2013 (12) TMI 802 - HC - VAT and Sales Tax

Liability under the provisions of the Central Sales Tax Act, 1956 Held that - The State had not enforced the law in relation to the transactions relating the State Corporation, would not entitle the petitioner to claim that the State must refrain from enforcing the law as against the petitioner; by recording the submission made by the State that it was initiating action against the State owned Corporation for the recovery of tax on transactions which were similar to those like that of assessees Relying upon South India Tanners and Dealers Association Vs. Deputy Commissioner of Commercial Taxes and others 2008 (9) TMI 545 - SUPREME COURT OF INDIA . Levy of penalty under Section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959 - Scope of 46th amendment to the Constitution of India - Whether the Forty-sixth amendment to the Constitution of India has done away with the doctrine of Mutuality Held that - The order of the Sales Tax Appellate Tribunal is unexceptional on the aspect of assessment on unincorporated body - the claim of the assessee itself does not appears to be a bonafide claim - the order of penalty under Section 12(5)(iii) of the Tamil Nadu General Sales Tax Act levied on the assessee upheld Decided against Assessee.

Summary

Issues:
- Interpretation of the Forty-sixth amendment to the Constitution of India regarding the doctrine of Mutuality
- Assessment of turnover under the Central Sales Tax Act for supply of wattle extract
- Appeal against levy of penalty under the Central Sales Tax Act and Tamil Nadu General Sales Tax Act
- Jurisdiction under the Central Sales Tax Act for inter-State sales
- Application of previous court judgments on taxability of goods sold by unincorporated associations
- Challenge to discriminatory treatment by the State
- Levy of penalty for incomplete return and non-reporting of taxable turnover

Analysis:
1. The case involved a challenge to the Forty-sixth amendment to the Constitution of India regarding the doctrine of Mutuality, specifically in relation to the supply of wattle extract by an association to its members engaged in processing hides and skins. The Assessing Officer assessed the turnover under the Central Sales Tax Act, rejecting the plea that the supply did not amount to a 'sale' under the Tamil Nadu General Sales Tax Act. The Appellate Assistant Commissioner and Sales Tax Appellate Tribunal upheld the assessment and penalty, citing previous court decisions on similar cases.

2. The appellant argued that since the transactions did not involve inter-State sales, the provisions of the Central Sales Tax Act should not apply. However, the Sales Tax Appellate Tribunal found that the sales occurred between the association and its members operating in other States, making them liable under the Tamil Nadu General Sales Tax Act. The Tribunal also upheld the penalty, noting the appellant's failure to file necessary returns despite previous court decisions.

3. The appellant further contended that a Supreme Court decision directed the Assessing Officer to reevaluate the case in light of new developments. However, the High Court rejected this argument, emphasizing that the Supreme Court decision related to show cause notices and did not impact the assessment of the appellant as an unincorporated body under the tax laws.

4. The High Court referred to previous judgments, including one where the appellant challenged the taxability of goods sold by unincorporated associations to their members. The court upheld the tax levy, stating that such sales were taxable under the relevant tax laws. The court also dismissed claims of discriminatory treatment by the State, emphasizing the uniform application of tax laws to all entities.

5. Regarding the penalty imposed for incomplete returns and non-reporting of taxable turnover, the High Court upheld the Sales Tax Appellate Tribunal's decision, noting the appellant's lack of substantiating evidence and failure to comply with tax regulations despite previous court rulings. The court found no grounds to accept the appellant's arguments and upheld the penalty under the Tamil Nadu General Sales Tax Act.

6. In conclusion, the High Court dismissed the Tax Case (Revisions) filed by the appellant, upholding the assessments under the Central Sales Tax Act and the penalty under the Tamil Nadu General Sales Tax Act. The court found no merit in the appellant's arguments and affirmed the decisions of the lower authorities.