1996 (2) TMI 494 - AT - VAT and Sales Tax

Summary

Issues:
Challenge to tax notices for specific years. Interpretation of government notification for exemption from tax based on turnover. Determination of turnover for exemption eligibility. Examination of validity of assessment orders.

Analysis:
The petitioners contested tax notices demanding payment for the years 1989-90, 1990-91, and 1991-92. The petitioners argued that the assessment orders for those years were under challenge in the High Court, and upon the formation of the Tribunal, those cases were to be transferred. The Tribunal accepted this course to avoid duplication of work and narrow the examination to the validity of the assessment orders.

The case revolved around a cooperative society engaged in trading milk products, operating a canteen for its employees. The society claimed the canteen as a separate establishment not liable for tax under a specific government notification. However, the assessing officer, appellate authority, and Sales Tax Appellate Tribunal disagreed, stating that for sales tax levy, only one total turnover should be considered, rejecting the bifurcation for exemption claim.

The petitioners relied on a recent judgment of the Madras High Court regarding a similar exemption notification. The High Court judgment clarified that turnover for exemption should pertain to the specific category of goods, not the entire turnover. The petitioners also highlighted the difference in terminology between earlier and later notifications, emphasizing the clarity in the later notification applicable to their case.

The Tribunal agreed with the petitioners' interpretation, stating that the turnover of the canteen should be eligible for exemption if it falls below the prescribed limit, separate from the main business turnover. The Tribunal emphasized that the canteen's sales should be deducted from the total turnover for exemption eligibility. Consequently, the recovery proceedings were ordered to be dropped, granting the benefit of exemption to the canteen sales.

In conclusion, the Tribunal allowed the petition, directing the observance of its order and the cessation of recovery proceedings. The judgment clarified the interpretation of the government notification for exemption eligibility based on turnover, emphasizing the separate consideration of turnover for specific categories of sales.