2010 (11) TMI 828 - SC - VAT and Sales Tax

Liability of the appellant to pay sales tax on the sales made by it - notification contemplates deferment of sales tax for a period of 5 years wherever sales tax levy is applicable on the purchases for the film city project Held that - stand of the appellant that the notification would cover the sales made by it to the Corporation in the years 1994-95 and 1995-96 which fall in the stipulated period of five years, court would be loathe to examine contentions of facts based on evidence, advanced for the first time before this court without there being any adjudication by the High Court on the same, judgment is set aside and the matter is remitted back to the Tribunal appeal is allowed

Summary

Issues Involved:
1. Levy of sales tax on sales made by the appellant to the Tamil Nadu Film Development Corporation.
2. Validity and applicability of the Government Order (G.O. M. No. 169) regarding sales tax exemption.
3. Liability of the appellant to pay sales tax under the Tamil Nadu General Sales Tax Act, 1959.
4. Interpretation of Section 17A of the Tamil Nadu General Sales Tax Act concerning deferred payment of tax.
5. Examination of factual contentions based on the notification issued.

Detailed Analysis:

1. Levy of Sales Tax on Sales Made by the Appellant to the Tamil Nadu Film Development Corporation:
The primary issue in this case is the challenge to the High Court's affirmation of the levy of sales tax on the appellant for sales made to the Tamil Nadu Film Development Corporation during the assessment years 1994-95 and 1995-96. The Commercial Tax Officer (CTO) initially exempted the sales for the year 1994-95 but later revised the assessment, disallowing the exemption and creating additional tax demands for both years. The Tribunal and High Court upheld the CTO's decision, leading to the present appeal.

2. Validity and Applicability of the Government Order (G.O. M. No. 169) Regarding Sales Tax Exemption:
The appellant contended that G.O. M. No. 169 dated June 27, 1994, issued by the Government of Tamil Nadu, exempted the film city project from the payment of sales tax. The order declared the film city project as a tourism project, granting it various concessions, including a deferral of sales tax for five years. The respondents argued that the order was not issued by the Commercial Taxes Department and hence could not be used to claim exemption.

3. Liability of the Appellant to Pay Sales Tax under the Tamil Nadu General Sales Tax Act, 1959:
Section 3 of the Tamil Nadu General Sales Tax Act, 1959, imposes the liability to pay sales tax on the dealer, regardless of whether the tax has been collected from the consumer. The High Court held that in the absence of a notification under Section 17 of the Act, the appellant, as the dealer, was liable to pay the sales tax. The appellant's plea that it had not collected sales tax from the corporation was deemed irrelevant.

4. Interpretation of Section 17A of the Tamil Nadu General Sales Tax Act Concerning Deferred Payment of Tax:
Section 17A empowers the State Government to defer the payment of tax for new industries. The notification dated June 27, 1994, issued with the concurrence of the Commercial Taxes and Finance Departments, deferred the payment of sales tax for the film city project for five years. The Court found that the State Government was competent to issue such a notification under Section 17A.

5. Examination of Factual Contentions Based on the Notification Issued:
The authorities below, including the Tribunal, did not examine the scope and implication of the notification dated June 27, 1994. The Court noted that the notification had a significant bearing on the issue and should be considered. The case was remanded to the Tribunal for fresh consideration, particularly in light of the notification and the fact that the deferral period had expired.

Conclusion:
The Supreme Court allowed the appeal, set aside the impugned judgment, and remanded the matter back to the Tribunal for fresh consideration in light of the notification dated June 27, 1994. The parties were left to bear their respective costs.