2007 (9) TMI 560

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....xes. The petitioner is a fabricator of air-handling unit technology, Chennai and an assessee on the files of the Commercial Tax Officer, Guindy. The petitioner reported their total and taxable turnover at Rs. 35,39,232 and Rs. 27,45,632, respectively, in their monthly returns filed under the Tamil Nadu General Sales Tax Act, 1959 for the assessment year 2004-05. The assessing authority issued a pre-assessment notice dated May 22, 2006 and proposed to disallow, among other things, labour charges collection and first sale of air-handling unit against form XVII. The reasons contained in the pre-assessment notice dated May 22, 2006 for the proposal to disallow are as follows: "Labour charges collection Rs. 7,84,600: They have not produced their work order, labour bills, proof for receipt of material and proof for delivery of finished goods. In the absence of such details, it is proposed to disallow their claim for deduction from turnover, to treat the transaction as sale of air-handling unit; and to assess the turnover to tax at Rs. 20 per cent. Sale of air-handling unit against form XVII-Rs. 19,57,784: The dealers have sold air-handling unit against form XVII. Air-handling un....

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....ment order dated October 16, 2006, the petitioner by their letter dated November 28, 2006, enclosed further details in the form of the orders and invoices in respect of the labour charges of Rs. 7,84,600 and in respect of air-handling unit further clarified that the unit by itself cannot be used and the purchaser who purchased the same, installs the unit in its factory as an integral part of its machinery for manufacture of drugs and medicines and so requested that the respondent to revise the assessment order. The petitioner further submitted that as there was no response from the respondent, by letter dated July 31, 2007, reiterated the request made earlier and once again requested the respondent to revise the assessment by enclosing the drawings to show that airhandling unit was an integral part of the machineries of the purchasers and also enclosed a certificate issued by the purchaser to that effect. Though the petitioner filed application before the respondent to revise the order, the respondent failed to consider the same and issued the recovery notice dated June 19, 2007. On receipt of the same, the petitioner sent a letter dated July 3, 2007 to the respondent to conside....

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....ealer to put forth his case. His submission is placed on record. Section 3(3) and 3(5) of the TNGST Act reads as follows: "Notwithstanding anything contained in sub-section (2), but subject to the provisions of sub-section (1), the tax payable by a dealer in respect of sale of any of the goods mentioned in the Eighth Schedule to any other dealer for installation of, and use in, his factory site situate within the State for the manufacture of any goods shall be at the rate of three per cent on the turnover relating to such sale:   Provided that the provisions of this sub-section shall not apply to any sale, unless the dealer selling such goods furnishes to the assessing authority in the prescribed manner and within the prescribed period, a declaration duly filled in and signed by the dealer to whom the goods are sold, containing the prescribed particulars in the prescribed form obtained from the prescribed authority: Provided further that any such dealer, who after purchasing the goods in respect of which he had furnished any declaration, fails to install the goods and make use of the goods so purchased for the purpose specified in the declaration or disposes of such g....

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....e requisite, if he complies with the proviso, and he is not called upon, beyond production of a declaration in form XVII, to show that the declaration has been given effect to. It is true that in order to satisfy the third requisite, the goods sold should be for use by a purchasing dealer as component parts of some other goods to be manufactured. But the manner in which the seller has to satisfy the requisite is as provided in the proviso to the sub-section, namely, production of the declaration in the prescribed form. Once that is done, there is no further obligation on the part of the selling dealer and he will automatically be entitled to the concessional rate. If the declaration turns out to be false, in the sense that the goods purchased have not been used as declared in the prescribed form, the purchaser is exposed to the penalties provided by section 23 and section 45(2)(e). If the purchaser will make a false declaration or a declaration which he does not comply with, he would do so under peril of meeting those penalties. But on that account, the selling dealer is not deprived of the concessional rate. The physical changes which the Board mentioned do not appear to us to bri....