2014 (5) TMI 796

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....du General Sales Tax Act, the Government exempted tax payable under the said Act on all sales of goods effected by the Tamil Nadu Electricity Board and its branches in the State of Tamil Nadu. 2. The assessee herein is a manufacturer of Cement. It purchased fly ash from Tamil Nadu Electricity Board to the turnover of Rs.35,78,954/- and consumed the same in the manufacture of cement. Placing reliance on the notification exempting sales by the Tamil Nadu Electricity Board, the assessee contended that the question of levying any purchase tax did not arise. Thus, on the ground that the exempted turnover would not come into reckoning of the charging provision under Section 7A of the Income Tax Act, the assesee resisted the assessment proposed....

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....Provided that - (i) in the case of rice products (for example, rice flour and rice bran), milk, fresh vegetables (other than those mentioned in the First Schedule), fresh fruits, betel and plantain leaves, flowers, eggs, meat and fish (other than canned meat and fish), the rate shall be one per cent. 7-A. Levy of purchase tax (1) Every dealer who in the course of his business purchases from a registered dealer or from any other person, any goods (the sale or purchase of which is liable to tax under this Act) in circumstances in which no tax is payable under sections 3, 4 or 5 as the case may be, and either, (a) consumes such goods in the manufacture of other goods for sale or otherwise; or (b) disposes of such goods in any manne....

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....ded by necessary implication goods, the sale or purchase of which is totally exempted from tax at all points under Section 8 or Section 17(1) of the Act. The Apex Court further pointed out that the goods so exempted, not being 'taxable goods', cannot be brought to charge under Section 7-A. When the goods purchased, ordinarily liable to tax, were not taxed at the hands of the sellers, on account of they being agriculturists or house holders, or purchase from unregistered dealers and the purchased goods were subjected to any one of the enumerated circumstance therein, the charge under Section 7-A of the Act stood attracted. The Apex Court pointed out that the main object of Section 7-A is to plug leakage as well as to prevent evasion of tax. ....

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....a dealer in livestock purchased the same and transported to Kerala for slaughtering and to sell it as a meat. As per the notification in G.O.Ps. 1858 Revenue dated 6.9.1969 sales by any dealer of sheep, goat, cows, bulls, bullucks, pigs and other animals, for slaughter, were exempted from tax. Noting the fact that the exemption was a general one, the assessee was not liable to suffer purchase tax under Section 7-A of the Act. This Court pointed out "the focal point in the expression 'goods the sale or purchase of which is liable to tax under the Act' in Section 7-A of the Act is the guiding factor to determine whether or not the transaction is exigible to tax liability. The goods exempted, being not taxable goods, they could not be brought ....

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....e under Section 7-A was not attracted. This Court pointed out that the exemption granted to some other third parties who sold goods to the petitioner cannot come to the aid of the petitioner so as to avoid tax liability under Section 7A of the Act. Referring to the decision reported in [1975] 36 STC 191 STATE OF TAMIL NADU v. KANDASWAMI, this Court pointed out that the notification not being a general one, the assessee was not entitled to succeed in its contention as regards chargeability to Section 7-A of the Act. Referring to the decision reported in 1992 I MTCR 337 STATE OF TAMIL NADU v. MURUGAPPA & CO., this Court distinguished the same, holding that the notification therein enured to the benefit of the assessee therein, which was not s....

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...., were purchased at a point other than the taxable point specified in the First or the Second Schedule) and either - (a) consumes or uses such goods in the manufacture of other goods for sale or otherwise; or (b) disposes of such goods in any manner other than by way of sale in the State ; or (c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall pay tax on the turnover relating to the purchase aforesaid at the rate mentioned in sections 3, 4 and 5, as the case may be, whatever be the quantum of such turnover in a year. Provided that a dealer (other than a casual trader or agent of a non-resident dealer) purchasing goods (the sale of wh....