2017 (10) TMI 1169 - HC - VAT and Sales Tax

Works contract - Levy of vat - transfer of property - in a dyeing works contract, the goods to be incorporated may either be as goods or in some other form similar to the accretion or occasions due to the application of dyes and chemicals - whether the dyes and chemicals is distinguishable from that of consumables like fuel or welding electrodes which are exhausted or disappeared after the work executed? - Held that - These two questions of law were considered by the Hon ble Division Bench in the case of State of Tamil Nadu V. S.S.M. Processing Mills 2013 (10) TMI 486 - MADRAS HIGH COURT and the answer to both the questions were against the assessee, holding that bleaching contract attracts sales tax as in the case of dyeing contract, when the chemicals are purchased from outside the state. As on date, the judgment of the Division Bench in the case of S.S.M. Processing Mills has attained finality and holds the field. Therefore, the present attempt of the petitioner to argue contrary to the decision is clear attempt to reopen a settled issue in an indirect manner, which cannot be permitted - petition dismissed.

Summary

Issues:
Challenging assessment orders for two different years, Reopening a concluded issue regarding dyeing works contract and taxation of chemicals used, Liberty granted by the Supreme Court for additional queries, Entertaining additional grounds in a related case, Attempt to argue contrary to a settled decision.

Analysis:

1. Challenging Assessment Orders: The petitioner filed writ petitions challenging assessment orders for the years 2002-2003 and 2005-2006. The key contention was the taxation aspect related to a dyeing works contract and the distinction between goods like dyes and chemicals used in the process and consumables like fuel or welding electrodes.

2. Reopening a Concluded Issue: The court noted that the petitioner's attempt was to reopen a settled issue regarding the taxation of chemicals in a dyeing works contract. Referring to a previous judgment, the court highlighted that the transfer of property of goods like chemicals used in the bleaching process is evident, thus attracting sales tax. The court emphasized that the petitioner's argument was an indirect attempt to challenge a settled issue.

3. Liberty Granted by Supreme Court: The Supreme Court had dismissed appeals related to a similar case but granted liberty to raise additional queries. However, the court clarified that unless a decision is rendered on those additional grounds in favor of the dealer, the petitioner cannot challenge the impugned orders based on those grounds. The court stressed that the judgment in the related case had attained finality.

4. Entertaining Additional Grounds: The petitioner claimed that the dealer in the related case had filed additional grounds, but there was no evidence that those grounds had been entertained or decided upon. The court emphasized that unless a decision is made in favor of the dealer on those grounds, the petitioner cannot rely on them to challenge the assessment orders.

5. Attempt to Argue Contrary to Settled Decision: The court concluded that the petitioner's attempt to argue against the settled decision indirectly was impermissible. As a result, the writ petitions were dismissed, but the petitioner was granted liberty to file appeals against the impugned orders. The appellate authority was directed to exclude a specific period while computing limitation for filing such appeals.

In summary, the judgment addressed the petitioner's challenges to assessment orders, the attempt to reopen a settled issue on taxation, the Supreme Court's grant of liberty for additional queries, the necessity of a decision on additional grounds, and the impermissibility of arguing against a settled decision.