TaxTMI 
TaxTMI 
2019 (3) TMI 771
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....urchase of the same from the Worth Trust on account of the fact that the sale of the Worth Trust to the petitioner was exempted under a notification issued under Section 17 of the TNGST Act, 1959, in G.O.Ms.No.436 dated 19.04.1983? (ii) Whether, on the facts and in the circumstances of the case, the Honourable Sales Tax Appellate Tribunal committed an error of law in failing to note that the amendment brought about by insertion of a proviso to Section 3(2) of the TNGST Act, 1959 by Tamil Nadu Act 38 of 1996 effective from 17.07.1996 was only prospective in nature and did not apply to the assessment year in question?" 3.The facts which are necessary for disposal of the case are that the petitioner, who shall be referred to as the assessee, is a Public Limited Company incorporated under the Companies Act and registered on the file of the respondent under the provisions of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the TNGST Act") and Central Sales Tax Act, 1956 (hereinafter referred to as "the CST Act"). 4.The controversy involved in this revision pertains to imposition of tax under Section 3(2) of the TNGST Act on the assessee by treating ....
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....n. It is submitted that re-sale effected by the assessee as a second seller has not been disputed by the Revenue and in such circumstances, the question of payment of tax by the assessee does not arise, since the point of taxation in terms of the provisions of the Act is the first sale, i.e., the sale by Worth Trust to the assessee and this transaction is exempted in terms of the notification issued by the Government in G.O.Ms.No.436 dated 19.04.1983. The Tribunal had stated that the first taxable sale suffer tax and to that effect placed reliance on certain decisions which dealt with the scope of Section 10 of the TNGST Act. It is submitted that Section 10 of the TNGST Act would have no application to the facts of the present case, as it is not the case of the Revenue that there is no second sale made by the assessee and therefore, the question of proving the same does not arise. 7.The learned counsel further submitted that the Tribunal placed heavy reliance on the decision of the Division Bench of this Court in the case of Vasu General Traders vs. The State of Tamil Nadu [1987 66 STC 358] to state that the assessee's sale being the subsequent sale which is the first taxabl....
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.... notification issued by the State Government which has been explained by the Hon'ble Supreme Court in the case of Associated Cement Companies Ltd. vs. State of Bihar and others [(2004) 137 STC 389 (SC)] and Peekay Re-Rolling Mills (P) Ltd., vs. Assistant Commissioner and another [(2007) 6 VST 541 (SC)]. 10.It is submitted that the Revenue are likely to rely upon the decision of the Division Bench of this Court in the case of Ruchi Soya Industries Limited vs. Commercial Tax Officer, Harbour III Assessment Circle, Chennai and others [(2008) 12 VST 546 (Mad)]. It is further submitted that the said decision cannot be applied to the facts of the case, since it is a matter where the validity of section 7-A of the TNGST Act was called in question and it is in that context, the Court rendered the decision. 11.Further, the Hon'ble Supreme Court in the case of Sudesh Kumar vs. State of Uttarakhan [(2008) 2 SCCC 111] has held that a decision made on a provision of a different State will be of no relevance unless the underlying objects of the two statutes are in pari materia. 12.The learned counsel also placed reliance on the decision of the Division Bench of this Court in the....
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....emption which was granted in favour of WORTH Trust was only in respect of the organization and not on the commodity and therefore, the plea raised by the assessee is not sustainable. Reliance was also placed on the decision of the Hon'ble Supreme Court in the case of State of Kerala and others vs. Fr.William Fernandez and others [(2017) 12 Scale 463], wherein the Hon'ble Supreme Court while examining the effect of West Bengal Entry Tax Act with the other State Acts pointed out that in the West Bengal Entry Tax Act though there are words to indicate that entering into local area from any place outside the territory of India, the said inclusion of words 'from outside the India' is a provision made by way of abundant caution. Thus, by drawing inspiration from the said decision, the learned counsel submitted that Section 3(2) of the Act requires to be read in such a manner and the amendment which was made to the said provision has to be considered as a clarificatory. 16.We have heard the learned counsels for the parties and perused the materials placed on record. 17.The question of law, which we are called upon to decide, is whether the assessee is liable for paym....
