TaxTMI 
TaxTMI 
2021 (2) TMI 835
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Central Sales Tax Act, 1956. 4. Before dealing with the merits and demerits of the case, I shall briefly refer to the facts of the case. The petitioner had obtained Certificate of Registration on 09.06.2006 under the provisions of the Central Sales Tax Act, 1956 from the respondent Commercial Tax Department. 5. The Registration Certificate granted to the petitioner specifies that the business of the petitioner was to chemically treat and process dyeing effluents, sewage water etc. 6. There is an endorsement in the Registration Certificate, as per which, the petitioner can procure goods for re-sale and for manufacture and processing of goods for sale against Form C. 7. The petitioner had procured goods from a dealer outside the State of Tamil Nadu and gave Form C to the said dealer, thereby, enabling the dealer to pay CST at concessional rate of tax under Section 8(3)(b) of the Central Sales Tax Act, 1956. 8. The petitioner transferred some of the goods procured at concessional rate of CST against Form C to some of its sister units which were also engaged in provision of similar services to dyeing units in and around Noyyal River, where, the directors of the petition....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d counsel for the respondent commercial tax department submits that the impugned order passed by the respondent was well reasoned and requires no interference in this writ petition. He further submits that under Section 10-A of the Central Sales Tax Act, 1956, mens-rea was not an ingredient. 16. It is further submitted that even otherwise diversion of the goods procured at concessional rate of tax against Form C to a sister concern was clearly in violation of the declarations and therefore the submission that the goods were diverted only to a sister concern was of no avail against. He submits that the respondent has correctly imposed the penalty on the petitioner under Section 10-A of the Central Sales Tax Act, 1956. 17. It is further submitted that not only the petitioner but also its sister companies were organised under the provisions of the Companies Act, 1956 and therefore they cannot feign ignorance of law and therefore, the impugned order passed by the respondent cannot be interfered with. 18. I have heard the learned counsel for the petitioner and the learned counsel for respondent. I have also perused the impugned order passed by the respondent and the notice issu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rm-C No. T.N. 2006-C-BB-728640 for a sum of Rs. 16,22,05,300/-. 27. The respective Form C were utilised against goods procured from the supplier dealer for direct supply to their sister concerns with different TIN numbers which are as follows:- C FORM NO. TN - 2006 - C - BB - 728639 Sl. No. Invoice No. Date Invoice to Consumed by Value (Rs.) Name TIN Name TIN 1 As per enclosure Tvl. Noyyal CFT Co. Ltd., 33092403702 Arulpuram CETP Co. Pvt. Ltd., 33036246196 2060000 2 Tvl. Noyyal CFT Co. Ltd., 33092403702 Kallikadu CETP Co. Pvt. Ltd., 33912325651 2000000 3 Tvl. Noyyal CFT Co. Ltd., 33092403702 Rayapuram CETP Co. Pvt. Ltd., 33202467419 2060000 4 Tvl. Noyyal CFT Co. Ltd., 33092403702 Tirupur Murugampalayam CETP Co. Pvt. Ltd., 33752394027 3205000 Total 9325000 C FORM NO. TN - 2006 - C - BB - 728640 Sl. No. Invoice No. Date Invoice to Consumed by Value (Rs.) Name TIN Name TIN 1 As per enclosure Tvl. Noyyal CFT Co. Ltd., 33092403702 Arulpuram CETP Co. Pvt. Ltd., 33036246196 35407265 2 Tvl. Noyyal CFT Co. Ltd., 3....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 8(1) of the Central Sales Tax Act, 1956, every dealer who in the course of interstate trade or commerce, sells to a register dealer, goods of the description referred to in Sub- Section (3), shall be liable to pay tax under the Act, which shall be 4% of turnover or at the rate applicable to the sale or purchase of the goods inside the appropriate State under the sales tax law of that State, whichever is lower. 35. Under Section 8(3)(b) of the Central Sales Tax Act, 1956, procurement at concessional rate of tax is available to a class or classes of goods specified in the certificate of registration of the registered dealer purchasing the goods as being:- i. intended for resale by him; or ii. subject to any rules made by the Central Government in this behalf , (a) for use by him in the manufacture; or processing of goods for sale; or (b) in the telecommunication network; or (c) in mining; or (d) in the generation; or (e) distribution of electricity or any other form of power. 36. For the purpose of procurement under Section 8(3)(b) of the Central Sales Act, 1956, Rule 13 of the Central Sales Tax (Registration and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, the plain bottles are themselves commercial commodities and can be sold and used as such. By the process of printing names or logos on the bottles, the basic character of the commodity does not change. They continue to be bottles. It cannot be said that but for the process of printing, the bottles will serve no purpose or are of no commercial use. 41. However, the treated effluent was not sold by the petitioner. Therefore, the petitioner was not entitled to issue Form C to the selling dealer from Ahmedabad. 42. The petitioner has provided a taxable service within the meaning of Finance Act, 1994. The service provided as a Common Effluent Treatment Plant Operator for treatment of effluent was exempted from Service Tax w.e.f. 01.04.2015 vide Notification No.6/2015-ST dated 01.03.2015. The exemption was added to entry mega exemption Notification No. 25/2012-ST dated 20.06.2012. 43. Prior to this exemption, services provided by an association of dyeing units in relation to common effluent treatment plants was exempted from payment of Service Tax vide Notification No. 42/2011- ST dated 25.07.2011. 