TaxTMI 
TaxTMI 
2016 (5) TMI 597
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....Value Added Tax Act, 2006? (ii) Whether on the facts and in the circumstances of the case, the learned Appellate Tribunal was correct in law in holding that tax and penalty are imposable upon the petitioner under the provisions of the Tamil Nadu Value Added Act, 2006? and (iii) Whether on the facts and in the circumstances of the case, the learned Appellate Tribunal was correct in law in holding that the petitioner is not entitled to refund of tax inadvertently paid on countervailing duty discharged on the finished goods cleared from the petitioner's SEZ unit?" 2. We have heard Mr.C.Natarajan, learned Senior Counsel assisted by Mrs.Hema Murali Krishnan, appearing for the petitioner/assessee and Dr.Anita Sumanth, Special Government Pleader (Taxes) appearing for the State of Tamil Nadu. 3. The petitioner herein is a company which is authorised to carry on certain operations in their unit located within the Special Economic Zone at the SIPCOT Industrial Park, Sriperumbudur, Kancheepuram District. In the course of the authorised operations, the petitioner manufactured and sold Optix OSN Series Intelligent Optical Transmission Platforms, referred to as "Optic....
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....ting a letter dated 6.9.2010. 9. Pending receipt of the clarification from the department, the purchaser namely Huawei India made payment of Anti-Dumping Duty on the value of imported components. According to the petitioner, this payment was made by the purchaser, without any notice or intimation to the petitioner. 10. Subsequently, the Assistant Commissioner (Commercial Taxes) informed the petitioner by a letter dated 29.4.2011 that the value of Anti-Dumping Duty is to be included in the sale price, for the purpose of levy of CST under the CST Act, 1956. By another letter of the same date, the Assistant Commissioner (Commercial Tax) also issued a show cause notice proposing to compute the tax liability and also to impose penalty. 11. After the petitioner submitted a letter of objections dated 12.5.2011, the Assessing Officer passed an order dated 27.6.2011, finalising the assessment for the year 2010-11. This assessment order was passed only upon the Return filed by the petitioner. Therefore, the petitioner was lulled into a sense of false security. But it was short levied. 12. By a next notice dated 30.6.2011, the very same officer....
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....pose an Anti-Dumping Duty, whenever an article is exported by an exporter or producer from any country or territory, to India at less than its normal value. The dutiable event as indicated in sub-section (1) of Section 9A is the "importation" of such article into India. Section 9A(1) reads as follows:- "Where any article is exported by an exporter or producer from any country or territory (hereinafter in this section referred to as the exporting country or territory) to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article." 18. What is significant to note is that any export from any country or any territory into India is covered by this sub-section. Therefore, a Special Economic Zone which is considered to be a foreign territory located within the Indian territorial limits, is also included in sub-section(1) of Section 9A. Sub-section (1) also uses the expression "upon importation of such article into India". 19. Therefore, the contention of Mr.C.Natarajan, learned senio....
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....country, on which anti dumping duty is normally liable to be paid, converts the product into another before it is cleared from the Special Economic Zone, no anti dumping duty is attracted. But, we do not know how this decision is applicable to the case on hand. In this case, the person who cleared the goods from the appellant's Unit in Special Economic Zone, has paid the anti dumping duty. Therefore, today there is no dispute about the liability to pay anti dumping duty. Hence, this decision is of no avail to the petitioner. 23. In support of his contention that anti dumping duty paid after the point of sale at the gate of the Special Economic Zone by the purchaser by filing a bill of entry, cannot be included in the sale price, the learned senior counsel for the petitioner relied upon a few decisions. These decisions can be broadly classified into three different headings, namely (i) decisions which arose out of the inclusion of excise duty in the sale price for the purpose of determination of the turnover, (ii) decisions which arose out of the inclusion of customs duty in the sale price, (iii) decision dealing with the time of happening of the taxable event, and (iv) Decis....
