2010 (11) TMI 860 - HC - VAT and Sales Tax

Whether in the facts and circumstances of the case the Appellate Tribunal is right in restoring the levy of purchase tax on the purchase consideration of 6, 35, 917/- paid by the petitioner on the purchase of fly ash from TNEB by shifting the point of levy from the point of first sale to the point of purchase ? Whether in the facts and circumstances of the case the Appellate Tribunal is right in restoring the levy of purchase tax on the sum of 40, 02, 498/- being the expenses incurred by the petitioner for transporting the fly ash to their factory when the condition of sale by TNEB was ex-works and the transportation charges were post purchase expenditure ? Whether in the facts and circumstances of the case the Appellate Tribunal is right in restoring the penalty levied under Section 23 of the Act when neither Section 3(3) of the Act nor the declarations contained in Form XVII declaration required that the petitioner must sell the manufactured goods with the State? Whether branch transfer of manufactured goods to branches / depots and sales thereafter would amount to contravention of provisions of Section 3(3) of the Act and misuse of Form XVII declarations attracting the provisions of Section 23 and Section 45(2)(e) of the Act when the manufacturing activity takes place with the State and tax is paid under Section 3(4) of the Act on the proportionate turnover? Held that - As far as question No. (a) is concerned the learned counsel for the petitioner fairly concedes that the petitioner has accepted the order and is willing to pay the tax determined. The said question is therefore answered against the petitioner. As far as the question No. (b) is concerned it is also answered in favour of the petitioner. As far as the question No. (c) is concerned in the absence of any specific misdeclaration in regard to the value of stock transfer made by the petitioner we do not find any basis at all for the Tribunal to hold that imposition of penalty under Section 23 was warranted in this case. We are not therefore convinced to sustain the said part of the order of the Tribunal. The question of law raised in ground C therefore answered in favour of the petitioner and the order of the Tribunal on that account stands set aside. In the light of the conclusions reached above on the question c and having regard to the fact that the petitioner has complied with the requirements of the tax liability under Section 3(4) of the Act we do not find any contravention of provisions of Section 3(3) of the Act. Consequently the question of law raised in ground d is answered in favour of the petitioner. Appeal allowed

Summary

Issues:
Challenge to the order of the Appellate Tribunal on the levy of purchase tax and penalty under TNGST Act for misuse of Form XVII declarations.

Analysis:
1. The first issue raised was regarding the levy of purchase tax on the purchase consideration of fly ash and transportation charges incurred by the petitioner. The court noted that the petitioner accepted the order and agreed to pay the tax determined, thus answering this question against the petitioner.

2. The second issue involved the imposition of purchase tax on transportation charges for fly ash. The court referred to a previous decision and held that transport charges would not form part of the purchase price paid, thus ruling in favor of the petitioner based on established legal principles.

3. The third issue pertained to the penalty under Section 23 of the TNGST Act for alleged misuse of Form XVII declarations. The petitioner, a manufacturer of Asbestos Cement Sheets, had made stock transfers to branches in other states. The Assessing Authority imposed a penalty citing misdeclaration in Form XVII. However, the court found no justification for the penalty as the petitioner had complied with tax liabilities under Section 3(4) of the Act. The court set aside the penalty, ruling in favor of the petitioner.

4. Lastly, the issue of contravention of provisions of Section 3(3) of the Act due to branch transfers of manufactured goods was addressed. The court found no contravention as the petitioner had complied with tax liabilities under Section 3(4) of the Act. Consequently, the court ruled in favor of the petitioner on this issue as well.

In conclusion, the Tax Case Revision was allowed to the extent indicated, the penalty under Section 23 was set aside, and the court ruled in favor of the petitioner on all issues raised. The judgment provided a detailed analysis of each issue, citing legal precedents and factual findings to support the decisions made.