1993 (12) TMI 219 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to the constitutional vires of entries 7(a) and 7(b) of the Second Schedule to the TNGST Act.
2. Demand of additional sales tax on raw hides and skins and dressed hides and skins.
3. Jurisdiction of authorities to levy and collect additional sales tax.
4. Payment of additional sales tax by the petitioner.
5. Necessity of a notice of demand for additional sales tax.

Analysis:

1. The petitioner, a registered dealer under the TNGST Act, challenged the constitutional vires of entries 7(a) and 7(b) of the Second Schedule to the Act, which levied sales tax on raw hides and skins and dressed hides and skins. The writ petition challenging this was dismissed by the court, and no further appeal was made.

2. The Deputy Commercial Tax Officer demanded a substantial sum from the petitioner as additional sales tax on the turnover of raw hides and skins and dressed hides and skins for multiple assessment years. The petitioner contended that as declared goods, hides and skins were not liable to additional sales tax. The petitioner also argued that the demand was not in conformity with statutory provisions and making a composite demand for multiple years was impermissible in law.

3. The court found that the petitioner's taxable turnover consistently exceeded Rs. 10 lakhs, making it liable to pay additional sales tax. The prescribed rate for additional tax was 1.25% of the turnover if it exceeded Rs. 10 lakhs but did not exceed Rs. 40 lakhs. The court determined that the petitioner was liable to pay additional tax based on the turnover of declared goods.

4. The petitioner had paid sales tax on the monthly turnover but had not paid the additional sales tax at the prescribed rates for the relevant years. The court analyzed the rates for different assessment years and concluded that for some years, the addition of additional tax was permissible, while for others, it exceeded the permissible limit of 4%.

5. The court discussed the necessity of a notice of demand for additional sales tax. It cited the relevant rules that mandated dealers to pay additional tax based on monthly returns without the need for a separate notice of demand. Despite the dismissal of the writ petition, the petitioner failed to pay the legitimate additional tax due, leading to the issuance of the impugned proceedings demanding payment.

In conclusion, the court dismissed the writ petition and the related application, stating that the petitioner, being a rule 18(3) assessee, was obligated to pay the additional sales tax, and the issuance of the demand notice was deemed appropriate under the circumstances.