Additional sales tax relief on first turnover slab applied under amended Tamil Nadu law, with penalty set aside.

The amended Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970, effective from 1 April 1993, granted dealers relief by exempting the first Rs. 10 lakhs of turnover from additional sales tax where the taxable turnover did not exceed one crore. The Commissioner's circular confirmed that the initial slab carried no additional tax under the amended regime. A refusal to split turnover for this purpose was inconsistent with the amendment and circular, because the first Rs. 10 lakhs could not be subjected to additional sales tax. The petitioner was therefore entitled to the amendment's benefit, and the levy of penalty to that extent was set aside.

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Issues: Whether the petitioner dealer was entitled to the benefit of the amendment to Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970, so that additional sales tax was not leviable on the first Rs. 10 lakhs of turnover for the relevant assessment year, and whether the turnover could be split for that purpose.

Analysis: The amended provision, with effect from 1 April 1993, substituted the tax slabs and granted relief to dealers whose taxable turnover did not exceed one crore of rupees by exempting the first ten lakhs from additional tax. The circular issued by the Commissioner clarified the working of the amended regime and indicated that, where the conditions were satisfied, additional sales tax would be nil on the initial slab. The rejection of the claim on the ground that the turnover could not be split was held to be inconsistent with the amended provision and the circular, since the initial Rs. 10 lakhs could not be subjected to additional sales tax.

Conclusion: The petitioner was entitled to the benefit of the amendment, and additional sales tax could not be levied on the first Rs. 10 lakhs of turnover for the assessment year 1994-95. The levy of penalty to that extent was also set aside.

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