2012 (9) TMI 891 - HC - VAT and Sales Tax

Whether the commodity dealt with by the assessee, viz., the woven labels or printed cloth labels are entitled to be classified under entry 11, Part A of the Third Schedule to the TNGST Act, 1959 or not? Held that - A combined reading of the decision of Metagraphs Pvt. Ltd. v. Collector of Central Excise, Bombay 1996 (11) TMI 68 - SUPREME COURT OF INDIA along with entries 5806 and 5807 of the Central Excise Tariff Act, no hesitation in rejecting the case of the assessee seeking exemption under entry 11 of Part A of the Third Schedule. Further, no justifiable ground to accept the clarification of the Special Commissioner and Commissioner of Commercial Taxes relied on by the assessee to argue that their product falls under entry 11 of Part A of the Third Schedule in the context of the specific reference to the heading 5806 of the Central Excise Tariff Act. Needless to say that a clarification cannot go beyond the scope and ambit of the provision of law. Considering the nature of dispute raised by the assessee claiming exemption and by applying the decision in Appollo Saline Pharmaceuticals (P) Ltd. v. Commercial Tax Officer (Fac) 2001 (10) TMI 1100 - MADRAS HIGH COURT we do not find any good ground to restore penalty. Appeal partly allowed.

Summary

Issues:
Classification of commodity for tax exemption under entry 11, Part A of the Third Schedule to the TNGST Act, 1959.

Detailed Analysis:
The case involved a dispute regarding the classification of goods for tax exemption under entry 11, Part A of the Third Schedule to the Tamil Nadu General Sales Tax Act, 1959. The assessee, a dealer in cloth tapes and printed labels, contended that the goods sold by them fell under the exempted category as per the mentioned entry. An assessment order brought the sales of woven cloth tapes and ribbon tapes (printed labels) under tax, leading to an appeal by the assessee. The first appellate authority rejected the claim, relying on a Supreme Court decision that classified printed cloth labels as printed material liable for tax.

The Sales Tax Appellate Tribunal, in its order dated September 6, 2002, accepted the assessee's case, classifying the commodity as falling under entry 11 of Part A of the Third Schedule. The Revenue challenged this decision, arguing that the goods did not qualify for exemption under the relevant entry. The Revenue contended that the goods should be considered under a different heading of the Central Excise Tariff Act, which excluded labels, badges, and similar articles of textile materials from the exemption.

The High Court analyzed the relevant entries and provisions to determine the classification of the goods. It highlighted the definitions and exclusions under the Central Excise Tariff Act, emphasizing that the specific nature of the goods sold by the assessee did not align with the requirements for exemption under entry 11. The Court referred to a Supreme Court decision regarding printed labels and concluded that the assessee's product did not qualify for exemption under the Third Schedule.

Based on the legal interpretations and precedents, the High Court set aside the Sales Tax Appellate Tribunal's order and restored the assessment order, levying tax at eight percent. The Court found no grounds to restore the penalty, considering the nature of the dispute and relevant legal principles. Ultimately, the tax case revision was partly allowed, with no costs imposed on either party.