2007 (8) TMI 675 - HC - VAT and Sales Tax

Whether the assessing officer is justified in levying tax at 16 per cent on the turnover of ₹ 16,14,79,635 representing the sales of tetra plain milk? Held that - In view of the latest clarification issued in D. Dis/Acts.Cell.II/24252/2007 dated July 30, 2007 (Clarification No. 73 of 2007) that the raw milk made bacteria-free by pasteurisation method/treatment and sold as plain milk in tetra pack, is similar to milk packed in polythene film sachet, and is eligible for exemption under entry No. 27(i) of Part B of the Third Schedule to the TNGST Act, 1959 and the said clarification would have retrospective effect from the years 1997-98 to 2000-01, the orders of the second respondent for the assessment years referred to above are liable to be set aside and accordingly, set aside and the matter is remitted back to the Appellate Assistant Commissioner (CT), the second respondent, with a direction to take note of the latest clarification and pass appropriate orders. In respect of levy of 12 per cent tax on the turnover of ₹ 1,88,739, not supported by C forms, which is under challenge in W.P. No. 25039 of 2007, it is open to the petitioner to represent his appeal before the second respondent and on receipt of the same, he is directed to consider the appeal independently, within a period of four weeks thereafter. The time spent in prosecuting the writ petitions is excluded.

Summary

Issues involved: Challenge to orders of the Appellate Assistant Commissioner under Central Sales Tax Act, Tamil Nadu General Sales Tax Act, and exemption eligibility for sales of tetra plain milk.

Central Sales Tax Act Issue:
The petitioner challenged the order of the Appellate Assistant Commissioner (C.T.) under the Central Sales Tax Act for the assessment year 1999-2000. The court previously directed the petitioner to establish before the authorities that the product sold falls within the exemption category. The second respondent upheld the levy of tax at 16% on the sales of tetra plain milk, citing that the exemption notification could not be applied retrospectively. The court found the second respondent's decision illegal and referred to a recent clarification that tetra plain milk is eligible for exemption under a specific entry of the Third Schedule to the TNGST Act. The court set aside the second respondent's orders and remitted the matter back for reconsideration in light of the clarification.

Tamil Nadu General Sales Tax Act Issue:
The petitioner also challenged the order of the Appellate Assistant Commissioner (C.T.) under the Tamil Nadu General Sales Tax Act for the assessment year 1999-2000. The petitioner argued that the sales of raw milk made bacteria-free and sold as plain milk in tetra pack should be exempt under a specific entry of the Third Schedule to the TNGST Act. The petitioner highlighted a clarification from the Commissioner of Commercial Taxes supporting the exemption eligibility of such sales. The court, considering the recent clarification, set aside the orders of the second respondent and directed a fresh assessment with the petitioner given an opportunity to present their case.

Exemption Eligibility for Sales of Tetra Plain Milk Issue:
The main contention was the legality of the 16% tax liability on the turnover representing sales of tetra plain milk. The petitioner argued that such sales should be exempt based on similarities with milk packed in polythene film sachet. The court referred to a clarification stating that such sales are eligible for exemption under a specific entry of the TNGST Act. Considering this clarification with retrospective effect, the court set aside the second respondent's orders and directed a reevaluation, granting the petitioner an opportunity to represent their case.

In conclusion, the court's judgment addressed the challenges to the orders of the Appellate Assistant Commissioner under the Central Sales Tax Act and the Tamil Nadu General Sales Tax Act. The court emphasized the importance of establishing exemption eligibility for sales of tetra plain milk and considered a recent clarification supporting such exemption. The court set aside the second respondent's orders and directed a fresh assessment, allowing the petitioner to present their case in light of the clarification provided by the Commissioner of Commercial Taxes.