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2010 (7) TMI 842 - HC - VAT and Sales TaxHow to apply section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970, which existed prior to Act 31 of 1996, since by Act 31 of 1996, the previous section 2(1)(a) came to be amended and after the amendment, section 2(1)(a) and 2(1)(aa) came to be introduced? Held that - Since the taxable turnover did not cross ₹ 100 crores during the said financial year, in the case of the respondent - assessee, the liability of additional sales tax will have to be calculated only for the period upto 31.7.1996 and not beyond and that too, on the taxable turnover that was available upto that date viz., 31.7.1996. Having regard to the said position, the impugned order of the Tribunal as well as that of the Assessing Authority are liable to be set aside. While setting aside the order the Assessing Authority, we direct the Assessing Authority to pass fresh orders by keeping the taxable turnover of the respondent assessee upto 31.7.1996 in a sum of ₹ 54,97,880/- and calculate the tax at the rate of 1.5% on the sum of ₹ 44,97,880/- (i.e.), after deducting the first ten lakhs as provided under the proviso to sub-clause (i) of Section 2(1)(a).
Issues Involved:
1. Application of Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970, pre and post-amendment by Act 31 of 1996. 2. Impact of the judgment in Siemens Limited v. State of Tamil Nadu on the amended provisions. 3. Calculation of additional sales tax liability for the assessment year 1996-97. Detailed Analysis: 1. Application of Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970, pre and post-amendment by Act 31 of 1996: The core issue revolves around how to apply Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970, which was amended by Act 31 of 1996. Before the amendment, Section 2(1)(a) stipulated additional tax rates based on the taxable turnover of a dealer, with different rates for turnovers exceeding ten lakhs, one crore, five crores, ten crores, and three hundred crores. Post-amendment, Section 2(1)(a) was modified, and Section 2(1)(aa) was introduced, altering the tax rates and the definition of taxable turnover. The unamended Section 2(1)(a) stated: - 1.5% for turnovers exceeding ten lakhs but not one crore. - 2% for turnovers exceeding one crore but not five crores. - 2.25% for turnovers exceeding five crores but not ten crores. - 2.5% for turnovers exceeding ten crores but not three hundred crores. - 3% for turnovers exceeding three hundred crores. The amended Sections 2(1)(a) and 2(1)(aa) introduced higher thresholds and rates, specifically targeting dealers with turnovers exceeding one hundred crores. 2. Impact of the judgment in Siemens Limited v. State of Tamil Nadu on the amended provisions: The Siemens Limited case played a pivotal role in shaping the interpretation of the amended provisions. The Special Tribunal struck down clause (a) of Section 2(1) as ultra vires and deleted specific words from Section 2(1)(aa). The Tribunal's judgment effectively meant that the exemption up to one hundred crores would apply uniformly to all dealers, and the amended provisions would be interpreted without the struck-down clauses. Post-Siemens case, the amended Section 2(1)(aa) read: - 2.5% for turnovers exceeding one hundred crores but not three hundred crores. - 3% for turnovers exceeding three hundred crores. 3. Calculation of additional sales tax liability for the assessment year 1996-97: For the assessment year 1996-97, the court had to determine the additional sales tax liability of the respondent-assessee. The State argued that the unamended Section 2(1)(a) applied until 31.7.1996, and the amended Sections 2(1)(a) and 2(1)(aa) applied from 1.8.1996 onwards. The respondent contended that the liability should be based on the financial year, and since their turnover did not exceed one hundred crores, no additional tax was due. The court clarified that the definition of "year" under the Tamil Nadu General Sales Tax Act, meaning the financial year, did not affect the application of different tax rates within the same financial year due to statutory amendments. Thus, the court concluded that the tax liability should be bifurcated: the unamended Section 2(1)(a) applied up to 31.7.1996, and the amended provisions applied from 1.8.1996. The court directed that for the period up to 31.7.1996, the taxable turnover of Rs.54,97,880/- should be considered, and the additional tax should be calculated at 1.5% on Rs.44,97,880/- (after deducting the first ten lakhs). Since the turnover did not exceed one hundred crores for the financial year, no additional tax was due for the period after 1.8.1996. Conclusion: The court set aside the orders of the Assessing Authority and the Tribunal, directing the Assessing Authority to pass fresh orders calculating the additional tax as specified. The court also acknowledged the existence of a Samadhan Scheme and directed the revised orders to be passed before 10.8.2010 to enable the assessee to avail of the scheme. The Tax Case (Revision) was disposed of accordingly, with no costs.
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