High Court sets aside assessment order for 2012-13, rules galvanization not manufacturing. Tax levy on labour charges dismissed.

The High Court allowed both writ petitions, setting aside the assessment order for 2012-13 and pre-assessment notices for the following years. The court held that the Assessing Authority's treatment of galvanization as manufacture and levy of tax at a higher rate were legally untenable. The order adding labour charge receipts to taxable turnover was overturned. Proceedings for 2012-13 were stayed pending the Tribunal's decision on the Revenue's appeal, and related Miscellaneous Petitions were closed without costs.

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Issues: Challenge to assessment order for 2012-13, challenge to pre-assessment notices for 2013-14 and 2014-15.

Analysis:
1. The petitioner challenged an assessment order for 2012-13 and pre-assessment notices for 2013-14 and 2014-15. The issue in question had already arisen for the periods 2010-11 and 2011-12, where the petitioner's appeals were allowed by the first Appellate Authority.

2. The appeals for 2010-11 and 2011-12 were allowed based on the taxability and quantification of receipts from job works of galvanization. The dealer-appellants had reported 2/3rd of contract receipts as material cost and paid tax at 4%, claiming deduction for the remaining 1/3rd as pure labour charges. The Assessing Authority's decision to treat galvanization as manufacture and outright sale was deemed legally untenable.

3. The Assessing Authority's levy of tax at a higher rate of 12.5% was challenged, as zinc and other chemicals involved were taxable at 4%. The order setting aside the addition of labour charge receipts to the taxable turnover was upheld. The Revenue appealed against this order to the Tamil Nadu Sales Tax Appellate Tribunal.

4. The High Court allowed both writ petitions, setting aside the impugned order for 2012-13. The proceedings for assessment for 2012-13 and the show cause notices for the subsequent years were put on hold pending the Tribunal's decision on the Revenue's appeal. The connected Miscellaneous Petitions were closed without costs.

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