2014 (2) TMI 714 - HC - VAT and Sales Tax

High Court interprets Tamil Nadu Sales Act on bakery product tax liability, finding in favor of assessee.

The State of Tamil Nadu rep. By the Deputy Commissioner (CT) Versus S. Vaidayanathasami (Legal representative of V. Balasubramaniam)

The High Court of Madras addressed a revision by the Revenue against the Tribunal's order for the assessment year 1992-93, involving the interpretation of ... Assessment u/s 7A(1)(a) - Revision u/s 16 - Turnover less than chargeable limit under Secton 3(1) of the Tamil Nadu General Sales Tax Act - Held that:- A perusal of Section 3(1) of the Tamil Nadu General Sales Tax Act, as it stood at the relevant time, shows that in the case of a dealer the liability to pay tax arises when the total turnover exceeded ₹ 1 lakh. In the case of casual trader or agent of a non-resident, the liability is fastened irrespective of sales turnover. Tax at flat rate at 8% was liable to be paid at the point of first sale - As far as Section 7A is concerned, it deals with levy of purchase tax. This is a charging Section by itself. A reading of Section 7A shows that the chargeability under Section 7A is attracted under stated circumstances. Without purchase of goods from any registered dealer or other persons whose sale or purchase, though liable to tax, does not suffer tax by reason of circumstances given under Sections 3 and 4 and such purchased goods were used and consumed in the manufacture of other goods or for sale or otherwise or in any manner other than by way of sale in the State or despatched them to a place out the State except as a direct result of sale or purchase in the course of inter-State trade or commerce. Then alone the charge under Section 7A stands attracted. On the admitted fact herein that the assessee, a dealer in bakery products, had effected sales locally only and that none of the circumstances given under Section 7A of the Act stood attracted to the facts herein, we do not find that the Revenue has a case for assessing the turnover under Section 7A of the Act - Therefore there is no ground to sustain the assessment - Decided against Revenue. Issues:1. Revision against the Tribunal's order for assessment year 1992-93.2. Interpretation of Section 16 of the Tamil Nadu General Sales Act for reassessment.3. Applicability of Section 7A of the Act in the case of the second sale of bakery products.4. Effect of notification under Section 17 of the Act on the levy of tax.5. Comparison of decisions in TVL. VASU GENERAL STORES v. STATE OF TAMIL NADU and SHANMUGA TRADERS v. STATE OF TAMIL NADU.6. Liability to pay tax under Section 3(1) of the Tamil Nadu General Sales Tax Act.7. Application of Section 7A for purchase tax and its conditions.Analysis:1. The High Court of Madras addressed a revision filed by the Revenue against the Tribunal's order concerning the assessment for the year 1992-93.2. The case involved a reassessment under Section 16 of the Tamil Nadu General Sales Act due to the initial exemption granted on the second sale of bakery products.3. The issue centered around the applicability of Section 7A of the Act to the second sale of bakery products, with the assessee arguing against the levy of tax based on the turnover of vendors.4. The impact of a notification under Section 17 of the Act, reducing the tax rate for certain sales, was considered in relation to the tax liability of the assessee as a second seller.5. The Court compared the decisions in TVL. VASU GENERAL STORES v. STATE OF TAMIL NADU and SHANMUGA TRADERS v. STATE OF TAMIL NADU to determine the correct application of tax liability in the case.6. The liability to pay tax under Section 3(1) of the Tamil Nadu General Sales Tax Act was analyzed, particularly focusing on the turnover threshold triggering tax liability.7. The Court examined the conditions under Section 7A for purchase tax and concluded that the circumstances did not warrant the assessment under this section based on the facts presented in the case.