TaxTMI 
TaxTMI 
2014 (5) TMI 255
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....ate Tribunal ought to have completely set aside the imposition of penalty in view of the bona fides of the petitioners?" 2. The assessee is a manufacturer of auto components and fabricated items. It is seen from the facts narrated in the order that the place of business of the assessee was inspected by the Enforcement Wing Officials on 19.9.89. The Enforcement Wing Officials viewed that top hat sections sold for bus body building should be assessed at 8% under I Schedule as auto components. Based on the results, the Assessing Officer viewed that the top hat section could be assessed to tax only under the I schedule and not under the II Schedule as an item falling under Entry 4(v) of the Tamil Nadu General Sales Tax Act. The assessee resisted the assessment by contending that the top hat section fell within the Entry 4(v) of the II Schedule as any other rolled section and the product has wide use apart from the body building industry. Thus, the understanding of the scope of the Entry for the purpose of taxation could not be based on user theory with reference to the purpose for which the item in question was sold. The assessee further pointed out that steel structurals was sold i....
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....d on the basis of user theory could not be sustained. In so arriving at this conclusion, the Tribunal also referred to the decision reported in 92 STC 67 in the case of DEWAN ENTERPRISES v. COMMISSIONER OF SALES TAX., U.P. The said decision dealt with reference to rim of a cycle to be assessed at 4% under Entry 4(xiv) of the II Schedule. 4. Dealing with the contention that the top hat section came within the broad category of rolled section, the Tribunal pointed out that in the monthly return, the assessee had pointed out to the rolled section as motor vehicle parts. In the case on hand there was no material to substantiate that top hat section were only rolled section. Pointing out to wind shield wiper arm blades wherein the stainless steel strips sold had to undergo the process to became motor vehicles component parts, the Tribunal held that in the absence of any material that top hat sections sold by the assessee could be used for any other purposes, the only head to which item in question could be fitted in was as a motor vehicle parts. Thus, based on the invoices or uses to which top hat section sold by the assessee were put into; the Tribunal rejected the assessee's conten....
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.... a correct view as the said decision of the Tribunal was revered by this Court in the above stated decision. Placing reliance on paragraph 13 of the said decision, learned counsel for the asssessee submitted that the Tribunal committed serious error in fixing the rate of tax with reference to the usage of the product sold by the assessee. He also referred to the decision of this Court reported in 52 STC 94 T.I. & M. SALES LIMITED v. STATE OF TAMIL NADU and submitted that entries are not enumerated with reference to the use to which steel structurals are put into to decide the rate of tax. Thus, in the background of this decision, he submitted that the Tribunal committed serious error in misdirecting its attention to consider the issue on the basis of the user theory, which has no relevant as far as the present case is concerned. 7. Learned Government Advocate (Taxes) supports the order of the Tribunal, which confirmed the order of assessment. 8. Heard learned counsel for the assessee as well as learned Government Advocate (Taxes) for the respondent and perused the materials available on record. 9. It is an admitted case that iron and steel are declared goods falling under ....
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....s. The end use of the declared goods would not have the effect of taking away the effect of the declaration made by Parliament regarding those goods. Thus the Court observed as follows :- "The fact that the buyer has used the steel tube supplied by the petitioner as part of a chassis/ engine by fitting it into such engine/ chassis, for use as exhaust pipe, does not in any way alter the basic fact that what is supplied by the petitioner is in fact, a steel tube of certain shape and length. As held by the Apex Court, the State Legislature has no authority to prescribe a higher rate of tax on declared goods by changing the description of those goods. Article 286(3) of the Constitution obligates the States to be bound by the declaration made by Parliament regarding the goods which are of special importance in inter-State trade or commerce, as also the restrictions and conditions including the ceiling on rates, subject to which States may levy tax on such declared goods. The State, by subjecting parts and accessories of motor vehicles, at a higher rate, cannot impose such higher rate on goods which are declared goods. The end use of the declared goods will not have the effect of taki....