TaxTMI 
TaxTMI 
2023 (3) TMI 226
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....l exemption and would attract the levy of purchase tax under Section 12 of the Tamil Nadu Value Added Tax, 2006 (hereinafter referred to as "the TNVAT Act"). 2. It is submitted by the Counsel for the Petitioners and the respondents that the facts and issues are common in all the writ petitions. 3. The Petitioners in this batch of Writ Petitions purchased Pulses and Grams from registered dealers. Entry 68 of Part B to the Fourth Schedule to the TNVAT Act exempts sales of pulses and grams by any dealer whose turnover does not exceed Rs.500 Crores in a year in respect of the goods mentioned in the said Entry. The turnover of the dealers from whom the purchases were effected by the petitioners was admittedly less than Rs.500 Crores in a year and thus entitled to exemption under the Entry 68 of Part B to the Fourth Schedule of the TNVAT Act. The selling dealer had claimed exemption in terms of the said Entry. Thus the purchases of pulses and grams did not suffer any tax. Admittedly the petitioners despatched/transferred the pulses and grams so purchased to places outside the State, otherwise than by way of sale. Orders of assessment came to be passed levying purchase tax under Sec....
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....ulses and grams purchase tax U/S 12(1) Assessment & demand Assessment order passed by STO Exemption U/S.15 Penalty was not imposed 11. Shree Vishnu Enterprises 24841/2022 2014-15 Pulses and grams purchase tax U/S 12(1) Assessment & demand Assessment order passed by STO Exemption U/S.15 Penalty was not imposed 12. Shree Vishnu Enterprises 24842/2022 2015-16 Pulses and grams purchase tax U/S 12(1) Assessment & demand Assessment order passed by STO Exemption U/S.15 Penalty was not imposed 13. Sri Durgaiamman Traders 24844/2022 2014-15 Pulses and grams purchase tax U/S 12(1) Assessment & demand Assessment order passed by STO Exemption U/S.15 Penalty was not imposed 14. Sri Durgaiamman Traders 24845/2022 2015-16 Pulses and grams purchase tax U/S 12(1) Assessment & demand Assessment order passed by STO Exemption U/S.15 Penalty was not imposed 15. Sri Durgaiamman Traders 24846/2022 2016-17 Pulses and grams purchase tax U/S 12(1) Assessment & demand Assessment order passed by STO Exemption U/S.15 Penalty was not imposed 16. Sri Durgaiamman Traders 24847/....
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....ew of the above submission I intend to examine as a preliminary issue if the above submission of the Revenue has merit. 5. I would therefore refer to the judgments which in the view of the revenue would cover the issue raised in this batch of writ petitions. In this regard, it may be relevant to refer to the following extracts/portions of the said judgments: i) Ruchi Soya Industries Limited vs. CTO, 2008 (12) VST 546: "2.The Petitioner has preferred W.P.No.29700 of 2004 before this Court for a Writ of Declaration that the power of the State to levy purchase tax under Section 7A on goods purchased, the sale of which enjoyed exemption under the notification issued under Section 17 and sent on consignment basis to outside the State otherwise by way of sale under Section 7A(1)(c) of the Tamil Nadu General Sales Tax Act, 1959 is unconstitutional and beyond the legislative competence of the State under Entry 54, List II of the Seventh Schedule to the Constitution of India and ultra vires Entry 92B of List I of the Seventh Schedule to the Constitution and void as repugnant to Article 14.... 29. A reading of the various decisions of the Supreme Court on the question....
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.... less than Rs.300 Crores was exempt by a notification issued by the State Government in exercise of its powers as a delegatee under Section 17 of the TNGST Act. The petitioner/assessee had purchased edible oil from registered dealers who claimed exemption under the said notification as the turnover of the selling dealer was less than the turnover stipulated in the said notification viz., Rs. 300 crores and consumed/used the said oil/goods purchased in the manufacture of biscuits. Purchase tax was levied under Section 7A of the TNGST Act, such levy of purchase tax was challenged. The challenge was rejected by the Division Bench holding that the exemption with reference to turnover of a dealer is conditional and section 7A of the TNGST Act stood attracted to cases of conditional exemption as held in Ruchi Soya and the contention by the assessee's do not deserve any further consideration as could be seen from the following extracts:- "..5. We do not think that the contention taken by the learned counsel for the assessee survives any more or for our consideration since the same was considered by this Court in the decision reported in (2008) 12 VST 546 - Ruchi Soya Industri....