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....ral Sales Tax Act or not. After analysing the rule position, the Supreme Court held that excise duty is levied upon goods manufactured or produced, by virtue of Entry 84 of List I and Entry 51 of List II of the Seventh Schedule and that its incidence falls on the manufacturer or producer. Therefore, by virtue of the definition of the expression "turnover" appearing in the Tamil Nadu General Sales Tax Act, 1959, the Court held that excise duty formed part of the turnover and that the fact that it did not physically enter the manufacturer's till, was not the decisive test for determining whether or not it would be part of the manufacturer's turnover. 26. In State of Kerala v. Madras Rubber Factory [(1998) 108 STC 583 (SC)], the Supreme Court was concerned with a question whether the cess payable under the provisions of the Rubber Act, 1947, will form part of the purchase turnover of the company under the Kerala General Sales Tax Act or not. In that case, the statutory liability for payment of cess was on the manufacturer. Therefore, the manufacturer contended that when they bought rubber from producers or dealers, the price paid by them did not include the cess that was pa....
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....cial Economic Zone to the Domestic Tariff Area shall be chargeable to duties of customs including anti-dumping, countervailing and safeguard duties under the Customs Tariff Act, 1975, where applicable, as leviable on such goods when imported; and (b) the rate of duty and tariff valuation, if any, applicable to goods removed from a Special Economic Zone shall be at the rate and tariff valuation in force as on the date of such removal, and where such date is not ascertainable, on the date of payment of duty. Domestic clearance by Units.Subject to the conditions specified in the rules made by the Government in this behalf:(a) any goods removed from a Special Economic Zone to the Domestic Tariff Area shall be chargeable to sales tax and additional sales tax under the Tamil Nadu General Sales Tax Act, 1959 and Tamil Nadu Additional Sales Tax Act, 1970 and the entry tax under the Tamil Nadu Entry of Motor Vehicles into Local Areas Act, 1990 and the Tamil Nadu Entry of Goods into Local Areas Act, 2001 where applicable, as leviable on such goods when imported; and (b) the rate of sales tax, additional sales tax and entry tax, if any, applicable to goods removed from a Special Econ....
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....r about the three decisions of the Supreme Court (McDowell, Mohan Breweries and Madras Rubber Factory) cannot be accepted. 33. The next decision relied upon by the learned senior counsel for the petitioner is the one in State of Rajasthan v. Rajasthan Chemists Association [(2006) 6 SCC 773 (SC)]. In that case, the Supreme Court was concerned with the validity of Section 4-A of the Rajasthan Sales Tax Act, 1994, by which sales tax was leviable not on the actual price, but on the MRP of the goods declared on the package. While upholding the judgment of the Rajasthan High Court declaring Section 4-A to be unconstitutional, the Supreme Court held that a tax cannot be levied on a person unconnected with the event nor the measure or value to which rate of tax can be applied, can be altogether unconnected with the subject of tax. This decision is relied upon by the learned senior counsel to drive home the point that when the anti dumping duty is paid after the point of sale, by the buyer, the same cannot be included in the turnover of the revision petitioner who is unconnected with the import. Decisions dealing with inclusion of customs duty in the sale price 34. In Gujarat Expor....
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....s "customs station", "crossing the customs frontiers of India" and "customs port" under the Customs Act, 1962, the Court held that the title to the goods had passed on to the buyer in that case before the clearance and crossing and that therefore, the sale effected by the dealer was one in the course of import. 37. But, the above decision is of no assistance to the petitioner herein. In the above case, this Court relied upon the decision of the Supreme Court in Kiran Spinning Mills Ltd. v. Collector of Customs [(1999) 113 ELT 753], for the proposition that a taxable event happens only upon the goods crossing the customs barrier and not the date on which the goods had landed in India or had entered the territorial waters. But, in the case on hand, the dutiable event had actually taken place at the time when the goods were imported into India. But, the payment of the duty was exempt by virtue of the provisions of the Special Economic Zones Act. This exemption got withdrawn at the time of removal of the goods to the Domestic Tariff Area. Therefore, neither Kiran Spinning Mills nor State Trading Corporation would go to the rescue of the petitioner. 38. Reliance is also placed upo....
