1996 (6) TMI 326 - AT - VAT and Sales Tax

Summary

Issues:
Interpretation of section 3(3) for eligibility of concessional levy on purchase of tin containers by an insecticides manufacturer against form XVII.

Analysis:
The judgment by the Appellate Tribunal of Tamil Nadu Taxation Special Tribunal, delivered by Chairman Ramalingam S., revolves around the issue of whether the purchase of tin containers by an insecticides manufacturer against form XVII would qualify for concessional levy under section 3(3). The petitioner, an insecticides manufacturer, contended that the turnover related to the purchase of tin containers should be eligible for concessional levy as they are used for packing insecticides and pesticides. However, the authorized officer in an order dated March 27, 1996, ruled against the petitioner, citing sub-section (3) which, according to the officer, prohibits the purchase of packing materials against form XVII declaration.

Upon examining the relevant provision of section 3(3) as it stood during the relevant period (1990-91), the Tribunal found that there was no explicit prohibition against the purchase of packing materials. The section specifically refers to the tax payable by a dealer in respect of the sale of goods, excluding consumables, for use in manufacturing goods liable to tax. The Tribunal emphasized that the exclusion of "consumables" does not encompass packing materials like tin containers. Therefore, the purchase of tin containers used to pack insecticides and pesticides, falling under Schedule I, would indeed be covered by subsection (3) of section 3.

The Tribunal rejected the reasoning of the assessing officer, deeming it contrary to the law. The Tribunal concurred with the argument presented by Mrs. Chitra Venkataraman, the learned Additional Government Pleader, that tin containers would only be eligible for concessional levy if they are used for containing the insecticides or pesticides specifically, not merely as packing materials for a consignment of packed products. Consequently, the Tribunal allowed the petition and directed that the order be observed and executed promptly.

In conclusion, the judgment clarifies the interpretation of section 3(3) regarding the eligibility of concessional levy on the purchase of tin containers by an insecticides manufacturer against form XVII, highlighting the distinction between packing materials and consumables and affirming the entitlement to concessional levy for packing materials directly involved in the manufacturing process of taxable goods.