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....Soya Industries Ltd. Commercial Tax Officer, Special Leave Petitions were filed by the assessee and the same were dismissed by the Apex Court in C.C.13571 to 13574 of 2008 by order dated 13.10.2008." (emphasis supplied) iii) India Cements Limited vs. State of Tamil Nadu and Another, 2012 (51) VST 286 (Mad): The Division Bench proceeded to hold that a purchase made against a conditional exemption would fall within the meaning of the expressions, "in circumstance in which no tax is payable", employed in Section 7A of the TNGST , thereby attracting the charge under Section 7A of the TNGST Act as could be seen from the following extract:- "..9. A reading of these decisions of this court and in the context of the decision reported in [1993] 88 STC 98 (SC) (Hotel Balaji v. State of Andhra Pradesh) and [1975] 36 STC 191 (SC) (State of Tamil Nadu v. M. K. Kandaswami), it is thus clear that the scheme of purchase tax levy under section 7A of the Act does not cover cases of sale or purchase of goods totally exempted from tax at all points under section 8 or section 17(1). However, where the exemption is a qualified one, be it goods related or dealer related, purchase or sal....
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....ld be liable to pay tax under Section 12 of the TNVAT Act, if his turnover exceeds the turnover prescribed/ stipulated as a condition for exemption. However, when the matters were carried in appeal before the Division Bench of this Court in W.A.No.2549 of 2021 and W.A.(MD)Nos. 557, 611 to 614, 647 to 653, 666 and 667 of 2019, the finding/observations rendered by the learned Judges in both the matters were vacated and the assessing officer was directed to take an independent decision uninfluenced by any of the observations contained in the orders of the learned Single Judges. 7. Now in the background of the above judicial pronouncements, I shall proceed to examine the submissions made by the Counsel for the assessees/petitioners and Revenue: 8. Case of the Assessee's/Petitioners: a. Learned counsel for the petitioners Mr.R.D.Ganesan and Mr. A.Chandrasekaran, would contend that the above judgments relied upon by Respondents are not relevant as those judgments dealt with provisions under the TNGST Act in the context of exemption granted by way of notification under Section 17 of the TNGST Act. On the other hand, the subject exemption is granted under an Entry to the....
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....l for the Respondents reiterated their preliminary objection that the issues raised are no longer res integra and have been examined on more than one occasion by Division Benches of this Court in the case of Ruchi Soya, Britannia Industries Limited and India Cements Limited. The attempt to revisit the same is without reason and must be rejected. Further, the distinction sought to be made between exemption by way of notification and exemption under Entry in the Schedule is artificial, misconceived and non-existent. The submission that the petitioners would be entitled to Input Tax Credit in terms of sub-section (2) to Section 12 of the TNVAT Act, independent of the restrictions under Section 19 of TNVAT Act is baseless, unfounded and would distort the Scheme of Input Tax Credit under the TNVAT Act. Pulses and grams are declared goods and would normally fall under Entry 41 of Part B to the I Schedule of the TNVAT Act liable to tax at 5%. Thus the argument that there is no rate of tax provided is misplaced. 10. Heard both sides. Perused the material on record. 11.Object of Purchase Tax: 11.1. It may be relevant to set out broadly the object and purpose of levying purchase tax....
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.... of section 3 or section 4, were purchased at a point other than the taxable point specified in the First, the Fifth, the Eleventh or the Second Schedule], respectively, and either, - (a) consumes or uses such goods in or for 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, (c) despatches or carries 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, or (e) installs and uses such goods in the factory for the manufacture of any goods shall pay tax on the turnover relating to the purchase aforesaid at the rate mentioned in sections 3 or 4, as case may be. Section 7-A(2). Notwithstanding anything contained in sub-section (1), the provisions of section 7 shall apply to a dealer referred to in sub-section (1) who purchases goods the sale of which is liable to tax under sub-section (1) of section 3 and whose total turnover for a year is not less than one lakh of rupees but not more than two lakhs of rupees, and such a dealer may, at his option instead of paying the tax in accordance with the provisions of sub-....
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....ject exemption is not conditional inasmuch as the exemption flows from the Schedule to the Act unlike in the judgments rendered under the TNGST Act, which were case of exemptions under notifications. 11.3.2. The question is would that make any difference. I would think it would not, for the above submission overlooks the fact that those judgments rendered under the TNGST Act, turned on the basis that exemptions were conditional, which was found to be a circumstance in which no tax is payable attracting the levy of purchase tax. Importantly, Section 12 of the TNVAT Act employs the very same expressions "in circumstances in which no tax is payable", which was considered and explained by Division Bench judgment of this Court. Thus the above judgments would continue to bind insofar as interpretation of the said expressions employed in Section 12 of the TNVAT Act. 11.3.3.That the above contention is misplaced would also be clear from the fact that the expressions "in circumstances in which no tax is payable" is explained by the Hon'ble Supreme Court in M.K. Kandaswami's case as taking within its fold purchases made from agriculturist and purchases made from dealers with a ....
