2011 (6) TMI 721 - HC - VAT and Sales Tax

Whether both the assessing officer and also the Joint Commissioner had correctly held that the automobile glasses were only fall under item 11(I)/ Part E of the First Schedule and the same will not come under entry 43(ii)/ Part D of the First Schedule and hence, the order passed by the Joint Commissioner is in accordance with law and the same has to be confirmed? Held that - As the assessee deals with automobile accessories and they purchased only automobile glasses and sold them in the State of Tamil Nadu and as there is no dispute regarding the same, we, therefore, hold that the purchase of automobile glasses squarely falls under entry 43/Part D of the First Schedule and shall be subjected to tax at eight per cent and not at 12 per cent and the order passed by the Joint Commissioner taxing at 12 per cent under entry 11/Part E of the First Schedule is set aside and the order of the Appellate Assistant Commissioner is restored. Accordingly, the above appeal is allowed.

Summary

Issues:
- Dispute over the correct tax rate for automobile glasses sold by the assessee.
- Interpretation of relevant entries in the First Schedule of the Tamil Nadu General Sales Tax Act, 1959.
- Rectification of assessment order under section 55 of the Act.
- Appeal against the order of the Joint Commissioner by the assessee.

Analysis:
The case involved a dispute regarding the tax rate applicable to automobile glasses sold by the assessee. Initially, the assessing officer levied tax at eight per cent under entry 43(ii)/Part D of the First Schedule, considering the goods as auto parts and accessories. However, the officer later rectified the order under section 55 of the Act, applying a tax rate of 12 per cent under entry 11(i)/Part E of the First Schedule. The assessee appealed this decision, arguing that the glasses purchased were solely used as automobile spare parts and should be taxed at eight per cent, not 12 per cent.

Upon analyzing the relevant entries in the First Schedule, the court noted that entry 11 specifically mentioned glass and glassware, excluding items specified elsewhere in the Schedule. Since the goods in question were specified elsewhere, they did not fall under entry 11. The court highlighted that the assessee dealt with automobile accessories, specifically purchasing automobile glasses and selling them to motor bus operators. Referring to a Supreme Court case, the court emphasized that an accessory need not be necessary for the effective use of the vehicle as a whole but should add comfort or enjoyment. Based on this, the court concluded that the purchase of automobile glasses fell under entry 43/Part D of the First Schedule, warranting taxation at eight per cent, not 12 per cent.

In light of the above analysis, the court set aside the Joint Commissioner's order and restored the decision of the Appellate Assistant Commissioner, allowing the appeal of the assessee. The court held that the automobile glasses were correctly taxed at eight per cent under entry 43/Part D of the First Schedule, rejecting the Joint Commissioner's assessment at 12 per cent under entry 11/Part E. No costs were awarded in the final judgment.