TaxTMI 
TaxTMI 
2023 (3) TMI 226
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....urchase 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 Section 12 of the TNVAT Act, on the premise that t....
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....x 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 24847/2022 2017-18 Pulses and grams purchase tax U/S 12(1) Assessment & demand Assessment order passed by STO Exemption U/S.15 Penalty was not imposed 17. Tvl.C.Marimuthu 19298/2022 2010-11 Pulses and grams purchase tax U/S 12(1) Assessment & demand penalty Assessment order passed by STO Exemption U....
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....referred 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 of purchase tax show that every aspect projected in this case has been considered right from (1969) 24 STC 343 (SC) (Ganesh Prasad Dixit V. Commissioner of Sales Tax, Madhya Pradesh), (1972) 30 STC 537 (Ker); ... and there is hardly any justification in the contentions of the learned counsel appearing for the assessee. ..31.The policy of law is to tax every transaction of sale either at the point of sale or at the point of purchase. Exemption is granted either....
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....hase 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 Industries Ltd. V. Commercial Tax Officer, to which one of us is a party. A contention similar to what is now argued was made by the learned counsel herein in the said reported decision relating to the very same assessment year 1999-2000, 2000-01. The contentions were rejected by this Court after elaborately considering to the scope of Section 7A of the Act. Referring to Section 3(2) as applicable to the assessment year under consideration, this Court held that goods falling under I Schedule suffer ....
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....yed 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 sale of goods subjected to any of the contingencies enumerated under section 7A, would certainly attract the charge under section 7A of the Act. Going by these decisions, we have no hesitation in rejecting the plea of the assessee that the notification granting exemption to sale by Tamil Nadu Electricity Board cannot be considered as a circumstance to apply to the assessee to exclude the charge under section 7A of the Act. 10. The amendment brought to section 7A of the Act with effect from January 1, 1987 by not....
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....ontained 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 Schedule to the TNVAT Act. The Schedule to an Act is part of the enactment and thus exemption under a Schedule cannot be equated with exemption by way of a notification. It was submitted that the exemptions having been granted under the Schedule to the Act would make a material difference insofar as the applicability of the judgments rendered under the TNGST Act, while construing the applicability of purchase tax under TNVAT Act. b. Decisions rendered under the erstwhile regime i.e., TNGST Act would not have bearing under the TNVAT....
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....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. The provision levying purchase tax is by itself a charging provision as well as a remedial provision, the main object being to plug the leakage and prevent evasion of tax. In this context it is useful to refer to the judgement of the Hon'ble Supreme Court in State of T.N. v. M.K. Kandaswami, (1975) 4 SCC 745, wherein, the object of levy of purchase tax was explained. The relevant portions is extracted hereunder: "It may be remembered that Section 7-A is at once a charging as well as a remedial provision. Its main object is to plug leakage and prevent evasion of tax. In interpreting such a provision, a construction w....
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....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-section (1), pay tax at the rates mentioned in sub-section (1) of section 7: Provided that this sub-section shall not apply to the purchase made on or after the 1st day of April, 1990. Section 7-A (3). Every dealer liable to pay purchase tax under sub-section (1), shall, for the purpose of this Act, be deemed to be a registered dealer. 12. Levy of purchase tax .- (1) Subject to the provisions of sub-section (1) of section 3, every dealer, who in the course of his business purchases from a registered dealer or from any other person, any goods (the sale or purchase of which is liable to tax under this Act), in circumstances in which no tax is payable ....
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....nd 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 turnover below the threshold stipulated under sub-section (1) to Section 3 of the TNGST Act. Both are circumstance in which tax is not payable in view of stipulations contained in Sub-section (1) to Section 3 of the TNGST Act, 1959, which is the charging section. However, the Hon'ble Supreme Court held that the above purchases would fall within the meaning of the expressions "in circumstances in which no tax is payable", thereby attracting the levy of purchase tax. The relevant portions of the judgment is extracted hereunder: "24. In all the forty appeals under consideration, the goods in question, namely, arecanuts, gingelly seeds, turmeric, grams, castor seeds and bu....
