2009 (6) TMI 941 - HC - VAT and Sales Tax

Whether the Appellate Tribunal was correct in holding that the concessional levy was rightly disallowed since no goods were manufactured inside the State for sale by him of any goods liable to tax when the statute permits the petitioner to make use of form XVII in the works contract? Whether the Appellate Tribunal was correct in not considering the correct provision exists during the year 1990-91, even though the same was raised in the grounds and also argued at the time of hearing? Held that - Admittedly, the assessment year in question is 1991 pertaining to the period from April 1, 1990 to March 31, 1991, viz., during the relevant assessment period, the sub-clause (iii) of section 3(3) which specifically provides that involved in the execution of works contract shall be at only three per cent on the turnover relating to such sale would mean that if a product was purchased utilising form XVII and that particular product is utilised in works contract of that person, who has availed form XVII even in that case the tax payable would be only at the concessional rates was very much available under the Act, under which the assessee, under law, is entitled to claim concession and the same was rightly claimed by the assessee. In view of the fact that the assessee is entitled to seek necessary concession of rate of interest as per section 3(3)(iii) as it then was, which has been rightly claimed by him, we set aside the order passed by the Tribunal and allow the tax case revision, answering the questions of law as stated above in favour of the assessee and against the Revenue.

Summary

Issues:
1. Interpretation of provisions under section 3(3)(iii) of the Tamil Nadu General Sales Tax Act, 1959.
2. Eligibility of concessional rate of tax for goods utilized in works contract.

Issue 1: Interpretation of provisions under section 3(3)(iii) of the Tamil Nadu General Sales Tax Act, 1959:
The case involved a railway contractor who purchased certain materials using form XVII, availing a concessional rate of tax. The assessing officer contended that the purchased items were not used in manufacturing a new commodity but in executing works contracts, hence levying tax at a higher rate. The Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal upheld this decision. However, the appellant argued that section 3(3)(iii) allowed for a concessional rate of tax for goods used in works contracts. The court noted that during the relevant assessment period, the provision under section 3(3)(iii) was in force, entitling the assessee to claim the concession. As the authorities had not considered this provision, the court set aside the Tribunal's order, ruling in favor of the assessee.

Issue 2: Eligibility of concessional rate of tax for goods utilized in works contract:
The appellant highlighted that section 3(3)(iii) permitted a concessional rate of tax for goods utilized in works contracts between April 1, 1990, and September 4, 1991. The court acknowledged that the assessee was entitled to claim the concession under this provision during the relevant assessment period. As the Tribunal had failed to consider this entitlement, the court overturned the Tribunal's decision, allowing the tax case revision in favor of the assessee. Consequently, the court ruled that the assessee was eligible for the necessary concession of the rate of interest as per section 3(3)(iii) and directed the restoration of the concession to the assessee, setting aside the Tribunal's order and ruling in favor of the assessee against the Revenue.