1991 (4) TMI 407 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to Tribunal's order granting relief to the respondent-assessee in respect of a turnover taxable at 5%, interpretation of rule 6(d) of the Tamil Nadu General Sales Tax Rules.

Analysis:
The Revenue challenged the Tribunal's order granting relief to the respondent-assessee regarding a turnover of Rs. 3,51,000 taxable at 5%, representing the sales turnover of machinery from Hindusthan Metal Refinery and Rolling Mills. The assessee operated multiple business units, including Hindusthan Metal Refinery and Rolling Mills, which was closed in 1968, with its machinery sold in 1975. The assessing officer initially taxed the turnover at 4%, denying the benefit under rule 6(d) of the Rules. However, the Tribunal upheld the assessee's claim based on precedents and the independent nature of the rolling mills unit. The Revenue contended that the assessee continued business after the sale, thus not entitled to exclusion under rule 6(d).

The Tribunal's reliance on precedents like Jeewanlal Limited v. Industrial Tribunal and Deputy Commissioner (C.T.) v. Behanan Thomas was crucial in upholding the assessee's claim. The Court analyzed the nature of the rolling mills unit, emphasizing its separate and independent status, even if part of a larger business entity. The Court held that if a specific unit of business is sold as a whole, the benefit under rule 6(d) can be invoked, as long as each line of business constitutes a separate unit. The Court distinguished the case from precedents cited by the Revenue, emphasizing the unique circumstances and the specific application of rule 6(d) in this case.

The Court referenced the decision in Jeewanlal Limited v. Industrial Tribunal to establish the separate nature of the rolling mills unit, even within a larger business framework. Despite common management and licenses, the Court upheld the independent status of the rolling mills section, which had been closed and disposed of as a distinct unit. The Court found no legal error in the Tribunal's decision, as the rolling mills unit was considered an independent entity sold as a whole, making the assessee eligible for the benefits under rule 6(d). Consequently, the Court dismissed the tax revision case, upholding the Tribunal's order in favor of the respondent-assessee.

In conclusion, the Court found no grounds for interference in the Tribunal's decision, as the rolling mills unit was deemed separate and sold as a whole, entitling the assessee to claim benefits under rule 6(d) of the Tamil Nadu General Sales Tax Rules. The judgment was based on a thorough analysis of precedents, the independent nature of the unit in question, and the specific application of the relevant tax rule.