1995 (3) TMI 447 - HC - VAT and Sales Tax

Summary

Issues Involved: Concessional rate of sales tax, applicability of Form XVII, status of the Forest Department as a dealer, refund of excess sales tax collected, and interpretation of tender conditions.

Issue-wise Detailed Analysis:

1. Concessional Rate of Sales Tax:
The petitioner argued that under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959, he was liable to pay a concessional rate of 3% sales tax for goods used in the manufacture of final products listed in the First Schedule, specifically soap and talcum powder. The court affirmed this, stating that the petitioner, being a registered dealer, was entitled to the concessional rate as his final products fell under Schedule I, entries 37 and 51, respectively.

2. Applicability of Form XVII:
The petitioner submitted Form XVII as required under Rule 22 of the Tamil Nadu General Sales Tax Rules to avail the concessional rate. The respondents rejected the form, claiming the Forest Department was not a registered dealer and hence not bound to accept it. The court rejected this argument, holding that the first respondent, by virtue of Section 22(1) and Explanation (2) to Section 2(g), was deemed a dealer and thus obligated to accept Form XVII.

3. Status of the Forest Department as a Dealer:
The respondents contended that the Forest Department was not a registered dealer and thus not required to accept Form XVII or offer the concessional rate. The court, referencing Section 2(g) and Explanation (2), determined that the Forest Department was indeed a dealer for the purposes of the Act and was required to comply with the provisions applicable to dealers, including accepting Form XVII.

4. Refund of Excess Sales Tax Collected:
The petitioner sought a refund of the excess sales tax collected. The court directed the third respondent (State of Tamil Nadu represented by the Commercial Tax Department) to refund the excess amount collected, as the first and second respondents acted as collecting agents for the third respondent. The petitioner was instructed to re-submit Form XVII, which the first respondent would forward to the third respondent for processing the refund.

5. Interpretation of Tender Conditions:
The respondents argued that the petitioner was bound by Clause 25 of the tender, which stipulated payment of sales tax at the rates in force at the time of sale confirmation. The court held that Clause 25 must be read subject to the provisions of the Tamil Nadu General Sales Tax Act, 1959. As the first respondent was deemed a dealer, it was bound by the Act to accept Form XVII and allow the concessional rate, overriding the tender condition.

Conclusion:
The court allowed the writ petition, directing the third respondent to refund the excess sales tax collected in accordance with Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959. The petitioner was to re-submit Form XVII to the first respondent, who would then forward it to the third respondent for processing the refund. There was no order as to costs.