1976 (12) TMI 170 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Entitlement to claim tax adjustment for returned goods beyond six months.
2. Interpretation of Section 13(5) of the Tamil Nadu General Sales Tax Act, 1959.
3. Conflict between Section 13(5) and Rule 5-A(b)(i) of the Tamil Nadu General Sales Tax Rules, 1959.
4. The impact of legislative amendments on tax adjustments and refunds.

Issue-wise Detailed Analysis:

1. Entitlement to claim tax adjustment for returned goods beyond six months:
The petitioner-assessee sold goods on 3rd March 1966, which were returned by the customer on 2nd September 1966. The assessee claimed an adjustment of tax paid on this sale in the monthly return for September 1966, filed on 25th October 1966. The assessing authority, Appellate Assistant Commissioner, and the Tribunal rejected the claim on the ground that it was made beyond the six-month period stipulated in Section 13(5) of the Tamil Nadu General Sales Tax Act, 1959. The Full Bench upheld this view, stating that the claim for deduction of tax must be made within six months from the date of sale.

2. Interpretation of Section 13(5) of the Tamil Nadu General Sales Tax Act, 1959:
Section 13(5) states: "Where a dealer has refunded the price of articles returned by customers together with the tax collected from such customers in respect of the sale of such articles and where the amount representing the price refunded by the dealer is included in his turnover, the dealer shall be entitled to claim deduction of the tax levied in respect of such sale, within a period of six months from the date of sale by adjustment in the assessment and the final assessment shall be completed accordingly, but such dealer shall not be entitled to claim any adjustment or refund of the tax in respect of the sale of such articles after the expiry of the said period of six months." The Full Bench emphasized that the six-month period is a strict limitation, and any claim for adjustment or refund of tax must be made within this timeframe.

3. Conflict between Section 13(5) and Rule 5-A(b)(i) of the Tamil Nadu General Sales Tax Rules, 1959:
The petitioner argued that Rule 5-A(b)(i) dealt with different rights of a dealer and should allow for adjustments beyond the six-month period. However, the Full Bench concluded that a rule cannot override a statutory provision. Section 13(5), being a statutory provision, takes precedence over Rule 5-A(b)(i). The court stated, "if under section 13(5) of the Act a restriction has been prescribed with regard to the period within which the claim for adjustment or refund of tax should be made, that restriction cannot be got rid of by a rule."

4. The impact of legislative amendments on tax adjustments and refunds:
The original Section 13(5) introduced by Tamil Nadu Act 15 of 1964 imposed a six-month limitation for claiming tax adjustments or refunds. This was later amended by Tamil Nadu Act 31 of 1972, which allowed for a prescribed period instead of a fixed six months. However, the Full Bench focused on the original provision applicable to the case at hand and held that the six-month limitation was binding. The court noted that the amendment by Act 31 of 1972 was not relevant for the present discussion.

Separate Judgments:

Chief Justice Kailasam:
The Chief Justice held that the decision in Madras Radiators and Pressings v. State of Tamil Nadu was erroneous. He emphasized that Section 13(5) provides a complete code for the tax treatment of sales returns and that the six-month limitation must be strictly adhered to.

Justice Ramaswami:
Justice Ramaswami dissented, arguing that the earlier decision in Madras Radiators and Pressings v. State of Tamil Nadu was correct. He believed that Section 13(5) was intended to cover cases where the assessee claims a deduction of the amount refunded from the turnover of the year in which the sale took place, even if the refund was in a subsequent year.

Justice Balasubrahmanyan:
Justice Balasubrahmanyan agreed with the Chief Justice, stating that Section 13(5) must be regarded as a complete code on the subject of tax relief for sales returns. He emphasized that the claim for deduction of tax must be made within six months from the date of sale and that Rule 5-A(b)(i) cannot override this statutory provision.

Conclusion:
The majority opinion held that the decision in Madras Radiators and Pressings v. State of Tamil Nadu was erroneous, and the tax case was dismissed with no order as to costs. The court reaffirmed the six-month limitation for claiming tax adjustments or refunds under Section 13(5) of the Tamil Nadu General Sales Tax Act, 1959.