2018 (10) TMI 812 - HC - VAT and Sales Tax

Levy of tax on sales - conveyor belts purchased from TNEB as second sales - Revision of assessment - TNGST Act - Held that - The sales of old conveyor belts out of the purchases made from TNEB is exempted from tax as second sales upto 30.06.2002, however, the second sales of such conveyor belts would be liable to resale tax at 1% under Section 3-H of the TNGST Act, from 01.07.2002 onwards. Such revision of assessment cannot be countenanced and is set aside - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to order dated 07.01.2010 regarding resale tax on old conveyor belts purchased from TNEB for assessment year 2004-05.

Detailed Analysis:
1. The petitioner, a partnership firm registered under the TNGST Act, challenged the order levying 12% tax on the turnover of old conveyor belts purchased from TNEB for the assessment year 2004-05. The first respondent re-opened the assessment and passed a revised order despite allowing similar claims in earlier years.

2. The petitioner argued that a clarification issued by the Commissioner of Commercial Taxes exempted second sales of old conveyor belts from tax until 30.06.2002, and thereafter, they would be liable for a 1% resale tax. The petitioner relied on a Supreme Court decision and the clarification to support their claim.

3. The respondents contended that the circular and decision cited by the petitioner were not applicable in this case. They defended the order as being in accordance with the law and not warranting any interference.

4. The court examined the facts and noted that the petitioner's claims for previous assessment years were accepted, exempting them from tax until 30.06.2002 and imposing a 1% resale tax thereafter. However, for the assessment year in question, the tax was revised to 12%, which was upheld by the second respondent.

5. Referring to the Supreme Court decision and the clarification issued by the authorities, the court found that the revision of tax for the assessment year 2004-05 was contrary to the established principles. The court emphasized that the revision could not be justified based on the previous acceptance of similar claims and set aside the impugned order.

6. Consequently, the court allowed the writ petition, setting aside the order dated 07.01.2010 and the re-assessment order dated 30.10.2008. No costs were awarded, and the miscellaneous petition was closed.