2015 (4) TMI 963 - HC - VAT and Sales Tax

Classification - Applicable rate of tax - whether the windscreen glasses sold by the assessee fall under Entry 11 Part E of the I Schedule, taxable at 12% or under Entry 43(ii) of Part D of I Schedule of the Tamil Nadu General Sales Tax Act, taxable at 8% - Held that - reasoning of the Appellate Assistant Commissioner appears to be more appropriate in the facts of the present case, who has applied the user theory, more particularly in a case where the goods sold is specifically parts and accessories of motor vehicles - It is to be noted that Entry 43(ii) of Part D of First Schedule includes bulbs, which is also made of glass. Therefore, the distinction is that the goods forming parts and accessories of motor vehicle would fall under Entry 43(ii) of Part D of First Schedule, taxable at 8%, in contrast to usual glass and glassware in Entry 11 of Part E of First Schedule of the Tamil Nadu General Sales Tax Act - In the instant case also, Entry 43(ii) of Part D of I Schedule specifically deals with parts and accessories of motor vehicle, while Entry 11 of Part E of I Schedule deals with general glass and glasswares. When there is a specific entry in the statute, the same should be applied while making the assessment. It is not in dispute that the assessee is a dealer in automobile glasses and has supplied their goods to the automobile manufacturers - Decided in favour of assessee.

Summary

Issues: Classification of goods for tax purposes under the Tamil Nadu General Sales Tax Act - Entry 11 of Part E vs. Entry 43(ii) of Part D.

Analysis:
1. The Tax Case (Revision) was filed by the assessee against the order of the Joint Commissioner of Commercial Taxes, Chennai. The assessee, a dealer in glass, was assessed for the assessment year 1992-93 under the Tamil Nadu General Sales Tax Act. The Assessing Officer estimated suppression and included forwarding charges in the taxable turnover. The rate of tax was disputed, with the Assessing Officer levying a penalty under Section 12(3) of the Act.

2. The Appellate Assistant Commissioner partly allowed the appeal, disagreeing with the assessment of turnover at 12% under Entry 11 of Part E, stating that the goods sold fell under Entry 43(ii) of Part D. The user theory was applied, considering the assessee primarily dealt in automobile glasses supplied to automobile manufacturers, leading to a direction to assess the turnover at 8%.

3. The Joint Commissioner, in a suo motu revision, disagreed with the Appellate Assistant Commissioner's decision, classifying windscreen glasses under Entry 11 of Part E. The assessee challenged this decision in the present Tax Case (Revision).

4. The main issue was whether windscreen glasses sold by the assessee should be taxed at 12% under Entry 11 of Part E or at 8% under Entry 43(ii) of Part D. The relevant entries were examined, with the user theory being crucial in determining the classification of goods.

5. The Court found the Appellate Assistant Commissioner's reasoning more appropriate, as parts and accessories of motor vehicles, including bulbs made of glass, fell under Entry 43(ii) of Part D, taxable at 8%. A Supreme Court decision reinforced this view, emphasizing the importance of specific entries in classification.

6. The Court held that the assessee, primarily dealing in automobile glasses supplied to manufacturers, should be taxed at 8% under Entry 43(ii) of Part D. The decision was in favor of the assessee, following the precedent and emphasizing the specific nature of the entry for accurate assessment.

7. The Court noted that the assessee had relied on a relevant decision in their written submission, which the Joint Commissioner had overlooked. Consequently, the Tax Case (Revision) was allowed in favor of the assessee, with no costs incurred.