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....il Nadu Indian Made Foreign Spirits (Supply by Wholesale) Rules, 1981, formed part of the sale price or not. This Court answered the question in favour of the assessee on the ground that vend fee had nothing to do with the manufacturer, but was collected for the grant of a privilege or license to sell Indian Made Foreign Spirit. 42. In Commissioner of Trade Tax, Uttaranchal v. Poltawaski TPS Power Services [(2009) 23 VST 410], the Uttaranchal High Court was concerned with the question whether the customs duty, insurance charges and port clearance charges not added to the price of the goods could be included within the "value of goods" as defined in Section 2(1)(e) of the UP Tax on Entry of Goods Act, 2000. The High Court answered the question in favour of the dealer and held that those charges could not be included in the purchase price for the purpose of arriving at the value of the goods to determine whether entry tax was payable or not. 43. We have carefully considered the decisions in Srinivasa Timber, Cauvery Sugars, Thiru Arooran Sugars, Mohan Breweries and Commissioner of Trade Tax, Uttaranchal. These cases are not comparable to the case on hand. They deal with s....
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....uty actually became leviable from the time of export from China into India, but was not actually collected due to the protective cover given by the Special Economic Zones Act. The moment the goods went out of this protective cover, the duty automatically got attached to the goods and hence, the inclusion of the same in the sale price for the purpose of levy of value added tax is in order. 48. The issue can be looked at from another angle also. The actual purpose of levy of anti dumping duty, as pointed out by the Supreme Court in Reliance Industries Ltd. v. Designated Authority [(2006) 10 SCC 368], is to maintain a level playing field for the domestic market, with the products that are exported into India. Tracing the history of the legislation providing for anti dumping duty, it was observed in Hyundai Motors India Ltd. v. Union of India (WP No.11683 of 2014 dated 12.12.2014), by one of us (VRSJ), as follows: "20. With the glasnost or the opening up of the Indian economy in 1992 and the creation of W.T.O. on 1.1.1995, the Indian perspective as well as the fiscal scenario here got completely changed. The Customs Tariff Act, 1975 (of India) was amended by Customs Tariff ....
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....sale price of a product or in the turnover, the levy of penalty should be avoided. In support of this contention, the learned senior counsel relied upon the decisions in Hindustan Steel Ltd. v. State of Orissa [(1969) 2 SCC 627], Union of India v. Rajasthan Spinning and Weaving Mills [(2009) 13 SCC 448] and Commissioner of Sales Tax v. Sanjiv Fabrics [(2010) 35 VST 1]. 51. In Hindustan Steel Ltd., the Supreme Court held that the liability to pay penalty under the Orissa Sales Tax Act, 1947, does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi criminal proceeding and penalty will not ordinarily be imposed unless the party either acted deliberately in defiance of the law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. The Court also pointed out that penalty will not also be imposed merely because it is lawful to do so. 52. In Rajasthan Spinning and Weaving Mills, the Supreme Court pointed out that the issues relating to (i) recovery, (ii) interest, and (iii) penalty are dealt with in Sections 11-A, 11-AA, 11-....
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....udgment assessment dated 21.10.2011. In this order, the Assessing Officer imposed a penalty at 150% under Section 27(3)(c). 56. No finding of fact was recorded by the Assessing Officer (i) as to how he was satisfied, and (ii) as to whether there was wilful non disclosure of assessable turnover. In fact, no finding to this effect could have been recorded by the Assessing Officer in view of the fact that the whole thing was brought to the notice of the Assessing Officer by the petitioner themselves by their letter dated 06.9.2010 seeking a clarification. 57. Before the Appellate Deputy Commissioner, the assessee raised an objection with regard to penalty. In one paragraph, the Appellate Authority held that there was a wilful intention on the part of the assessee to evade the taxes by adopting a device and by filing incorrect and incomplete returns. In other words, the Appellate Authority did not also address himself to the question as to whether there was wilful non disclosure or not. 58. Unfortunately, the Tribunal also misdirected itself on this issue. Therefore, we are of the considered view that the second question of law has to be answered in favour of the revision peti....