2013 (12) TMI 501 - HC - VAT and Sales Tax

Transaction treated as outright sale Supply and laying mosaic to the prescription of the purchaser Held that - The assessee has not used in the execution of any works contract, the goods which were purchased by him in the same form - the question of granting exemption under Section 3B(2)(b) of the TNGST Act, does not arise - There was no justifiable grounds to accept the plea of the assessee that they are entitled for exemption under Section 3B(2)(b) of the TNGST Act - the contract is one for manufacture of mosaic tiles and laying of tiles in the business place of the dealer, which is an inevitable works contract, the Assessing Officer in his point of assessment, proposed adoption of 50% for manufacturing process and the other 50% for laying and polishing, there being no separate details for payment of such wages towards manufacturing of mosaic tiles and for laying and polishing in the sites of his customers. Imposition of Penalty u/s 12(5)(iii) of the TNGST Act - Relying upon Apparels and Handloom Exporters Association and Ors., vs. State of Tamil Nadu and Ors. 2001 (9) TMI 1114 - MADRAS HIGH COURT - The Assessing Officer to redo the deduction particularly with reference to Labour Charges alone adopting 30% as relatable to labour charges liable to be deducted in the books of accounts - Apart from this, the question of penalty levied on the assessee also needs to be reassessed - the Appellate Assistant Commissioner confirmed the levy of penalty under Section 12(5)(iii) of the TNGST Act, the Tribunal reduced the levy of penalty at 50% as against the 150% - Decided partly in favour of Petitioner.

Summary

Issues:
1. Interpretation of works contract for mosaic tiles.
2. Exemption under Section 3B(2)(b) of the TNGST Act.
3. Levy of penalty under Section 12(3) of the TNGST Act.

Detailed Analysis:
1. The case involved the interpretation of a works contract for mosaic tiles. The assessee claimed exemption under the Tamil Nadu General Sales Tax Act, 1959, stating that the work carried out was a works contract in mosaic tiles. The Assessing Officer proposed a split of turnover for manufacturing and laying/polishing due to lack of separate wage details. The Appellate Authority upheld the tax levy based on a Division Bench decision. The Tribunal rejected the works contract claim based on the nature of changes in goods and upheld the penalty.

2. The assessee contended for exemption under Section 3B(2)(b) of the TNGST Act, arguing that goods purchased from registered dealers were used in the same form in works contracts. However, the authorities found that the goods were not used in the same form, leading to a denial of exemption. The court upheld this finding based on the works contract bill and the nature of goods sold to customers, affirming the tax liability.

3. The penalty under Section 12(3) of the TNGST Act was also disputed. The Appellate Authority and Tribunal had differing views on the penalty amount, with the Tribunal reducing it to 50% from the original 150%. The court, considering the turnover details and lack of willful non-compliance, deleted the penalty, aligning with the decision in a related case. The Tax Case (Revision) was partly allowed based on these considerations, confirming the quantum assessment but deleting the penalty.