Panel boards purchased by submersible pump manufacturer must be taxed as integrated units with pumps, not separately at higher rates.

M/s. TECMO Industries Versus The Tamil Nadu Sales Tax Appellate Tribunal, (Additional Bench), The Appellate Assistant Commissioner (CT), (Main), (FAC), Coimbatore, The Deputy Commercial Tax Officer

M/s. TECMO Industries Versus The Tamil Nadu Sales Tax Appellate Tribunal, (Additional Bench), The Appellate Assistant Commissioner (CT), (Main), (FAC), ... Issues:
1. Interpretation of provisions of Tamil Nadu General Sales Tax Act, 1959 regarding the taxability of panel boards purchased by a manufacturer of submersible pumps.
2. Determination of whether panel boards purchased against Form XVII declarations should be taxed separately at a higher rate or as part of an integrated unit with submersible pumps.
3. Application of Section 3(3) of the Act in determining the tax liability on the sale of integrated pumpsets.
4. Consistency in the assessment of tax liability by the Department over different assessment periods.

Detailed Analysis:
1. The petitioner, a manufacturer of submersible pumps, was assessed for the sale of pumps, motors, scrap, and pumpsets. The dispute arose regarding the tax treatment of panel boards purchased against Form XVII declarations, which were sold along with submersible pumps. The Assessing Authority contended that the panel boards were separate items taxed at a higher rate, while the petitioner argued that they were integral components of the pumpsets. The Supreme Court judgment in Northwest Switchgear Ltd. case was cited in support of the tax department's position.

2. Both the first and second appeals upheld the tax department's findings that panel boards were independent items taxable at a higher rate. The petitioner argued that the pumpsets were sold as integrated units for immediate use, emphasizing the necessity of panel boards for the pumps' functionality. The definition of 'Manufacturer' under TNGST Rules was invoked to support the integration argument.

3. The Court analyzed the factual matrix and found that the pumpsets sold by the petitioner included both submersible pumps and panel boards. Despite the tax department's contention that panel boards could be purchased separately, the Court noted the integrated nature of the supplied pumpsets. The application of Section 3(3) of the Act, providing for a reduced tax rate on goods used in manufacturing, was crucial in determining the tax liability on the integrated pumpsets.

4. The Assessing Authority's invocation of the proviso to Section 3(3) was questioned as the panel boards were sold as part of integrated kits, not as independent commodities. The Court emphasized the uniformity in assessing tax liability over different periods, citing previous assessment orders where the concessional rate of tax under Section 3(3) was accepted. Inconsistency in the tax department's approach for the intervening year was highlighted as unjustified.

5. The Court referenced a decision regarding institutional integrity and consistency in judicial decisions to support its conclusion. Ultimately, the Court set aside the tax department's order, allowing the writ petition and emphasizing the importance of maintaining consistency in tax assessments. The judgment highlighted the need for a uniform and sustained view by the tax department to avoid conflicting positions on tax liabilities.