2019 (3) TMI 339 - HC - VAT and Sales Tax

High Court affirms Tribunal decision on additional sales tax for out-of-state dealers

The High Court of Madras upheld the Tamil Nadu Sales Tax Appellate Tribunal's decision regarding the levy of additional sales tax for dealers outside ... Levy of additional sales tax for the period from 01.04.1999 to 18.06.1999 - head office was situated outside the State of Tamil Nadu - TNGST Act - amendment vide the Tamil Nadu Additional Sales Tax Act [amendment Act] - whether the appellant/dealer is liable to pay additional sales tax pursuant to the amendment vide the Tamil Nadu Additional Sales Tax Act [amendment Act], from the date on which it was published in the Tamil Nadu Government Gazette? - Held that:- As identical question was decided by the Hon'ble Division Bench of this Court in the case of Philips India Limited Vs. The Assistant Commissioner [2004 (5) TMI 538 - MADRAS HIGH COURT], where it was held that The Assessing Officer was justified in coming to a conclusion that the taxable turnover for the period between 01.04.1996 and 31.03.1997 being more than ₹ 100 crores, the petitioner was liable to pay additional sales tax even as per the amended provision as contained in Section 2(1)(aa). Thus, it is clear that the liability to pay additional sales tax is to be collected on the total taxable turnover of the dealer for the entire year. Therefore, the contentions advanced by the petitioner that the year should be split into two, is impermissible as we cannot add words to a statute which are clear and unambiguous. The Assessing Officer needs to apply the said decision and take a fresh decision on merits and in accordance with law - Tax Case Revision stands disposed of by remitting the matter to the Assessing Officer and calculate the liability of additional sales tax. Issues:1. Challenge to order passed by Tamil Nadu Sales Tax Appellate Tribunal.2. Interpretation of provisions regarding levy of additional sales tax for dealers outside Tamil Nadu.3. Applicability of Section 2(1)(aa) of the Act.4. Liability of petitioners to pay additional sales tax for specific periods.5. Comparison of Act 37/99 with Act 23/98.6. Consideration of additional grounds and explanations in the appeal.Issue 1: Challenge to Tribunal's OrderThe appellant, a dealer, challenged the order of the Tamil Nadu Sales Tax Appellate Tribunal regarding the levy of additional sales tax. The Tribunal held that there was no vacuum period for tax liability and that Section 2(1)(aa) continued to apply. The Tribunal's decision was based on the interpretation of the Act and relevant amendments.Issue 2: Interpretation of Provisions for Dealers Outside Tamil NaduThe main question was whether the dealer was liable to pay additional sales tax from the date of the amendment in the Tamil Nadu Additional Sales Tax Act. The dealer argued that the liability should only apply from a specific date, based on turnover thresholds.Issue 3: Applicability of Section 2(1)(aa) of the ActThe Tribunal's decision was based on the application of Section 2(1)(aa) of the Act, which was inserted by Act 23/1998. The Tribunal concluded that the provision continued to be in force during the relevant period.Issue 4: Liability of Petitioners for Specific PeriodsThe appellant contended that there was no liability for a specific period and that turnover should be considered only after a certain date to determine tax liability. The argument was based on turnover thresholds and the timing of the amendment.Issue 5: Act 37/99 vs. Act 23/98The Tribunal held that Act 37/99 was a reformed version of Act 23/98, removing certain issues and making the latter more comprehensive. The appellant challenged this interpretation, seeking a different application of the Acts.Issue 6: Consideration of Additional Grounds in AppealThe appellant raised additional grounds and explanations in the appeal, which the Tribunal was urged to consider. The Tribunal's decision was challenged based on the failure to address these additional contentions.In summary, the High Court of Madras analyzed various legal issues raised in the Tax Case Revision. The Court referred to previous judgments to determine the liability of the dealer to pay additional sales tax. The Court upheld the Tribunal's decision, emphasizing that tax liability should be based on the dealer's total taxable turnover for the entire year. The Court directed the Assessing Officer to recalculate the tax liability in accordance with the law. The judgment clarified the legal position based on precedents and disposed of the Tax Case Revision accordingly.