2011 (11) TMI 702 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Claim of exemption u/s 8 of the Tamil Nadu General Sales Tax Act, 1959.
2. Jurisdiction to impose sales tax on the commodity subjected to additional duties of excise.
3. Availability of alternative remedy of appeal.

Summary:

1. Claim of exemption u/s 8 of the Tamil Nadu General Sales Tax Act, 1959:

The petitioner, a public limited company engaged in the manufacture of sugar, challenged the assessment order for the year 2004-05, which rejected their claim for exemption u/s 8 of the Tamil Nadu General Sales Tax Act, 1959. The petitioner argued that the imported raw sugar and the processed white sugar are two different commercial commodities, and thus, the sale of white sugar should qualify for exemption from sales tax. The Commercial Tax Officer, however, assessed the sale of sugar at a four per cent tax rate and proposed a penalty under section 12(3)(a).

2. Jurisdiction to impose sales tax on the commodity subjected to additional duties of excise:

The petitioner contended that the white sugar manufactured from imported raw sugar should not attract sales tax as it is a different commercial commodity subjected to excise duties. The court examined the relevant entries under the First and Third Schedules of the Tamil Nadu General Sales Tax Act and the Additional Duties of Excise (Goods of Special Importance) Act, 1957. It was determined that the exemption under the Third Schedule does not depend on the payment of additional duties of excise but on whether the goods fit the description in the First Schedule of the Additional Duties of Excise Act.

3. Availability of alternative remedy of appeal:

The Revenue argued that the writ petition should be dismissed due to the availability of an effective alternative remedy of appeal. However, the court referred to the Supreme Court's decision in Union of India (UOI) v. Tantia Construction Private Limited, which held that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not compulsion. The court decided to entertain the writ petition despite the alternative remedy.

Conclusion:

The court set aside the assessment order dated April 29, 2011, and remanded the matter back to the first respondent for fresh consideration. The petitioner was directed to provide further materials to support their contention that raw sugar and refined sugar are different commodities. The writ petition was allowed, and the related miscellaneous petition was closed.