2010 (1) TMI 1144 - HC - VAT and Sales Tax

Court remits case for tax rate reevaluation. Importance of accurate classification and detailed assessment highlighted.

Aerochem Electronics Versus Commercial Tax Officer, Luz Assessment Circle, Chennai and Another

The court set aside the previous orders and remitted the case for reevaluation to determine the correct tax rate for the petitioner-assessee for the years ... Whether the petitioner-assessee for the years 1994-95 and 1997-98 is liable to pay tax at the rate of 16 per cent and 20 per cent, respectively, or at eight per cent? Held that:- As far as the application of clarification dated February 27, 1995, which was issued prior to insertion of section 28A into the Act 60 of 1987 was introduced with effect from November 6, 1997 is concerned, we may point out that such clarification has no legal backing and therefore, it cannot be put against the assesse even though it was made at the instance of the assessee himself. As to whether the clarification issued after the amendment, viz., July 7, 1997 can be of any benefit to the assessee, this question has not been considered by the authorities below, apart from the question as to which of the entry would be applicable to the case on hand as contended by the learned counsel for the assessee was also not considered, we set aside the order on that ground and remit the matter to the assessing officer for consideration as to whether the commodity in question, viz., electronic gas stove ignitor/lighters is liable to tax in terms of entry 36 of Part C of the First Schedule or item No. 18 of Part F of the First Schedule for the period from March 12, 1993 and item No. 5 of Part G of the Fist Schedule from July 17, 1996. In view of the remittal, we have to necessarily set aside the order and for that reason, the common order passed by the Tribunal is set aside. Issues:Determining the correct tax rate for the petitioner-assessee for the years 1994-95 and 1997-98 under the Tamil Nadu General Sales Tax Act, 1959.Analysis:The petitioner, a dealer in various goods, contested the tax rates imposed on them for the years 1994-95 and 1997-98. The assessment initially set the tax rate at 16% for 1994-95 and 20% for 1997-98. The petitioner argued that as electronic goods, they should be taxed at 4%. The appellate authority upheld 16% for 1994-95 but reduced the rate to 8% for 1997-98. The Revenue appealed, leading to the confirmation of the 20% tax rate for 1997-98. The petitioner challenged these orders through writ petitions.The petitioner's counsel argued that the goods fell under a specific entry in the schedule, warranting an 8% tax rate. The Special Government Pleader contended that different entries mandated higher tax rates, supported by a clarification issued in 1995. The court noted that the 1995 clarification lacked legal backing and could not be used against the assessee. The court also questioned the applicability of a post-amendment clarification from 1997, remitting the matter to the assessing officer for a detailed consideration.The court set aside the previous orders and remitted the case for reevaluation based on whether the goods in question should be taxed under specific entries in the schedule. The judgment highlighted the need for a thorough assessment to determine the appropriate tax rate, emphasizing the importance of accurate classification under the tax law.