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....ld be liable to tax on the purchase-turnover of these goods." (emphasis supplied) Purchases made from an entity which in terms of the provisions under the primary enactment are outside the purview of the charging provision, has been explained as "a circumstance in which no tax is payable", attracting the levy of purchase tax. If so, the contention that the judgments rendered under the TNGST Act would have no bearing as it dealt with exemptions by way of notifications while the present exemption is granted under the Schedule to the Act on the premise which forms part of the Act is misplaced and liable to be rejected. Yet another reason to why the above contention is misplaced is in view of Section 15 of the TNVAT Act which reads as under: "15. Exempted Sale.-- Sale of goods specified in the Fourth Schedule and the goods exempted by notification by the Government by any dealer shall be exempted from tax." A reading of the above provision would suggest exempted sale for the purpose of Section 15 of the TNVAT Act is both goods specified in the Fourth Schedule as well as goods exempted by way of notification issued by the Government. It does not matter whether the e....
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....and grams by a dealer with a turnover in excess of Rs. 500 Crores in a year in respect of the said goods would not be entitled to exemption but liable to tax under Section 3(2) of the Act read with Entry 41 of Part B of the First Schedule to the TNVAT Act at 5%. The fact that the exemption is conditional would also be evident by contrasting it with some of the other exemptions ( conditional/unconditional) granted under the Schedule to the TNVAT Act. The following Table is relevant:- TABLE A. GENERALLY EXEMPTED GOODS Entry no Description Commodity code Number 4 Appalam, pappad, vadam and vathal 704 8 Bagasse 708 13 Broom sticks 713 14 Candles 714 16 Charcoal 716 23 Earthen pot and pottery items 723 25 Electrical energy 725 34 Garlic and ginger 734 40 Handicrafts. (For Thanjavur Plates, see item No. 6(12) of the Notification dated 23rd March 2007 740 41A Handmade Locks 44 Hank Yarn 744 TABLE B. CONDITIONALLY EXEMPTED GOODS Entry no Description Commodity code Number 18 Chillies and chilly powder, coriander and coriander powder, turmeric and ....
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.... purchases was made "in circumstances in which no tax is payable". A conditional exemption has been held "to be a circumstance in which no tax is payable" by three Division Bench judgments referred supra. Thus reliance on the above judgment would have no relevance in determining the scope of Section 12 of the TNVAT Act, where the legislature has looked at payability and not exigibility or liability. Further, the Division Bench of this Court in Ruchi Soya has considered the judgment in Associated Cement, while holding that conditional exemption would constitute a "circumstance in which no tax is payable" for the purpose of purchase tax. 13. Rate of Tax- Not provided - Purchase tax is not attracted: The submission that pulses and grams are not liable to purchase tax inasmuch as there is no prescribed rate of tax is misconceived. Pulses and grams are Declared Goods in terms of Section 14 read with Section 15 of the Central Sales Tax Act. Entry 41 of Part B of the first Schedule to the TNVAT Act provides for levy of taxes on Declared Goods at 5%. Pulses and Grams being declared goods would be liable to tax at 5%, but for the conditional exemption granted under the Fourth Schedule....
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....er in the case of purchase tax under Section 12 of the TNVAT Act, the taxes are not paid by the purchasing dealer to the selling dealer instead the levy/ charge is on the purchasing dealer and he is required to discharge the obligation/liability. But for the non-obstante clause in sub-section (2) to Section 12 of the TNVAT Act the taxes paid under section 12 of TNVAT Act may not qualify as Input Tax Credit within the meaning of Section 2(24) of the TNVAT Act. With a view to give effect to the object of legislature viz., to grant Input Tax Credit of purchase tax under Section 12 of the Act, the non-obstante clause is employed with reference to Section 2 (24). Importantly, the non-obstante clause is limited in its operation to Section 2 (24) of the TNVAT Act and does not cover Section 19 of the TNVAT Act. Thus a construction that the non-obstante clause contained in sub-section (2) to Section 12 of the TNVAT Act, as operating even with reference to Section 19 of the TNVAT Act, would result in extending the scope of the non-obstante clause beyond the purpose for which it was enacted. A construction which ought to be avoided. As a matter of fact, there are provisions under the TNVAT Ac....
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....Such construction ought to be avoided for the Court cannot aid the legislature, it cannot add or amend the provision [Crawford vs. Spooner, (1846) 6 Moore PC]. It is contrary to all rules of construction to read words into an Act [Smt.Renula Bose vs. Rai Manmathanath Bose, AIR 1945 PC 108]. Similarly it is wrong and dangerous to proceed by substituting some other words for words of the statute [Pinner vs. Everett, (1969) 2 All ER]. The court cannot re-frame the legislation for the reason that it has no power to legislate. c. Different words different meaning This Court had found that the legislature has employed the non-obstante clause differently through the Act, while in some provisions the non-obstante clause is very wide, in some cases it is limited to a particular provision or provisions. The non-obstante clause under sub-section (2) to Section 12 of the TNVAT Act, is limited in its operation to section 2 (24) of the TNVAT Act. If the intention of legislature of employing the non-obstante clause in sub-clause (2) to Section 12 of the Act, was to override Section 19 of TNVAT Act it would have provided for it expressly in sub-section (2) to Section 12, as done in various o....