2019 (2) TMI 130 - HC - VAT and Sales Tax

Levy of sales tax - sale of 43,554 colour television sets by the petitioner - Benefit of an exemption under the scheme of free disbursement of the said sets to the families who did not own the colour television sets. But 43,554 colour television sets lifted from the petitioner s godown after 01.03.2011 were distributed not among the families who did not own the colour television sets, but only to various Government departments. Held that - The notification issued vide G.O.Ms.No.120 Commercial Taxes and Registration(B2) Department, dated 06.10.2006, will continue to apply notwithstanding the change in the end user. Petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
Levy of tax on the sale of 43,554 color television sets by the petitioner to the second respondent.

Detailed Analysis:
The petitioner had a contract with the Electronic Corporation of Tamil Nadu for supplying color television sets under a government scheme. A purchase order was placed by the second respondent for 1,20,500 sets, with tax exemption mentioned. Due to elections and a change in policy, further supplies were halted, and already manufactured sets were to be distributed to government departments instead of families. The first respondent proposed levying tax on the sets distributed to government departments, arguing the exemption was no longer applicable. The tax amount was retained by the second respondent from the petitioner's bill.

The main issue was whether the first respondent was justified in levying tax on the sale of color television sets to the second respondent. The court criticized the first respondent's approach as rigid, emphasizing the original scheme's welfare nature and the change in end users. The court cited legal precedents to support the application of promissory estoppel in this case, maintaining that the tax exemption notification should still apply despite the change in beneficiaries.

The court concluded that the notification providing tax exemption should continue to apply even with a change in end users. Consequently, the impugned order was set aside, and the writ petition was allowed with no costs. The connected miscellaneous petition was also allowed as a result of the judgment.