2013 (10) TMI 538 - HC - VAT and Sales Tax

Exemption u/s 3(B)(2-a) - Work contract - work of erection and commissioning of diesel engine generators - Held that - assessee has no where stated in the appeal grounds or in reply that the work contract was executed from outside the State of Tamil Nadu and they purchased the materials and other connected parts and accessories from other States only for the purpose of job work undertaken by them with the Telecommunication department. In the circumstances, there was absolutely no material to substantiate the claim for deduction under Section 3-B (2-a) and the same was rightly rejected by the authorities concerned Penalty u/s 22(2) Held that - Assessee charged sales tax at 12% as against 4% on sales to the Government department. Thus, the Tribunal held that the levy of penalty was in accordance with the provisions of law - Decided against assessee.

Summary

Issues:
1. Levying tax on goods involved in the execution of works contract purchased in the course of interstate sales.
2. Confirmation of penalty under Section 22(2) of the TNGST Act.

Issue 1: Levying Tax on Goods in Works Contract:
The case involved a dealer in diesel engine generators engaged in erection and commissioning work for the government. The dealer claimed exemption on 30% towards labor charges. The Assessing Officer found discrepancies in the dealer's tax filings, leading to the determination of taxable turnover and the levy of tax. The Appellate Authority upheld the assessment, noting that the dealer had not proven the purchase of all materials from outside the state for exemption under Section 3-B (2-a). The Sales Tax Appellate Tribunal also confirmed the assessment, emphasizing the lack of evidence supporting the claim for deduction. The High Court rejected the dealer's argument that materials were purchased from outside the state, as no substantiating material was provided, upholding the Tribunal's decision.

Issue 2: Confirmation of Penalty under Section 22(2):
Regarding the penalty levied under Section 22(2) for charging higher sales tax on government sales, the Tribunal deemed the penalty justified. The High Court concurred with this decision, stating that the penalty was in line with the legal provisions. Consequently, the Court dismissed the Tax Case Revision, finding no grounds to interfere with the Tribunal's orders. No costs were awarded in this matter.

This judgment addressed the challenges faced by the dealer in proving exemption claims and the imposition of penalties under the TNGST Act. The Court's detailed analysis highlighted the importance of substantiating claims with evidence and complying with tax regulations to avoid penalties.