1991 (7) TMI 343 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Concessional rate of tax on transformer oil.
2. Interpretation of Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959.
3. Validity of declaration forms under the Act.

Summary:

Issue 1: Concessional rate of tax on transformer oil
The assessee/respondent claimed a concessional rate of 3% on sales of transformer oil amounting to Rs. 7,43,883.79 by producing form XVII as prescribed u/s 3(3) of the Tamil Nadu General Sales Tax Act, 1959. The assessing authority rejected this claim and levied an 8% tax, relying on a circular from the Board of Revenue stating that transformer oil is not a component part of a transformer.

Issue 2: Interpretation of Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959
The Appellate Assistant Commissioner upheld the assessing authority's decision, stating that transformer oil is used only for cleaning or cooling and is not a component part of the transformer. However, the Tribunal, relying on the decision in Premier Electro-Mechanical Fabricators v. State of Madras [1968] 22 STC 269 (Mad.), held that once valid form XVII declarations are filed, the assessing officer cannot question whether the transformer oil is a component part as certified by the buyer. The Tribunal ruled that the turnover should be taxed at the concessional rate of 3%.

Issue 3: Validity of declaration forms under the Act
The Revenue argued that transformer oil cannot be a component part of a transformer and that blindly applying the proviso to section 3(3) would be incorrect. The respondent contended that transformer oil is an identifiable constituent of the finished product and that the selling dealer is not responsible for verifying the declaration form's accuracy. The Court examined the relevant provisions of section 3(3) and its amendments, concluding that the selling dealer is not liable for any wrong declaration by the purchasing dealer. The Court cited Premier Electro-Mechanical Fabricators v. State of Madras [1968] 22 STC 269, which held that the selling dealer's obligation is fulfilled by producing the declaration form, and any false declaration exposes the purchaser to penalties.

The Court also referenced State of Madras v. Radio and Electricals Ltd. [1966] 18 STC 222 (SC) and Chunni Lal Parshadi Lal v. Commissioner of Sales Tax [1986] 62 STC 112 (SC), which supported the view that the selling dealer is not required to verify the truthfulness of the declaration form. The Court concluded that the Tribunal's order did not require reconsideration and dismissed the revision petition, with no order as to costs.

Petition dismissed.