TaxTMI 
TaxTMI 
2017 (12) TMI 2
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....tion 3(3) of the TNGST Act, 1959, by issue of Form XVII declaration and used them in the manufacture of goods and effected export sales. The assessing authority rejected the claim of the assessee that the purchase turnover, under Section 3(3), corresponding to the export turnover, would not be assessed to tax under Section 3(4) of the TNGST Act, 1959 and assessed the turnover of Rs. 19,50,273/-, by adopting a formula at 1%, under Section 3(4) of the TNGST Act, 1959. Aggrieved by the same, the dealer has filed an appeal in A.P.No.1 of 2012, before the Appellate Deputy Commissioner (CT)-IV, FAC, Chennai, who partly allowed the appeal, by setting aside the assessment made, on the turnover of Rs. 19,50,272/- at 1%, under Section 3(4) of the TNGST Act, 1959. 3. Against which, the State has preferred a second appeal in S.T.A.No.34 of 2012, before the Tamil Nadu Sales Tax Appellate Tribunal (Main Branch) Chennai. Following the decision of this Court, in Tube Investment of India Ltd., v. State of Tamil Nadu reported in [2010] 36 VST 67 (Mad.), the Appellate Tribunal, vide order, dated 18.02.2013, has passed the following orders, "9. The learned State Representative would submit....
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....ch as it was rendered by the Honourable Tamil Nadu Taxation Special Tribunal and on the other hand, the case law relied on by the Counsel for the appellant (i.e.) 36 VST67, mentioned supra is the one rendered by the Honourable High Court of Madras and we are bound by the decision of the Division Bench of Honourable High Court of Madras only. 12. Though the State has contended in the grounds of appeal that the Appellate Deputy Commissioner (CT) ought to have seen that against the order of the Division Bench of the Honourable High Court of Madras, the State has filed SLP before the Honourable Supreme Court, the State has not filed any deferment petition to defer the hearing of the appeal and the learned State Representative is not able to furnish the Writ Appeal Number. He is not able to convince the Tribunal that the Writ Appeal has been taken on file. In such circumstances, since the State has not satisfied that SLPhas been filed and pending, the prayer sought for in this regard by the State is also not accepted. 13. Hence, we have no hesitation to hold, the first appellate authority following the ratio held by the Division Bench of Honourable Madras High Court of....
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....ribunal is correct in placing a construction on the expression "in any other manner" occurring under sub Section (4) of Section 3 of the Tamil Nadu General Sales Tax Act, 1959 would not include export sale within its ambit? (6) Whether the Appellate Tribunal has failed to appreciate that sections 3(3) and 3(4) of the Tamil Nadu General Sales Tax Act, 1959 are not designed as charging provisions as evident from the non-obstante clause occurring at the beginning of Section 3(3) of the said Act? (7) Whether the Appellate Tribunal has totally failed to consider that Tamil Nadu General Sales Tax Act, 1959 was enacted to levy tax on sales or purchases within the State of Tamil Nadu alone as evident from the pre-factory explanation to the said Act?" 5. In support of the substantial questions of law raised, Mrs.Narmatha Sampath, learned Special Government Pleader submitted that the Appellate Tribunal has grossly erred in interpreting the expression "does not sell the goods so manufactured "occurring in sub Section (4) of Section 3 of the TNGST Act, 1959, as including not only intra state but also export sale, without appreciating the fact that Section 3(3) and 3(4) of ....
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....ascertained or future goods, at the time of their appropriation to the contract of sale or purchase by the seller or by the purchaser, whether the assent of the other party is prior or subsequent to such appropriation." (ii) Sub-Sections (3) and (4) of Section 3 of the said Act, read as follows: "Section 3(3): Notwithstanding anything contained in (sub-section (2), (2-A) or (2-C), but subject to the provisions of sub-section (1), the tax payable by a dealer in respect of sale of any goods including consumables, packing material and labels, but excluding plant and machinery, to another dealer for use by the latter in the manufacture, and assembling, packing or labelling in connection with such manufacture inside the State, for sale by him of any goods other than ethyl alcohol, absolute alcohol, methyl alcohol, rectified spirit, neutral spirit and denatured spirit goods falling under Part A of the Third Schedule, goods falling under item 1 of the Sixth Schedule and arrack, shall beat the rate of only three per cent on the turnover relating to such sale: PROVIDED that the provisions of this sub-section shall not apply to - (a) any sale of high speed diese....
