2016 (7) TMI 1124 - HC - VAT and Sales Tax

Classification - rubberised coir product - purchase of used polyurethane foam - Suppression of taxable turnover - Held that - Agreeing with the finding of fact, rendered by the Appellate Assistant Commissioner (CT) that merely because, the latex gum was used, in the process of binding the coir fibre, the end product cannot be termed as foam rubber product and following the decision of this Court in State of Tamil Nadu v. Duroflex Coir Industries Private Ltd., 1997 (8) TMI 479 - MADRAS HIGH COURT and Notification in G.O.P.303, dated 16.03.1981, applicable to rubberised coir, the Tamil Nadu Sales Tax Appellate Tribunal has dismissed the appeal filed by the revenue. First of all, samples have been perused and the Appellate Assistant Commissioner has recorded a categorical finding that the product is only made of rubberised coir, taxable at 5%, which fact has been concurred by the Tribunal - No demand - decided against the revenue.

Summary

Issues:
Challenge to order made in S.T.A.No.1061 of 2000 passed by Sales Tax Appellate Tribunal, Chennai.

Analysis:
1. Facts and Defects Found by Assessing Officer:
The respondent, a dealer in rubberised coir products, was taxed under the Tamil Nadu General Sales Tax Act for the year 1995-96. The Assessing Officer found various defects in the reported turnovers, leading to the imposition of a penalty under Section 12(3)(b) of the Act.

2. Appellate Authority's Modification:
The respondent appealed before the Appellate Assistant Commissioner, who modified the assessment by clarifying that rubberised coir products should be taxed at 5% only. Consequently, the penalty imposed was set aside due to excess payment.

3. State's Appeal Before Tribunal:
The State appealed before the Sales Tax Appellate Tribunal, arguing that the end products manufactured by the respondent should be taxed at 12% due to the use of additional materials like polyurethane foam in the production process.

4. Tribunal's Decision and Reasoning:
The Tribunal dismissed the State's appeal, emphasizing that the product in question was rubber coir mattress, not foam rubber product. It relied on the clarification issued by the Commissioner of Commercial Taxes and previous court decisions to support the assessment at 5%.

5. Questions of Law Raised for Revision:
The State sought revision of the Tribunal's order based on several grounds, including the nature of the end product, the raw materials used, and the applicability of specific notifications and clarifications.

6. Court's Decision and Reasoning:
After examining the facts and findings of the lower authorities, the Court upheld the Tribunal's decision. It noted that the product was indeed rubberised coir, taxable at 5%, and rejected the State's arguments regarding the use of polyurethane foam and different raw materials.

7. Conclusion:
Ultimately, the Court dismissed the Tax Case Appeal, ruling in favor of the respondent and upholding the assessment at 5%. The decision highlighted the importance of factual findings and concurrence between lower authorities in tax assessments.