2000 (6) TMI 784 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Disallowance of exemption under section 5(3) of the Central Sales Tax Act, 1956.
2. Applicability of G.O. Ms. No. 115, Revenue, dated January 17, 1972.
3. Levy of penalty under section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959.
4. Assessment of turnover under the Central Act versus the local Act.

Detailed Analysis:

1. Disallowance of exemption under section 5(3) of the Central Sales Tax Act, 1956:
The primary issue was whether the sale of bus bodies by the assessees to chassis manufacturers, who then exported the complete buses, qualified for exemption under section 5(3) of the Central Sales Tax Act, 1956. The assessing authority disallowed the exemption, stating that the exported goods (buses) were different from the goods sold by the assessees (bus bodies). The Appellate Tribunal, however, allowed the exemption, reasoning that the bus bodies were integral to the exported buses, thus qualifying as the penultimate sale before export. The Tribunal relied on the shipping documents and the export orders which specified the bus bodies and treated the sale as complying with the export agreement.

2. Applicability of G.O. Ms. No. 115, Revenue, dated January 17, 1972:
The assessees also claimed exemption based on G.O. Ms. No. 115, Revenue, which granted tax refunds for bus bodies built and supplied for export. The assessing authority rejected this claim, stating that the introduction of section 5(3) in 1976 superseded the Government Order. The Tribunal, however, held that the Government Order was still in effect and applicable, as it had not been withdrawn. The Tribunal ruled that the exemption should be granted by construing it under section 17 of the Tamil Nadu General Sales Tax Act, 1959, even if the specific section was not mentioned in the Government Order.

3. Levy of penalty under section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959:
Penalties were imposed under section 12(5)(iii) for the disallowed exemptions. The Tribunal, in both cases, deleted the penalties, reasoning that the assessees had provided all necessary documents to substantiate their claims for exemption. The Tribunal found no grounds for imposing penalties as the transactions were conducted in compliance with the export agreements and the Government Order.

4. Assessment of turnover under the Central Act versus the local Act:
In the case of Tvl. Anamallais Engineering, the dispute was whether the turnover should be assessed under the Central Sales Tax Act or the local Act. The Tribunal found that the transactions were not inextricably linked to inter-State trade or export and upheld the assessment under the local Act. The Tribunal noted that the delivery of bus bodies occurred at Pollachi, and the subsequent movement to ports was not part of a single transaction.

Conclusion:
The Tribunal upheld the exemption under section 5(3) of the Central Sales Tax Act, 1956, for the sale of bus bodies as penultimate sales preceding export. It also affirmed the applicability of G.O. Ms. No. 115, Revenue, for granting tax refunds on bus bodies supplied for export. Penalties imposed under section 12(5)(iii) were deleted, and the assessment of turnover under the local Act was confirmed where applicable. The Tribunal emphasized the importance of adhering to the specific provisions of the Central Sales Tax Act and the Government Order, ensuring that the transactions were in compliance with the export agreements.