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2013 (7) TMI 331 - HC - VAT and Sales Tax


Issues:
Assessment based on Rule 6(h) of Tamil Nadu General Sales Tax Rules, 1959 and Section 10 of Tamil Nadu General Sales Tax Act, 1959 - Dispute regarding tax payment by commission agent - Double taxation concern.

Analysis:

The case involved a revision against the Sales Tax Appellate Tribunal's order for the assessment year 1999-2000. The primary question of law was whether the Tribunal was correct in relying on Rule 6(h) of the Tamil Nadu General Sales Tax Rules, 1959, and Section 10 of the Tamil Nadu General Sales Tax Act, 1959, to uphold the assessment on the petitioner-Principals despite the goods being sold by registered Commission Agents. The agents were considered primarily liable for tax under the Act, and the Revenue did not find any failure in tax remittance by the agents. The Tribunal's decision was challenged based on this aspect.

The background revealed that the assessment was made on Indian Petrochemicals Corporation Limited (IPCL) for transferring products to various commission agents, including V.D.Swamy and Company Limited, Chennai. A consignment sale agreement was in place between IPCL and the agent, where the agent was responsible for showing turnover in sales tax returns and collecting/paying sales tax. Disputes arose between IPCL and the agent, leading to assessment issues. The absence of proof of tax payment by the agent resulted in the assessee being assessed for the turnover related to this transaction. Despite appeals, the assessment was upheld due to lack of evidence regarding tax payment by the agent.

Upon direction from the Court, it was confirmed that the agent had indeed been assessed for the turnover and tax had been collected. With this verification, the Court concluded that there should be no double taxation concerning the turnover at the hands of the assessee towards the principal. Consequently, the Court set aside the Tribunal's order, allowing the Tax Case Revision in favor of the assessee. No costs were awarded in this matter.

In summary, the judgment clarified the issue of assessment based on specific tax rules and acts, resolved the dispute regarding tax payment by the commission agent, and addressed concerns related to potential double taxation, ultimately ruling in favor of the assessee based on the verification of the agent's assessment and tax collection.

 

 

 

 

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