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....ion 3(3), the sale of any goods including consumables, packing materials and labels and excluding certain specific goods sold to another dealer for use by such dealer for manufacturing any other goods inside the State of Tamil Nadu for sale of any goods other than certain exempted goods, such sale would attract levy of only 3% by way of sales tax to be collected by the seller. The levy is however subject to Section 3(1) wherein the turnover limit for levy of tax has been prescribed. The proviso to Section 3(3) however makes it clear that any dealer after purchasing the goods by using Form-XVII violates the conditions of such purchase as stipulated in Section 3(3) and the declaration contained in Form-XVII but dispose of such goods in any other manner should pay the difference of tax payable on the turnover relating to sale of such goods at the rate prescribed under the Act and the 3% which is already paid. The second proviso prescribes that a separate stock account of the goods purchased by using Form-XVII should be maintained by the purchasing dealer. 25. As submitted by the learned counsel, the apparent purport of Section 3(3) is to provide a concession....
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....e Constitution. In fact there is a Constitutional embargo on the States to enact any law providing for levy of tax both on interstate sale or purchase as well as export sale that takes place to any territory outside the country. The apparent purpose is quite clear that in the case of interstate sale the same is covered by the provisions of the Central Sales Tax Act in which the respective States get a part of the tax collection. As far as the export sales are concerned, it is needless to state that in the national interest, when by virtue of such exports, considerable foreign exchange is earned, by way of incentives and to augment more of such exports, the levy of any tax on such export sale is prohibited. 30. In fact under Section 5(3) of the Central Sales Tax Act, the last sale or purchase of any goods preceding the sale or purchase occasioning the export is also to be deemed as export sales. Such extended definition of export making it applicable even to the last sale or purchase of any goods plays a vital role in the article to be exported. Ultimately it only implies that the Constitutional framers want to attach great signific....
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....ions made under the statute, etc) (iv) Purely administrative or executive orders." Applying the said principles to the facts of this case, as in the hierarchy of law, the Constitution provision will supersede any conflicting statutory provision, we hold that the interpretation sought to be laid on behalf of the State, to hold that Section 3(4) will apply to the export sale of the assesses will run counter to the well laid legal principles referred to above and the same cannot be countenanced. 33. On these grounds itself, it can be held that there would be no scope for invoking Section 3(4) in regard to the export sales of the goods manufactured. 34. When we examine the other submissions of the learned counsel appearing for the petitioners that the export sale is fully covered by the definition of 'sale' under Section 2(n) read along with Explanation 3(a) and thereby that is also a sale within the State, on that ground as well, no liability by way of tax can be fastened under Section 3(4) of the Act. The said submission of the learned counsel for the petitioners is also well founded. 35. When we examine Section 2(n) which de....
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....3(3) of the Act. 40. In view of our above conclusions, we have no hesitation to hold that such an export sale cannot be brought under the set of expressions "in any other manner" as used in Section 3(4) of the Act. 41. As rightly contended by the learned counsel for the petitioners, the said set of expressions having been used following the expression "for sale" and applying the maxim Ejusdem Generis, it can only mean and taken to the effect that any despatch to a place outside the State either by way of branch transfer or by transfer to an agent by whatever manner called, either for sale or for any other purpose, certainly it cannot be attributed to an export sale. It would be directly covered by the definition of 'sale' under Section 2(n) of the Act and thereby would not come within the exclusion of sale. We therefore need not have to even deal with the submission based on the comparison made by making a reference to Section 7(a), 7(b) and 9(b) of the Act. 42. On behalf of the State, heavy reliance was placed upon the decision of the Hon'ble Supreme Court reported in (1997) vol 107 STC 571 (STATE OF KARNATAKA VS. B.M.ASHRAF....