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.... 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 exemption is by way of an Entry in the Schedule to the Act or through a notification for the purpose of Section 15 of the TNVAT Act. This in my view would also make evident that the legislative intent is not to treat the nature of exemptions differently based on the legislative device by which it is granted. Thus the submission that merely because exemptions are granted under the Schedule to the TNVAT Act would result in judgments rendered under the TNGST Act in the context of exemptions granted under a notification as irrelevant is rejected. 11.4. Exemption on the basis of turnover - Whether Conditional: On a reading of the judgments of this Court in Ruchi Soya, Britannia India and India Cements, it w....
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....s 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 turmeric powder, shikakai and shikakai powder, tamarind and asafetida (Hing) sold by any dealer whose total turnover in respect of those item does not exceed rupees three hundred crores in a year 718 29 Fly Ash sold to brick manufacturers 729 735 Gauze or bandage cloth produced or manufactured in power-loom sold by a dealer whose aggregate turnover does not exceed Rupees One 4 [***] crore in a year. 735 38 Goods taken under Customs bond for re-export after manufacturing or otherwise. 738 38A Goods which are used for agricultural / horticultural purposes, namely:- (a) Chemical Fertilizers (b) Insecticides, Pesticides, Rodenticides, Weedicides, Fungicides, Herbicides and combinations thereof, Plant-growth promoters, Plant Nutrients, Micro Nutrients and Bio fertilizers] A reading o....
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.... 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 to the TNVAT Act. This Court has found that the exemption under Entry 68 of Part B of the 4th Schedule to the TNVAT Act is conditional and Entry 41 of Part B of the First Schedule to the TNVAT Act, covers the sale of pulses and grams and thus the general rate of pulses and grams is 5%. In view of the above, the contention that there is no rate of tax prescribed under the Schedule to the TNVAT Act is misconceived and lacks merit. 14. Input tax credit on purchase tax under Section 12 of the TNVAT Act: Having found that the levy of purchase tax would get attracted, the next question that has been raised is with regard to the applicability of Section 19 of TNVAT Act insofar as dealers eligibility to Input Tax Credit of the purchase tax that has been paid under Section 12 of TNVAT Act. The reliance upon the non-obstante clause in sub-....
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....stante 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 Act which provides for a non-obstante clause which are much wider in its scope and operation. It may also be relevant to note that there are instances/provisions under the TNVAT Act where the legislature intended to give an over-riding effect over more than one provision, it had been expressly provided for as would be evident if one gleans through the TNVAT Act. While Sections 3(1-A), 4 to 10, 13 and 28 of the TNVAT Act employs the expression "nothwithstanding anything contained in this Act", thereby giving it very wide operation. Importantly the non-obstante clause in Section 29 reads as "Notwithstanding anything contained in Sections 27 and 28 of the Act", thereby giving it an overriding effect which is limited to Sections 27 and 28. Thus if the legislature intended that Section 12 would override Section 19 of the TNVAT Act, it would have....
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....ion 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 other provisions of the Act. It is settled rule of construction that if in relation to the same subject-matter different words are used in the same statute, there is a presumption that they are not used in the same sense" [Brighton Parish Guardians v. Strand Union Guardians, (1891) 2 QB 156; Member, Board of Revenue v. Arthur Paul Benthall, AIR 1956 SC 842; CIT v. East West Import and Export (P) Ltd., (1989) 1 SCC 760] In this regard it may be relevant to refer the precedent laid down by the Hon'ble Supreme Court in the case of CIT v. East West Import and Export (P) Ltd., (1989) 1 SCC 760 which is extracted hereunder: 7. ...... There is abundant authority to support the stand of the counsel for the revenue that when the situation has been differently expressed the legislature must be taken to have intended to express a different intention. From t....