2012 (2) TMI 444 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of section 3(2) of the Tamil Nadu General Sales Tax Act, 1959 regarding tax liability on sale of laminated sheet scraps.
2. Applicability of exemption under section 17 of the Act to successive dealers.

On the first issue, the Revenue challenged the order of the Tamil Nadu Sales Tax Appellate Tribunal regarding the tax liability on the sale of laminated sheet scraps purchased from Tamil Nadu Electricity Board (TNEB). The Revenue argued that even though the scraps were exempted under section 17 of the Act, they should be considered taxable as a second sale within the State. The assessing officer and the Additional Appellate Assistant Commissioner supported this view, citing the second proviso to section 3(2) of the Act.

However, the Tribunal disagreed and relied on a previous judgment to rule that if the exemption was allowed for the purchase of iron and steel, it should apply to successive dealers as well. The Tribunal held that taxing the second sale of laminated scraps would be illegal based on this principle, leading to the appeal by the Revenue.

Regarding the interpretation of the second proviso to section 3(2) of the Act, the court examined the provision and clarified that the exemption applies only to the first sale of goods mentioned in the First Schedule, taxable at the point of first sale. The court emphasized that if a sale is not the first sale, the dealer is entitled to claim exemption even if the first sale has not been taxed.

In conclusion, the court dismissed the tax case revision, stating that the assessee is entitled to claim exemption on the grounds that the sale of laminated sheet scraps was not the first sale, thus upholding the decision of the Tribunal.