TaxTMI 
TaxTMI 
2026 (7) TMI 1124
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.... extent of Rs. 2,40,86,083/- disallowed by holding it will not fall under the exemption category of goods. Therefore, assessment order passed on the proposed turnover of Rs. 2,60,07,22,929/-, along with Additional Sales Tax at the rate of 2.5% for the car components manufactured and sold, interest levied for the belated payment and penalty imposed. 2. Aggrieved by the determination of the total turnover, the rejection of exemption claimed on certain transactions which lead to dispute regarding the taxable turnover, the dealer preferred Appeal against the Assessment Order dated 03.09.2010. 3. The Appellate Authority, on considering the grounds of appeal, allowed the appeal partly. A portion of the assessment order was remanded with the direction that the Assessing Officer to levy penalty under Section 12(3) (b) strictly in accordance with the graded scale. 4. In substance, the order of the Appellate Authority was as under:- (a) Second sale of asset Rs.4,71,993/-@ 12% (Confirmed) (b) Second sale of asset Rs.2,18,198/-@ 12% (Confirmed) (c) Addition/ Deletion of items Rs.47,87,308/-@ 12% (Confirmed) (d) Second sale disallowed Rs.49,817/-@ 12....
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.... cars in the course of import 1,39,18,525/- 9. Penalty under Section 12(3)(b) of the TNGST Act 6,67,12,411/- 8. This Court, considering the grounds raised in the revision, had admitted the Tax Case to address the following substantial questions of law:- (i). Whether the Tamil Nadu Sales Tax Appellate Tribunal is right in confirming the levy of tax under the TNGST Act, 1959 on sales of cars in the course of import, ignoring the evidence on record that the goods directly move from Mumbai to the customers in different parts of the country other than Tamil Nadu and on the sale basis of the invoices? And (ii) Whether the Tribunal is right in restoring the order of the Assistant Commissioner without there being an appeal by the Department to the First Appellate Authority? 9. In the course of final hearing, the Learned Counsel for the dealer/ revision petitioner has filed a written submission wherein, it is stated that out of nine issues mentioned in the above table, considering the amount of tax involved in those issues, the revision petitioner is giving up the issues listed at Serial numbers 1 to 5 and 7. Leaving open those issues for consideration in....
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....of the Act. 14. Aggrieved by the order of remand to levy compounding fees, being without jurisdiction, the trader filed further appeal to the Tribunal. The Tribunal in the appeal of the trader, restored the levy of tax on the exempted goods overturning the finding of the appellate authority regarding the remand order to consider levy of compound fees. 15. According to the Learned Counsel, the order of the tribunal overturning the order of the Appellate Authority suo motu on the point which was never challenged by the department is beyond jurisdiction and the scope of the appeal. The reasoning given by the Tribunal that the Assessing Officer has demanded tax from the trader for violation of the condition imposed in G.O.Ms.No.381 is incorrect. That apart, without prejudice to the above argument in respect of levy of tax on the goods claimed exemption, in any event even if the goods purchased not used for the purpose of manufacturing or activities mentioned in the exemption Government Order but sold as such, the benefit under Section 5(3) of the CST Act is available to the vendor. 16. The further contention of the revision petitioner is that, when there is no tax liability or....
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....uppression and intentional evasion of tax. In the absence of any such allegation, the penalty is not imposable. 19. Submissions on behalf of the Department: The trader failed to establish the fact that the goods purchased from the registered dealers in the State were used for the manufacture as mandated in the exemption G.O.Ms.No.381. During the inspection, the violation was noticed and explanation called. The trader, after availing tax exemption under G.O.Ms.No.381 by furnishing declaration, resort to the alternate plea that the sales covered under Section 5(3) of CST Act. If the goods purchased against declaration but not used in the manufacture but disposed otherwise, it amounts to violation of condition laid in G.O.Ms.No.381. Hence, the tax levied on the turnover relating to purchase of such goods as per the terms of the Government Order. 20. The order of the Appellate Authority set aside the levy of tax on the goods not used in the manufacturing the cars exported, after getting exemption on declaration flouting the jurisdiction of the Assessing Officer who imposed tax in terms of clause (b) of G.O.Ms.No.381. Further, remanded the matter to fix compound fees for flouti....