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....GST Act). From what has been laid down by the Hon'ble Supreme Court in the first blush, it does appear that irrespective of the fact that the sale of fish oil by the assessee therein was a sequel to an export order thereby governed by Section 5(3) of the CST Act, but, yet the Supreme Court held that such a sale cannot be construed as a 'Sale' in the State and consequently it does not fall within the Set of expressions specifically stipulated in Section 6(i) of the Karnataka GST Act. 44. But at the very outset, it will have to be stated that the said decision can be considered in the event of a question arising relating to the exigibility of tax (purchase tax) under Section 7-A of the Act. Consequently, it is relevant to note that in Section 6(i) of the Karnataka Act, a specific expression ' by way of sale in the State' has been used and the decision of the Hon'ble Supreme Court was primarily while interpreting the said expression contained in Section 6(i) of the Karnataka Act. It is well laid down principle that a judgment cannot be an authority for a proposition which was not canvassed before it. In this context, it wi....
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.... facts of the case and the reasoning contained therein. ..." 45. Applying the principles referred to in the above two decisions and the reliance placed upon Ashraf's case, it will have to be held that the said decision rendered in the context of the specific provisions contained in Section 6(i) of the Karnataka Act cannot be mutatis mutandis apply to the case on hand where Section 3(4) are worded differently. While in Section 3(4) the qualifying words are 'does not sell the goods so manufactured' and the expression by way of sale in the State as contained in Section 6(i) of the Karnataka Act is significantly absent in Section 3(4). Therefore, what are to be examined while applying Section 3(4) is as to whether the dealer after availing the concession rate of sale under Section 3(3) failed to effect a sale. It is unnecessary for that dealer to establish that such a sale was a 'sale either by way of intra state sale or export sale'. Keeping the above specific content of Section 3(4) in mind, when we examine, the definition of sale as contained in Section 2(n) read along with explanation 3(a) of the Act, the position becomes clear to the ....
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....sp; We may repeat what Pollock, C.B., said in Attorney-General Vs. Sillem. That "if this had been the object of our legislature, it might have been accomplished by the simplest possible piece of legislation ; it might have been expressed in language so clear that no human being could entertain a doubt about it". We think that in a taxing statute like the present which is intended to tax the dealings of ordinary traders, if the intention of the legislature were that in order to qualify a sale of goods for deduction, "resale" of it must necessarily be inside Delhi, the legislature would have expressed itself clearly and not left its intention to be gathered by doubtful implication from other provisions of the Act. The absence of specific words limiting "resale" inside the territory of Delhi is not without significance and it cannot be made good by a process of judicial construction, for to do so would be to attribute to the legislature an intention which has chosen not to express and to usurp the legislative function. ...." 47. Applying the ratio laid down therein and having regard to the specific provision contained in explanation 3(a) to Section 2(n) wherein, i....
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....st also be given effect to. The same would ordinarily mean "for the purpose of all the provisions of the said Act". ......" Applying the said ratio, it can be safely held that the export sale of the petitioners would squarely fall under the definition of 'sale'. 48. We therefore hold that the 'export sale' is also a 'sale' as contemplated in the first part of Section 3(4) of the Act and consequently the exigibility to tax as provided under the said Section cannot be applied. 49. On behalf of the assesses, reliance was placed upon 2002 8 SCC 139 (CEMENTO CORPORATION LTD VS. COLLECTOR, CENTRAL EXCISE). In paragraph 17, the Hon'ble Supreme Court held as under:- ".....17. In our view, the Tribunal and the Collector have incorrectly interpreted the provisions of Tariff Item 23 of the First Schedule to the 1944 Act. The tariff heading of the entry is "Cement.". Therefore when TI 23(2) speaks of "all others" it means "all other kinds or varieties of cement". It is axiomatic that if the product is not cement but can be used for some purposes like cement, such product is not cement.&nb....