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.... at the point of first sale in the State. 21.Before we proceed further, we need to understand what is the effect of an exemption from payment of tax. In Associated Cement Companies Ltd. (supra), the Hon'ble Supreme Court pointed out that literally, "exemption" is freedom from liability, tax or duty. Fiscally, it may assume varying shapes, specially, in a growing economy. An exemption provision is like an exception and normally, principles of construction of interpretation of statute have been construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. 22.In Peekay Re-Rolling Mills (P) Ltd. (supra), the Hon'ble Supreme Court after referring to the decision in the case of Associated Cement Companies Ltd., (supra), held that the question of exemption arises only when there is a liability, exigibility to tax is not the same as liability to pay tax, as the former depends on charge created by the statute and the latter on computation in accordance with the provisions of the statute and the Rules framed thereunder if any. Therefore, it was held that li....
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....ed a notification exempting the Forest Department from paying any sales tax in respect of the sales effected by it as from 1st April, 1959 to 2nd November, 1962. Placing reliance on the said notification, the assessee became retrospectively liable to pay sales tax in respect of the sales effected by it. The question, which fell for consideration, was whether the exemption given to the Forest Department creates a fresh levy on the assessee with retrospective effect. The Hon'ble Supreme Court pointed out that when the taxing events took place, the assessee was not liable to pay tax and its liability has to be determined as on those dates and having come to the conclusion that the assessee was not liable to pay any sales tax when the sales took place, the fact that the Forest Department was retrospectively exempted from paying tax from an earlier date cannot make the assessee liable to pay tax, which he was otherwise not liable to pay. Hence, it was held that the Government had no power to levy tax either prospectively or retrospectively and the power of the Government was merely to exempt one or more dealers from paying tax. Thus, the point of taxation can never be shifted. 26.The....
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.... has been granted to WORTH by way of exemption. 29.In Shanmuga Traders, ETC. (supra), the question was when the point of levy was fixed by the TNGST Act and the sale at that point was exempted by Government Notification, whether sale at other points can be taxed. This question was answered in favour of the assessee. 30.It is pointed out by the learned Special Government Pleader that the decision in the case of Shanmuga Traders, ETC. (supra), was in respect of declared goods under the provisions of Section 14 of the CST Act. In paragraph 7 of the judgment, the Hon'ble Supreme Court has taken note all the decisions on the point including the decision in the case of Vasu General Traders (supra), which was relied on by the Tribunal to dismiss the appeal filed by the assessee. Thus, the decision rendered by the Hon'ble Supreme Court is on a larger issue and this is explicitly clear on a reading of paragraph 14 of the judgment, which is as follows:- "14.There is no warrant for the emphasis that would appear to have been placed by the Madras High Court on the phrase "taxable sale". The State Act does not fix the single point of the levy at the first taxable sale; it fixe....
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....ted by the Division Bench of this Court on the ground that the exemption granted by the Government is not a general exemption. It is for the sale of handmade matches manufactured, and the sale by the person who purchases goods from the manufacturer, becomes the first taxable sale inside the State and this was pointed out by the Hon'ble Supreme Court in the case of Shanmuga Traders, ETC. (supra). 35.That apart, the decision in the case of T.Narayanaswami Naidu (supra) had not been noticed in the case of Vasu General Traders (supra). In addition to the above, the decision of the Hon'ble Division Bench of this Court in the case of V.Guard Industries Ltd. [(2004) 136 STC 562] (supra) comes to the aid and assistance of the assessee. In the said case, the assessment year under consideration was 1992-93, that is, much prior to the insertion of second proviso to Section 3(2) of the TNGST Act. The Hon'ble Division Bench noted that the TNGST Act was amended with effect from 17.07.1996 and the amendment of Section 3 of the TNGST Act provides for levy of sales tax on the second sale, if the first sale has not suffered tax for any reason, in cases where the point of levy is the first sale an....