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2014 (5) TMI 796 - HC - VAT and Sales TaxExemption of Tax Levy of purchase tax - Whether exempted turnover would come into reckoning of the charging provision u/s 7A Tamil Nadu Electricity Board Notified that all sales of goods u/s 17(1) of the TNGST Act are exempted from tax - Held that - Judgments in STATE OF TAMIL NADU v. KANDASWAMI 1975 (7) TMI 123 - SUPREME COURT OF INDIA and HOTEL BALAJI v. STATE OF A.P. 1992 (10) TMI 240 - SUPREME COURT OF INDIA followed - The scheme of purchase tax levy u/s 7-A of the Act does not cover cases of sale or purchase of goods totally exempted from tax at all points u/s 8 or Section 17(1) - However, where the exemption is a qualified one, be it goods related or dealer related, purchase or sale of goods subjected to any of the contingencies enumerated under Section 7-A, would certainly attract the charge under Section 7-A of the Act - Going by these decisions, there is no hesitation in rejecting the plea of the assessee that the notification granting exemption to sale by Tamil Nadu Electricity Board cannot be considered as a circumstance to apply to the assessee to exclude the charge u/s 7-A of the Act - Quite apart from that Section 7-A itself underwent an amendment with effect from 1.1.1987. In the light of the provisions u/s 3 as well as Section 7-A of the Act, before the amendment in the 1986 i.e. upto 31.12.1986, and there afterwards from 1.1.1986 onwards, no hesitation in holding that the assessments were correctly made and the Tribunal s order is in accordance with the principle of law laid down by the Apex Court in KANDASWAMI Supra and HOTEL BALAJI Supra - Revision is dismissed - Consequently, connected MP is also dismissed Decided against assessee.
Issues:
1. Interpretation of provisions of Section 7-A of the Tamil Nadu General Sales Tax Act. 2. Applicability of exemption notifications to purchase tax liability. 3. Assessment of tax liability on purchase of goods exempted from sales tax. Analysis: The High Court of Madras heard a Tax Case Revision filed by an assessee regarding the assessment year 1986-87. The case revolved around the exemption notification G.O. Ps. No. 1215 dated 1st November 1982, which exempted tax on sales of goods by the Tamil Nadu Electricity Board under Section 17(1) of the Tamil Nadu General Sales Tax Act. The assessee, a cement manufacturer, purchased fly ash from the Electricity Board and contended that no purchase tax should be levied due to the exemption. However, the Assessing Officer, Deputy Commissioner, and Sales Tax Appellate Tribunal upheld the assessment under Section 7-A of the Act, leading to the revision by the assessee. The Tribunal, while rejecting the assessee's contention, canceled the penalty but upheld the assessment under Section 7A of the Act. The Court analyzed the provisions of Section 3 and Section 7-A of the Act to determine the tax liability. It referred to previous judgments, including the Supreme Court's interpretation of Section 7-A, emphasizing the concepts of 'taxable person,' 'taxable goods,' and 'taxable event.' The Court highlighted that goods exempted from tax cannot be brought under the purview of Section 7-A. The Court examined various decisions, such as the case of conditional exemption on purchase tax and the impact of exemption notifications on tax liability. It differentiated between general exemptions and qualified exemptions, emphasizing that only qualified exemptions may attract the charge under Section 7-A. The Court also discussed the 1987 amendment to Section 7-A and how it affected the assessment of purchase tax liability. Based on the analysis of relevant provisions and previous judgments, the Court concluded that the assessments were correctly made, aligning with the principles established by the Apex Court in earlier decisions. Consequently, the Tax Case Revision was dismissed, and no costs were awarded. The connected Miscellaneous Petition was also dismissed in light of the judgment. In summary, the judgment addressed the interpretation of Section 7-A of the Act, the impact of exemption notifications on purchase tax liability, and the correct assessment of tax liability on goods exempted from sales tax. The Court's decision was based on a thorough analysis of legal provisions, previous judgments, and the principles established by higher courts, ultimately upholding the assessment under Section 7-A in this case.
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