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2004 (5) TMI 538 - HC - VAT and Sales TaxConstitutionality of Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970 - Applicability of amended Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970 - Liability to pay additional sales tax for the period from April 1, 1996 to July 31, 1996 - Jurisdiction u/s 55 of the Tamil Nadu General Sales Tax Act, 1959 for rectification - HELD THAT - It is quite well-settled that the effect of a judgment has to be examined in its totality and in the context in which it was made and not by referring to a stray sentence here or there, torn totally out of the context in which such observation has been made. It has to be remembered that before the Act was amended by Act 31 of 1996, the liability to pay additional sales tax in a graded scale had been clearly laid down u/s 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970. Only after tinkering had been made by the Legislature by amending section 2(1)(a), making it applicable to the dealers other than the dealers registered in Tamil Nadu and by introducing a new provision in the shape of section 2(1)(aa), raising exemption limit regarding the liability to pay additional sales tax so far as the registered dealers in Tamil Nadu are concerned to more than Rs. 100 crores, the provision was found offensive. In other words, section 2(1)(a), as it originally stood, was not found offensive, but section 2(1)(a) as amended by the Act 31 of 1996 was struck down and the new provision as contained in section 2(1)(aa) with required modifications was held to be applicable to all concerned. Even though the learned counsel appearing for the petitioner is correct in his submission to the effect that striking down of section 2(1)(a) did not have the effect of reviving section 2(1)(a) as it originally stood, the fact remains that so long as that provision, namely, section 2(1)(a) of the unamended Act, was in statute book, the liability to pay tax as per such provision was already incurred. In other words, the liability as envisaged under section 2(1)(a) as per the original Act was in existence for the period from April 1, 1996 till July 31, 1996. At that stage the liability was incurred as soon as the turnover exceeded Rs. 10 lakhs and as per the original provision, the extent of such liability varied upon the taxable turnover as per the original provision. With effect from August 1, 1996, the exemption limit was raised to Rs. 100 crores and by virtue of the decision of the Tribunal, such exemption was equally applicable to all concerned. Thus, the contention of the learned counsel for the petitioner that there was no liability during the period from April 1, 1996 to July 31, 1996 is not acceptable. It merely supplements Tamil Nadu General Sales Tax Act. It is necessary to read and construe the Tamil Nadu General Sales Tax Act and the Tamil Nadu Additional Sales Tax Act together. The observation made by the Supreme Court 1983 (2) TMI 243 - SUPREME COURT (Ashok Service Centre v. State of Orissa) in the context of Orissa Sales Tax Act and Orissa Additional Sales Tax Act is equally applicable in the present context. It has been held 1997 (8) TMI 493 - MADRAS HIGH COURT (Kirloskar Brothers Ltd. v. State of Tamil Nadu) that the provisions u/s 55 of the TNGST Act can also be availed for the purpose of rectification of assessment under the Central Sales Tax Act and the ratio of the said decision would equally apply to the assessment of additional sales tax. The writ petition was dismissed, and the court upheld the liability to pay additional sales tax for the entire assessment year 1996-97, considering the taxable turnover exceeded Rs. 100 crores. The court also affirmed the applicability of Section 55 of the TNGST Act for rectification purposes.
Issues Involved:
1. Constitutionality of Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970. 2. Applicability of amended Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970. 3. Liability to pay additional sales tax for the period from April 1, 1996 to July 31, 1996. 4. Jurisdiction under Section 55 of the Tamil Nadu General Sales Tax Act, 1959 for rectification. Summary: 1. Constitutionality of Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970: The Tamil Nadu Taxation Special Tribunal found Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970, as amended by Act 31 of 1996, to be ultra vires and in violation of Articles 301, 303, and 304(a) of the Constitution of India. The Tribunal directed that clause (a) of Section 2(1) should stand deleted, and certain words in Section 2(1)(aa) should also be deleted to ensure the exemption up to Rs. 100 crores is equally applicable to all dealers. 2. Applicability of amended Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970: The amended provision, Section 2(1)(aa), effective from August 1, 1996, imposed additional sales tax on dealers with a taxable turnover exceeding Rs. 100 crores. The petitioner contended that since their taxable turnover between August 1, 1996, and March 31, 1997, was less than Rs. 100 crores, they were not liable to pay additional sales tax. However, the court held that the liability under the unamended Section 2(1)(a) was already incurred for the period from April 1, 1996, to July 31, 1996, and the amended provision applied from August 1, 1996. 3. Liability to pay additional sales tax for the period from April 1, 1996 to July 31, 1996: The court found that the liability to pay additional sales tax under the original Section 2(1)(a) existed for the period from April 1, 1996, to July 31, 1996, as the taxable turnover exceeded Rs. 10 lakhs. The contention that there was no liability during this period was not accepted. Additionally, the annual turnover for the assessment year 1996-97 exceeded Rs. 100 crores, making the petitioner liable to pay additional sales tax even under the amended provision. 4. Jurisdiction under Section 55 of the Tamil Nadu General Sales Tax Act, 1959 for rectification: The court held that the levy of additional sales tax under Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970, is a collection of sales tax at a higher rate. Section 2(1)(b) and Rule 9 of the Tamil Nadu Additional Sales Tax Rules, 1970, make the provisions of the TNGST Act applicable to additional tax. Therefore, Section 55 of the TNGST Act could be used for rectification. Even if Section 55 was not applicable, Section 16 of the TNGST Act relating to escaped turnover could be applied. Conclusion: The writ petition was dismissed, and the court upheld the liability to pay additional sales tax for the entire assessment year 1996-97, considering the taxable turnover exceeded Rs. 100 crores. The court also affirmed the applicability of Section 55 of the TNGST Act for rectification purposes.
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