of the expression 'cause of action' in the context of territorial jurisdiction.Question of law regarding the treatment of the purchase of Wattle Extract by the Assessing Officer.Interpretation of the provisions of the Tamil Nadu Societies Registration Act, 1975 in relation to taxability of goods sold by incorporated bodies to their members.Jurisdiction of the Madras High Court:The case was transferred to the Madras High Court from the Special Tribunal after its abolition under the Special Tribunal Repealing Act. The Court examined the jurisdiction issue and found that the original order of assessment and the subsequent appellate orders were within the jurisdiction of the Madurai Bench of the Madras High Court. The assessee had carried the matter to the Special Tribunal, which admitted the revision before being transferred to the Principal Bench of the Madras High Court. The Court concluded that it had the jurisdiction to proceed with the transferred case.Interpretation of the expression 'cause of action':The Supreme Court's decision in Rajasthan High Court Advocates' Association vs. Union of India provided guidance on the interpretation of 'cause of action' in the context of territorial jurisdiction. The Court analyzed the application of this principle in the present case to determine the appropriate jurisdiction for the matter. It was emphasized that the litigant has the right to choose a court based on where the cause of action arises, whether wholly or partially within specific areas. The Court applied this principle to assess the jurisdiction in the current case.Treatment of Wattle Extract purchase by Assessing Officer:The main legal question in this revision was whether the Tribunal was correct in confirming the Assessing Officer's treatment of the purchase of Wattle Extract without considering a clarification from the Secretary to Government. The Special Tribunal had previously decided against the assessee based on a previous case law. The Court reviewed the relevant provisions and upheld the decision based on the interpretation of the Tamil Nadu General Sales Tax Act, confirming the order of the Special Tribunal.Interpretation of Tamil Nadu Societies Registration Act, 1975:The Court delved into the interpretation of the Tamil Nadu Societies Registration Act, 1975 in relation to the taxability of goods sold by incorporated bodies to their members. By referring to previous judgments, the Court concluded that sales by incorporated bodies to their members are subject to tax. The Court held that the petitioner, being an incorporated body, fell under the category of 'unincorporated association' as per the Constitution. The provisions of the Tamil Nadu General Sales Tax Act aligned with the Constitution, and the issue was deemed to be covered by previous decisions.In conclusion, the Court dismissed the revision as the issue was found to be squarely covered by previous Division Bench judgments, thereby upholding the decisions made based on the interpretation of relevant laws and precedents.