Court dismisses writ appeal challenging tax assessment order interpreting Commissioner's clarification on cotton hosiery goods.

Rupa & Co. Ltd. Versus Special Commissioner and Commissioner of Commercial Taxes, Ezhilagam, Chennai and another

Rupa & Co. Ltd. Versus Special Commissioner and Commissioner of Commercial Taxes, Ezhilagam, Chennai and another - [2008] 17 VST 303 (Mad) Issues:
Challenge to assessment order based on violation of clarification by Commissioner of Commercial Taxes, Chennai.

Detailed Analysis:
The appellant challenged the assessment order dated June 30, 2003, on the grounds of violation of a clarification by the Commissioner of Commercial Taxes, Chennai. The appellant contended that the assessment was without jurisdiction and against the law. The appellant, a manufacturer and dealer in cotton hosiery goods, claimed that hosiery goods were generally exempted under Tamil Nadu sales tax laws. A notification issued on March 5, 1997, exempted hosiery goods, and a further notification directed a reduced tax rate of one percent for inter-State trade of hosiery goods. The appellant sought clarification on eligibility for the reduced tax rate, and the Commissioner clarified that inter-State sale of cotton hosiery goods is taxable at one percent if no exemption on branch transfers is claimed.

The appellant reported taxable turnover under the Central Sales Tax Act, 1956, without claiming any exemption for branch transfer and paid tax at one percent. However, the second respondent issued a pre-assessment notice stating that the appellant should have claimed exemption for branch transfer and cannot claim the lower tax rate. The impugned assessment order interpreted the Commissioner's clarification differently, bringing the appellant's inter-State sales turnover to tax at 10 percent, proposing a penalty under the CST Act and the Tamil Nadu General Sales Tax Act.

The appellant argued that the circular issued by the Commissioner is binding on the taxing authority, citing relevant case law. The assessing authority's interpretation was challenged, emphasizing that the order of the single judge directing the appellant to appeal was improper. The court analyzed the relevant provisions of the CST Act and the TNGST Act, highlighting the burden of proof in cases of transfer of goods and the rates of tax for inter-State trade. The court noted the availability of an appeal under the TNGST Act and the requirement to pay 25 percent of the difference in tax assessed for such an appeal.

The court considered various judgments cited by the appellant, emphasizing the importance of following statutory remedies and the limitations of writ jurisdiction when alternative remedies are available. The court concluded that in the absence of illegality in the single judge's order and the availability of an alternative remedy, no interference was warranted. The appellant was granted one month to prefer an appeal with a petition for condonation of delay. The writ appeal was dismissed with no order as to costs.

In summary, the judgment addressed the challenge to the assessment order based on the violation of a clarification by the Commissioner of Commercial Taxes, Chennai. The court analyzed the relevant legal provisions, case law, and the availability of alternative remedies, ultimately dismissing the writ appeal and allowing the appellant one month to prefer an appeal with a petition for condonation of delay.