2018 (10) TMI 262 - HC - VAT and Sales Tax

Court Upholds Concessional Tax Rate for Bearings Under Sales Tax Law

The State of Tamil Nadu Versus Tvl. Reliance Bearing Corporation

The High Court dismissed the Tax Case (Revision) concerning the eligibility of bearings for a concessional tax rate under the Tamil Nadu General Sales Tax ... Classification of an item - Bearings - Whether on the facts and in the circumstances of the case the Tribunal is right in law in holding that bearing would fall under item 3 of 8th Schedule to the Tamil Nadu General Sales Tax Act 1959 when there is specific entry under 66 of part C of 1st Schedule to the Tamil Nadu General Sales Tax Act 1959? - concessional rate of tax - Form XVII declarations under section 3(5) of TNGST Act. Held that:- This Court, in an identical matter, in the case of The State of Tamil Nadu vs. Tvl.Phoenix Trading Corporation, [2018 (9) TMI 1115 - MADRAS HIGH COURT] took note of the observations in the order passed by the Appellate Assistant Commissioner and upheld the decision of the Appellate Assistant Commissioner - It was held in the case that The Revenue has not disputed the factual position, which was taken note of by the Appellate Assistant Commissioner (CT), which has not been adequately dealt with in the order passed by the Tribunal. Thus, on facts, the Appellate Assistant Commissioner (CT) was fully justified in allowing the appeal and considering the factual matrix. Following the above case, the substantial questions of law, which have been raised, do not arise for consideration in this Tax Case (Revision) - Tax Case Revision is dismissed Issues:1. Interpretation of provisions under Tamil Nadu General Sales Tax Act, 1959 regarding the eligibility of bearings for concessional rate of tax.2. Consideration of clarification issued by the Commissioner of Commercial Taxes.3. Determination of whether bearings could be sold against Form XVII and their classification as parts of machinery or consumable items.Issue 1: Interpretation of provisions under Tamil Nadu General Sales Tax Act, 1959 regarding the eligibility of bearings for concessional rate of tax:The Tax Case (Revision) involved a dispute regarding the eligibility of bearings for concessional rate of tax under Section 3(5) of the Tamil Nadu General Sales Tax Act, 1959. The Revenue contended that bearings did not fall under the specific entry in the I Schedule and, therefore, were not eligible to be sold against Form XVII declaration for a lower tax rate. The Appellate Assistant Commissioner upheld the Revenue's decision, emphasizing that forms filed for items not specifically listed in the VIII Schedule became invalid. However, the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench) allowed the dealer's appeal, stating that bearings could be treated as parts of machinery under item 3 of the VIII Schedule, making them eligible for concessional tax rates.Issue 2: Consideration of clarification issued by the Commissioner of Commercial Taxes:One of the questions raised was whether the Tribunal erred in not considering a clarification issued by the Commissioner of Commercial Taxes. The Tribunal's decision was based on the interpretation of the law and the factual matrix of the case, rather than the specific clarification. The High Court found that the Appellate Assistant Commissioner's decision was well-reasoned, considering both the factual position and the legal aspects, and thus upheld the decision in favor of the dealer.Issue 3: Determination of whether bearings could be sold against Form XVII and their classification as parts of machinery or consumable items:The Tribunal's decision was supported by a previous case where concessional tax rates were allowed for items that required assembly by buyers/traders. The Tribunal referred to a case involving printed materials where a similar concessional tax rate was permitted. The High Court emphasized that the Tribunal correctly considered the factual position and upheld the Appellate Assistant Commissioner's decision, stating that the substantial questions of law raised did not warrant consideration in the Tax Case (Revision).In conclusion, the High Court dismissed the Tax Case (Revision), restored the order of the Appellate Assistant Commissioner, and left the substantial questions of law open for future consideration, highlighting the importance of factual analysis in tax cases involving the interpretation of legal provisions.