2003 (4) TMI 535 - AT - VAT and Sales Tax

Summary

Issues:
1. Challenge to the validity of explanation 1 to section 2(n) of the Tamil Nadu General Sales Tax Act, 1959.
2. Exemption from levy of tax under the Tamil Nadu General Sales Tax Act, 1959 for an incorporated association.
3. Determination of tax liability on the supply of goods by an association to its members.
4. Application of section 5(2) of the Central Sales Tax Act, 1956 to transactions involving import of goods.

Analysis:
1. The first issue pertains to the challenge against explanation 1 to section 2(n) of the Tamil Nadu General Sales Tax Act, 1959. The petitioner-association sought a declaration that the explanation is ultra vires of the Constitutional 46th Amendment and against principles laid down by the Supreme Court. The respondents argued that the levy of tax on supplies falls within the ambit of the Act and is in conformity with the Constitution of India.

2. The second issue involves the exemption from tax under the Tamil Nadu General Sales Tax Act, 1959 for an incorporated society importing goods on behalf of its members. The petitioner-association contended that as an agent to its members, they are not exigible to tax under the Act, relying on section 5(2) of the Central Sales Tax Act, 1956. However, the respondents argued that the society's activities constitute a sale exigible to tax under the Act.

3. The third issue revolves around the determination of tax liability on the supply of goods by the petitioner-association to its members. The Special Tribunal and the High Court held that such transactions constitute a sale under section 2(n)(v) of the Act, and the liability to tax arises depending on the nature of the commodity sold and the point of taxation, as per the Act. The petitioner's reliance on previous judgments was found to be unfounded.

4. The fourth issue concerns the application of section 5(2) of the Central Sales Tax Act, 1956 to transactions involving the import of goods by the petitioner-association. The Tribunal found that the petitioners failed to provide evidence that the sale or purchase of goods occurred in the course of import into India as required by the section. Consequently, the petitioners could not benefit from the provision, leading to the dismissal of their petitions.

In conclusion, the Tribunal dismissed the original petitions, emphasizing that the petitioners did not meet the legal requirements for exemption or relief from tax liabilities as per the relevant statutes and precedents cited in the judgment.