1989 (11) TMI 294 - HC - VAT and Sales Tax

Summary

Issues:
1. Admissibility of additional grounds by the Tribunal
2. Entitlement to claim exemption based on previous decisions
3. Impact of the Constitution (Forty-sixth Amendment) Act, 1982 on taxation laws

Admissibility of Additional Grounds:
The judgment dealt with two revisions concerning the assessment years 1974-75 and 1977-78 for two separate businesses. The common issues were the Tribunal's admission of additional grounds disputing turnover and the entitlement to claim exemption. The Court referenced a Full Bench decision stating that the appellate authority has discretion to admit additional grounds, rejecting the rigid view of a previous case. This established that the Tribunal was justified in admitting additional grounds for appeal.

Entitlement to Claim Exemption:
Regarding the second issue, the Tribunal allowed exemption based on a Supreme Court decision. However, a subsequent Supreme Court decision necessitated reconsideration by the assessing authority. The Court highlighted that the Government of Tamil Nadu had not extended the Act to cover the specific sale in question, thus the Revenue could not benefit from the Forty-sixth Amendment to the Constitution. Citing a Division Bench decision, the Court emphasized that the turnover related to food and drinks supplied in hotels and restaurants could not have been taxed under the existing provisions or the Constitution (Forty-sixth Amendment) Act, 1982.

Impact of Constitution (Forty-sixth Amendment) Act, 1982:
The judgment also discussed the impact of the Forty-sixth Amendment on taxation laws. It clarified that the amendment did not alter the definition of 'sale' in State legislations but validated certain provisions that lacked legislative competence at the time of enactment. The Court held that the turnover in question could not have been taxed under the existing laws or the Amendment. Additionally, it emphasized that pending proceedings did not render assessments final, especially if the transactions were not taxable. The Court directed the matter to be remitted back to the Appellate Tribunal for reconsideration in light of the relevant Supreme Court decision and the previous decision of the High Court.

In conclusion, the impugned orders were set aside, and both cases were remitted back to the Appellate Tribunal for reevaluation based on the principles outlined in the relevant Supreme Court decision and the previous High Court decision. The Tribunal was instructed to consider the facts of each case and dispose of the matters accordingly, while keeping in view the legal interpretations provided in the judgment.