2018 (12) TMI 1007 - HC - VAT and Sales Tax

Principles of natural justice - validity of assessment order - classification of goods - benefit of exemption - entry No. 69 of Part C of the First Schedule to the TNVAT Act - Held that - The equipment would fall under entry No. 104 of Part B of the First Schedule and without applying the exemption, the rate of tax will be only 5 per cent. Issuance of Form-H - Held that - In any event, form H has to be signed by the exporter giving registration number of the exporter under the provisions of the CST Act. Thus, it appears that it is mandatory for the person claiming exemption to produce form H declaration. So far as the claim of exemption is concerned, the petitioner has to produce form H mandatorily and without the same, the benefit of exemption cannot be granted. The matter is remitted to the respondent for fresh consideration - appeal allowed by way of remand.

Summary

Issues: Classification of exported product under the CST Act and entitlement to exemption on the product.

Classification Issue Analysis:
The petitioner challenged the assessment order under the CST Act, claiming the water purification plant falls under a different entry for a lower tax rate. The respondent classified it as "machinery" under a specific entry, leading to a higher tax rate. The court found the respondent's classification incorrect as no valid reasons were provided for not accepting the petitioner's arguments. The court emphasized the need for a detailed examination by the officer to determine the correct classification based on technical details.

Exemption Entitlement Analysis:
Regarding the exemption claim, the petitioner contended that the actual exporter did not provide the necessary form H, required for exemption under the CST Act. The court highlighted the mandatory requirement of producing form H for claiming exemption. Since the petitioner did not have the form, the benefit of exemption could not be granted. The court directed the respondent to re-examine the issue, providing the petitioner with a personal hearing and considering the technical details of the equipment. If the petitioner produces the required form H, the exemption claim should be reconsidered.

The court allowed the writ petition, setting aside the impugned order, and remitted the matter to the respondent for fresh consideration. The respondent was instructed to conduct a detailed examination, afford a personal hearing to the petitioner, and determine the correct classification of the product. The court emphasized the necessity of producing form H for exemption consideration. No costs were awarded, and the connected miscellaneous petition was closed.