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....goods) required by him for use in the manufacture or processing of goods for sale and issues Form 'C' to the selling dealer, the selling dealer shall be liable to pay tax only @ 4% as per Section 8(1) and not 10% as provided in Section 8(2), provided that the certificate of registration of the purchasing dealer specifies the class of goods purchased by him. (In case of declared goods, the selling dealer has to pay tax at the rate applicable to sale of such goods within the appropriate State.) It necessarily means that the selling dealer will collect (pass on) tax from the purchasing dealer only at the said concessional rate. The idea behind this provision is self-evident. It is to ensure that the price of the product manufactured by such purchasing dealers does not go up to the detriment of the consumers of those goods. The Parliament does not want to tax both the raw material and the finished goods at the full rate. Where the finished goods are meant for sale, the raw material utilised or consumed for the manufacture of said finished goods is taxed at the concessional rate, for the reason that the State derives revenue again by taxing the sale....
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....ned in the Orissa Sales Tax Act, in the context, where an Assessee, a registered dealer to the said Act, purchase certain goods from another registered dealer based on a declaration furnished by it for resale of the purchased goods in the state and the goods were however sold in the course of inter state trade, in that context, held as under at page 97:- " .....It is the admitted case of the assessee that the sales in question were the sales in the course of inter-State trade and if that is the position then the question of the same sales being the sales within the State did not arise. ......." Having regard to the peculiar facts involved in that case, the decision rendered therein cannot be applied to the facts of this case. 55. Similarly, the Division Bench decision reported in 45 STC 291 (PONNU SAW MILLS VS. THE STTE OF TAMIL NADU) cannot also be applied inasmuch as the said decision came to be rendered while applying Section 7-A of the Act. Inasmuch as the said section varies in very many degrees as compared to 3(3) and 3(4) of the Act, the same cannot be applied to the facts of this case. Similar is the decision reported in 87 STC 3....
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....es in relation to which it exercises jurisdiction. It does not extend beyond its territorial jurisdiction. (c) The position in regard to the binding nature of the decisions of a High Court on different Benches of the same court may be summed up as follows: (i) ....... (ii) A Division Bench of a High Court should follow the decision of another Division Bench of equal strength or a Full Bench of the same High Court. If one Division Bench differs from another Division Bench of the same High Court, it should refer the case to a larger Bench." (ii) In Rajasthan Public Service Commission v. Harish Kumar Purohit reported in (2003) 5 SCC 480, the Hon'ble Court held that a bench must follow the decision of a coordinate bench and take the same view as has been taken earlier. The earlier decision of the coordinate bench is binding upon any latter coordinate bench deciding the same or similar issues. If the latter bench wants to take a different view than that taken by the earlier bench, the proper course for it is to refer the matter to a larger bench. (iii) In State of Punjab v. Devans Modern Breweries Ltd., reported in (2004) 11 SCC 26, the Hon'ble S....
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....hich rendered the decision is moved and grants an interim stay of the decision pending the preferment of an appeal and grant of stay by the appellate Court, the decision continues to be operative. Indeed, non-compliance with the decision on the mere ground that an appeal is contemplated to be preferred or is actually preferred, and that, therefore, the matter is sub-judice, may amount to contempt of Court punishable under the Contempt of Courts Act, 1971." While observing thus, the Hon'ble Division Bench of the Himachal Pradesh High Court has considered a decision of the Hon'ble Supreme Court in Baradakanta Mishra v. Bhimsen Dixit reported in 1973 Crl.L.J. 19. 15. In Dr.Sajad Majid v. Dr.Syed Zahoor Ahmed reported in 1989 Crl.L.J 2065, a Hon'ble Division Bench of Jammu and Kashmir High Court, faced with a similar situation, like in the present case, has observed and ordered, as hereunder: "8. It is not disputed before us that SLP against the Court direction has been filled before the Supreme Court. It is also not disputed that no stay has been obtained against the implementation of the order but all the same the Court direction has been kept in abeyance b....