2018 (3) TMI 1366 - HC - VAT and Sales Tax

Court rules purchase turnover not liable for additional sales tax, overturns penalty under TNGST Act

Sri Shanmuga Polymers (P) Ltd. Versus The Assistant Commissioner (CT)

Sri Shanmuga Polymers (P) Ltd. Versus The Assistant Commissioner (CT) - [2019] 61 G S.T.R. 260 (Mad) Issues:Challenge to impugned order determining taxable turnover under TNGST Act at 1% | Dismissal of writ petition as not maintainable | Applicability of Additional Sales Tax Act | Levy of penalty under TNGST Act | Interpretation of statutory provisions | Availability of effective alternate remedy | Liability of turnover assessable under Additional Sales Tax ActIssue 1: Challenge to Impugned OrderThe appellant challenged the impugned order determining taxable turnover under the TNGST Act at a rate of 1%. The writ petition was initially dismissed as not maintainable due to the availability of an effective alternate appellate remedy. The appellant then filed a writ appeal challenging the legality of the order.Issue 2: Applicability of Additional Sales Tax ActThe respondent proposed to levy a penalty under the TNGST Act due to the appellant's alleged misuse of Form XVII and resale of purchased materials without using them in the manufacture of goods. The respondent issued a revision notice proposing to levy additional tax at 1% on the turnover, including the purchase turnover of Rs. 82,56,954, under the Tamil Nadu Additional Sales Tax Act. The appellant contended that the purchase turnover should not be considered for additional sales tax as it was the seller's taxable turnover.Issue 3: Levy of Penalty under TNGST ActThe respondent argued that the appellant contravened Section 3(3) of the TNGST Act by reselling polythene granules purchased under concessional rates. The respondent assessed the turnover at 1% and proposed a penalty under Section 12(3)(b) of the TNGST Act. The appellant disputed this assessment, claiming that the turnover was not liable for additional sales tax and penalty.Issue 4: Interpretation of Statutory ProvisionsThe appellant's counsel referred to relevant sections of the TNGST Act and the Additional Sales Tax Act to support their argument against the levy of 1% tax on the turnover. They emphasized that the appellant had already paid the required taxes and additional sales tax as per the statutory provisions.Issue 5: Availability of Effective Alternate RemedyThe Court admitted the writ appeal only on the question of the liability of turnover assessable under the Additional Sales Tax Act. The appellant argued that since the levy was against the express provisions of the statute, they should not be required to seek an alternate remedy.Issue 6: Liability of Turnover Assessable under Additional Sales Tax ActAfter considering the submissions and materials, the Court found that the purchase turnover of Rs. 82,56,954 should not be included for levying tax at 1% under the Additional Sales Tax Act. The impugned order determining taxable turnover at 1% and the penalty under the TNGST Act were set aside.This detailed analysis covers the various legal issues involved in the judgment, providing a comprehensive overview of the case and the Court's decision on each issue.