44. The scope of the exemption was expanded with retrospective effect fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....under:- 7. Having effectuated the directions recorded in the foregoing paragraphs, the next step would be, to set up common effluent treatment plants. We are informed, that for the aforesaid purpose, the financial contribution of the Central Government is to the extent of 50%, that of the State Government concerned (including the Union Territory concerned) is 25%. The balance 25%, is to be arranged by way of loans from banks. The above loans, are to be repaid, by the industrial areas, and/or industrial clusters. We are also informed that the setting up of a common effluent treatment plant, would ordinarily take approximately two years (in cases where the process has yet to be commenced). The reason for the above prolonged period, for setting up "common effluent treatment plants", according to the learned counsel, is not only financial, but also, the requirement of land acquisition, for the same. 8. In view of the fact that the financial position has been taken care of, as has been expressed above, we are of the view, that the setting up of "common effluent treatment plants", should be taken up as an urgent mission. With reference to common effluent treatment plant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....overnment (Union Territory) concerned, through the Secretaries, Urban Development and Local Bodies, respectively (depending on the location of the respective common effluent treatment plant). The norms for generating funds for setting up and/or operating the "common effluent treatment plant" shall be finalised, on or before 31-3-2017, so as to be implemented with effect from the next financial year. In case, such norms are not in place, before the commencement of the next financial year, the State Governments (or the Union Territories) concerned, shall cater to the financial requirements, of running the "common effluent treatment plants", which are presently dysfunctional, from their own financial resources. 11. Just in the manner suggested hereinabove, for the purpose of setting up of "common effluent treatment plants", the State Governments concerned (including, the Union Territories concerned) will prioritise such cities, towns and villages, which discharge industrial pollutants and sewer, directly into rivers and water bodies. 52. These passages indicate the primary responsibility is on the State Government and local bodies to run and operate Common Effluent Treatme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Schedule to the Central Excises and Salt Act, 1944, from the payment of excise duty in excess of Rs. 4.36 per kilolitre at 15 degrees centigrade if used in the manufacture of ammonia provided such ammonia was used elsewhere in the manufacture of fertilisers" and the procedure set out in Chapter X of the said rules was followed. 58. A question arose as to whether the ammonia used in the off-site plants was also ammonia "used" in the manufacture of fertilisers". Therefore, the offsite plants belonged to the manufacturers. The Court held as follows:- "These off-site plants are part of the process of the manufacture of urea. There is no good reason why the exemption should be limited to the raw naphtha used for producing ammonia that is utilised directly in the urea plant. The exemption notification does not require that the ammonia should be used directly in the manufacture of fertilisers. It requires only that the ammonia should be used in the manufacture of fertilisers. The exemption notification must be so construed as to give due weight to the liberal language it uses. The ammonia used in the water treatment, steam generation and inert gas generation plants, which ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Sales Tax Act, 1956. 65. Perhaps, there was a local exemption under Section 8(2)(c) of the Act and therefore, no tax was charged by the supplier. It is also not clear why the petitioner has issued Form-C No.TN-2006-C-BB-728640 (Annexure II Invoices) for the proportionate of value of goods covered by Invoices in Annexure II(A), (B) and (C) if no tax was charged in the invoice by the supplier. 66. If the goods cleared against invoices in Annexure II(A),( B) and (C) were exempted, the petitioner was not required to issue Form-C. There is no proper explanation forthcoming either in the reply or in the affidavit filed in support of the present writ petition as to why the petitioner issued Form-C No.TN-2006-C-BB-728640 (Annexure I) to the supplier. It shows complicity on the part of the petitioner to facilitate evasion of Central Sales Tax. 67. As the petitioner was not entitled to issue Form C to the supplier, in my view, there is no error in the impugned order seeking to impose penalty under Section 10-A of the Central Sales Tax Act, 1956. 68. Under Section 10 of the Central Sales Tax Act, 1956, for such offences, the petitioner is punishable with imprisonment which may ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....goods would be liable to normal tax contemplated under sub-section (2) of Section 8. Therefore, the penalty should be worked out only on the basis of the normal rates prescribed under sub-section (2) of Section 8. That would make sense. That is a reasonably possible construction. That would avoid absurd result. 70. The Court there considered the various conflicting view and ultimately held that it must remember that the provision is a penal provision. It has to be further borne in mind that the expression "if" is not same as "as if" nor does it contemplate a deeming provision. It has also to be borne in mind that the provision was introduced for the imposition of penalty in lieu of prosecution. The purpose of the Act and the object of a particular section have to be borne in mind. 71. The Hon'ble Court agreed with the views expressed by the Orissa High Court in Bisra Limestone Co. Ltd. Vs. STO, (1971) 27 STC 531 (Ori), Jammu and Kashmir High Court in Assessing Authority Vs. Jammu Metal Rolling Mills, (1976) 37 STC 129 (Guj), the High Court of Kerala in Kottayam Electricals (P) Ltd. Vs. State of Kerala, (1976) 37 STC 129 (Guj), the High Court of Mysore in M. Pais & Sons Vs. St....