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....emand is not appropriate since the provisions in the Government Order issued exclusive for the trader takes care of breach of the Government Order condition. Hence, the tribunal order is sustainable. 24. As far as the tax on the sales of imported cars, the Learned Counsel for the Department submitted that, sales of imported cars were assessed to tax at the rate of 12% since the records produced by the trader did not substantiate its claim that the sales was effected in the High Seas before the cars reached the Port at Mumbai. The invoice copy pertaining to the sales of the imported cars were emanated from Chennai and the situs of the sale purportedly from Chennai. The trader, who claims that the cars were delivered from Mumbai to other places miserably failed to show document that the sales was prior to the entry to the port or the custom duty paid by the buyer of the vehicle on entry of the goods into the custom frontier of the India. 25. Weighed the rival submissions in the light of the provisions of law and judgments of the Court. Substantial question of law (i):- (i).Whether the Tamil Nadu Sales Tax Appellate Tribunal is right in confirming the levy of t....
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....invoices by the dealer is subsequent to the entry of goods within Indian territory. Admittedly, the sale invoices raised at the Office of the trader which is located at Chengalpattu, Tamil Nadu. While so, even if the exporter had mentioned the name of the dealers of the trader at other parts of the Country as the buyers, the law of the land which governs the taxing policy fixes the situs of sale at the place from which the transfer takes place. In this case, the transfer is shown as place the invoices raised. It is the admitted case of the trader that goods imported were distributed to the dealers at other parts of the Country and from the dealers, same was delivered to the end users. The lorry receipt is to prove the transport of the imported car between port of Mumbai to other parts of the state but it is not a conclusive proof to hold that the cars never entered the territorial jurisdiction of Tamil Nadu. Neither mentioning the name of the purchasers in the invoice of the exporter is a proof that the transfer of goods was effected in high seas. Furthermore, whether the goods physically entered the territory of Tamil Nadu or not, the tax liability is based on the point of sale. I....
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....n High Speed Diesel Oil, Light Diesel Oil and Molasses but excluding Plant and Machinery to Thiruvalargal Mahindra Ford India Limited; (b) purchase tax payable under Section 7A of the said Act by Thiruvalargal Mahindra Ford India Limited on the purchase of goods specified in clause (a), - For use by Thiruvalargal Mahindra Ford India Limited in the manufactured and in the assembling, packing or labelling in connection with such manufacture of passenger cars and components at their factory situated at Maraimalai Nagar, Kancheepuram District. Provided that in respect of goods specified in clause (a), the seller shall furnish to the assessing authority a declaration duly filled in and signed by Thiruvalargal Mahindra Ford India Limited containing the particulars in the form of declaration annexed to this notification. One such declaration shall be sufficient to cover goods supplied against each purchase order; Provided further that where goods are supplied against a purchase order over more than one assessment year, then separate declarations shall be furnished for the purchase relating to each assessment year: Provided also that if Thiruvalargal Mah....
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....ection of implementation on behalf of the State Legislature. In such a violation, the Assessing Officer is empowered to levy compounding fee under the above such sections and the option is open to the concerned Assessing Officer in the interest of revenue." 35. Before the Tribunal, the observation of the Appellate Authority regarding taxing the purchase of the goods against firm export orders were challenged by the dealer. The Tribunal, referring the third proviso to clause (b) in the G.O.Ms.No.381, held that the observation of the Appellate Authority was not in consonance with the provisions of the Act. The Government Order clearly mandates that the appellant must use the goods purchased without paying tax as provided under the G.O., for the purpose specified in the declaration. If the goods are not used for the said purpose but disposed of otherwise, the dealer has to pay tax at the rate on which tax is payable. The exemption under Section 5(3) of the CST Act, 1956, Act is applicable to the sellers who sold goods to the exporters and not to the dealer who has availed tax exemption under G.O.Ms.No.381 after furnishing the necessary declaration. Hence, the tribunal has restored ....
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....ise. Therefore, the Tribunal restored the order of the Assessing Officer holding that the dealer is liable to pay tax at the rate on which the tax on the turnover relating to the purchase of such goods. The trader has failed to produce records that the alleged goods purchased were used in the manufacture of taxable goods. For violation of the conditions stipulated in G.O.Ms.No.381, the trader is liable to pay tax as contemplated under the said Government order, independently of other provisions of law. 39. We see two important facts been put against the trader in connection with his claim of exemption under G.O.Ms.No.381; firstly, the goods were not supplied to the trader directly but to his Parts Division Centre (PDC), whereas the Government Order issued specifically to the trader granting exemption in respect of goods, including consumables, packing materials and labeling, sold to the trader, namely TVL. Ford India Private Limited (revision petitioner); secondly, no evidence produced by the trader to show that the materials were used for manufacturing as declared. 40. We find when the trader was called upon to explain, after furnishing declarations regarding purchase of goo....