TaxTMI 
TaxTMI 
2025 (11) TMI 1688
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.... 3. Petitioner herein is engaged in the manufacture and sales of Asphalt Roofing Sheets. Petitioner was registered under the TNGST Act during the assessment years 1993-1994 to 1996-1997. There was inspection of petitioner's place of business by the Enforcement Wing on 21.03.1996. During the course of inspection, it was noticed that petitioner's effected purchases of Asphalt from Sri Vinayaga Agencies and Sri Mahalakshmi Agencies, however, the said sellers/vendors had not discharged the taxes on such sales. Petitioner used the Asphalt so purchased in the manufacture of other goods. The goods so manufactured was sold and appropriate taxes was paid by petitioner on manufactured goods sales which is not in dispute. The following Table would show purchases made by the petitioner during the relevant period from the above dealers namely Sri Vinayaga Agencies and Sri Mahalakshmi Agencies: Sl. No. Name of the vendor Year Turn over 1 M/s Sri Vinayaka Agencies 1993-1994 47,94,594/- Tvl. Sri Mahalakshmi Agencies 1,17,169/- 2 M/s Sri Vinayaka Agencies 1994-1995 53,09,502/- Tvl. Sri Mahalakshmi Agencies 14,51,801/- 3 M/s Sri Vinaya....
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....ssing Officer and the Assessing Officer is directed to make fresh order within eight weeks from the date of receipt of this appeal order." 6. Pursuant to the above order of remand, Assessing Authority confirmed levy of purchase tax under Section 7A of the TNGST Act on finding that petitioner's vendors were non-existent dealers. Aggrieved petitioners preferred appeal before the Appellate Assistant Commissioner in A.P.Nos.119 and 223 of 2000. Appellate Authority vide order dated 11.07.2000 allowed the appeal on finding that investigation to find existence or otherwise of a dealer much after the relevant assessment year is unjustifiable, further, Assessing Officer ought to have proceeded against the seller thus levy of purchase tax on the petitioner was unsustainable. 7. Aggrieved State carried the matter in appeal before STAT. STAT by way of a common order vide order dated 19.02.2008, set aside the order of the Appellate Authority and confirmed the levy of purchase tax under Section 7A of TNGST Act. 8. The present Writ Petition is filed challenging the above order of STAT on the premise that Tribunal orders suffers from the following infirmities, viz., a) Whethe....
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.... 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; or (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, shall pay tax on the turnover relating to the purchase as aforesaid at the rate mentioned in Sections 3 or 4, as the case may be, (2) Notwithstanding anything contained in sub-section (1), the provisions of Section 7 shall apply to a dealer referred to in subsection (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 purchases made on or after the 1st day of April, 1990. (3) Every dealer liable to pay purchase tax under sub-section (1). shall, for the purposes of th....
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....on of purchases, claimed to have been made from the above two vendors (Sri Vinayaga Agencies and Sri Mahalakshmi Agencies) upon which no taxes were paid to the State during the assessment years 1993-94, 1994-95, 1995-96 and 1996-97 have been correctly assessed to tax under section 7A of the Tamil Nadu General Sales Tax Act,1959." 14. The above reasoning of Tribunal is misconceived inasmuch as admittedly the goods in question are liable to tax at the 1st point of sale. The taxable person is petitioner's vendor. Importantly, petitioner's vendor's turnover is beyond and in excess of the threshold limit provided under Section 3 of TNGST Act, thus sale by petitioner vendors are liable to tax. In this regard, it may be relevant to refer to the judgment of Kerala High Court in the case of The Kerala Premo Pipe Factory Ltd., v. State of Kerala, reported in 57 STC 84, rendered in the context of provision relating to purchase tax under Kerala General Sales Tax Act which is pari materia to Section 7A of TNGST Act. The relevant portion of the judgment is extracted hereunder: "2. Though the tax under section 5A relates both to purchase of river sand and charcoal the revi....