Tribunal Upholds Additional Sales Tax for 1996-97; Declares Section 2(1)(a) Ultra Vires; Amended Act Effective August 1, 1996.

The writ petition was dismissed by the T.N. Taxation Special Tribunal, upholding the liability to pay additional sales tax for the entire assessment year 1996-97, as the taxable turnover exceeded Rs. 100 crores. The Tribunal declared Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970, ultra vires, directing its deletion. It affirmed that Section 55 of the TNGST Act could be used for rectification purposes, and the amended Section 2(1)(aa) applied from August 1, 1996. The court found the petitioner liable for additional sales tax for the period from April 1, 1996, to July 31, 1996.

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Issues Involved:
1. Constitutionality of Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970.
2. Applicability of amended Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970.
3. Liability to pay additional sales tax for the period from April 1, 1996 to July 31, 1996.
4. Jurisdiction under Section 55 of the Tamil Nadu General Sales Tax Act, 1959 for rectification.

Summary:

1. Constitutionality of Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970:
The Tamil Nadu Taxation Special Tribunal found Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970, as amended by Act 31 of 1996, to be ultra vires and in violation of Articles 301, 303, and 304(a) of the Constitution of India. The Tribunal directed that clause (a) of Section 2(1) should stand deleted, and certain words in Section 2(1)(aa) should also be deleted to ensure the exemption up to Rs. 100 crores is equally applicable to all dealers.

2. Applicability of amended Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970:
The amended provision, Section 2(1)(aa), effective from August 1, 1996, imposed additional sales tax on dealers with a taxable turnover exceeding Rs. 100 crores. The petitioner contended that since their taxable turnover between August 1, 1996, and March 31, 1997, was less than Rs. 100 crores, they were not liable to pay additional sales tax. However, the court held that the liability under the unamended Section 2(1)(a) was already incurred for the period from April 1, 1996, to July 31, 1996, and the amended provision applied from August 1, 1996.

3. Liability to pay additional sales tax for the period from April 1, 1996 to July 31, 1996:
The court found that the liability to pay additional sales tax under the original Section 2(1)(a) existed for the period from April 1, 1996, to July 31, 1996, as the taxable turnover exceeded Rs. 10 lakhs. The contention that there was no liability during this period was not accepted. Additionally, the annual turnover for the assessment year 1996-97 exceeded Rs. 100 crores, making the petitioner liable to pay additional sales tax even under the amended provision.

4. Jurisdiction under Section 55 of the Tamil Nadu General Sales Tax Act, 1959 for rectification:
The court held that the levy of additional sales tax under Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970, is a collection of sales tax at a higher rate. Section 2(1)(b) and Rule 9 of the Tamil Nadu Additional Sales Tax Rules, 1970, make the provisions of the TNGST Act applicable to additional tax. Therefore, Section 55 of the TNGST Act could be used for rectification. Even if Section 55 was not applicable, Section 16 of the TNGST Act relating to escaped turnover could be applied.

Conclusion:
The writ petition was dismissed, and the court upheld the liability to pay additional sales tax for the entire assessment year 1996-97, considering the taxable turnover exceeded Rs. 100 crores. The court also affirmed the applicability of Section 55 of the TNGST Act for rectification purposes.

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