2019 (2) TMI 1390 - HC - VAT and Sales Tax

Classification of goods - Concessional rate of tax - sale of traction batteries - issuance of Form XVII - Section 3(5) of the Tamil Nadu General Sales Tax Act, 1959 - whether traction batteries specifically designed to suit electrically operated material handling equipments and vehicles like fork-lifts, power trolleys, electric vehicles can be considered as part of the electrically operated vehicles equipments? Held that - The product in question are traction batteries which are specifically designed to suit electrically operated material handling equipments and therefore, the Tribunal was right in holding that they can be purchased by issue of Form XVII declaration, thereby entitled for concession under Section 3(5) of the Act. Penalty u/s 16(2) of the TNGST Act - Held that - The Tribunal after taking into consideration that the revision of assessment was made under Section 16 (1) (b) and noting that there was a dispute as to whether the claim of exemption by the respondent dealer was correct or not and what is the correct rate of tax, held that there was no escapement of turnover and therefore, vacated the levy of penalty. The Tax Case Revision is dismissed.

Issues:
1. Interpretation of whether traction batteries are considered part of electrically operated vehicles equipments.
2. Determination of whether traction batteries can be purchased under Form XVII declaration for concession under Section 3(5) of the TNGST Act.
3. Assessment of the levy of penalty under Section 16(2) of the TNGST Act.

Analysis:

Issue 1:
The primary issue before the court was to determine whether traction batteries, specifically designed for electrically operated material handling equipments and vehicles, could be considered as part of the electrically operated vehicles equipments. The Respondent argued that since the traction batteries were specifically designed for these equipments, they qualified as part of the machinery and could be purchased under Form XVII declaration under Section 3(5) of the TNGST Act. The court agreed with this argument, stating that the traction batteries designed for such specific use can indeed be considered as part of the electrically operated material handling equipments.

Issue 2:
The court then addressed the issue of whether traction batteries could be purchased under Form XVII declaration for concession under Section 3(5) of the TNGST Act. The Petitioner contended that the batteries should not be considered part of the machinery and, therefore, should not be eligible for concession. However, the court disagreed with this argument, upholding the Tribunal's decision that the traction batteries, being specifically designed for electrically operated material handling equipments, could indeed be purchased under Form XVII declaration, thus qualifying for concession under Section 3(5) of the Act.

Issue 3:
Lastly, the court considered the levy of penalty under Section 16(2) of the TNGST Act. The Tribunal had vacated the levy of penalty, citing a revision of assessment under Section 16(1)(b) and the existence of a dispute regarding the exemption claimed by the respondent dealer. The Tribunal concluded that there was no turnover escapement, leading to the decision to vacate the penalty. The court agreed with the Tribunal's reasoning on this matter, dismissing the Tax Case Revision and answering the substantial questions of law against the Revenue.

In conclusion, the court upheld the Tribunal's decision regarding the eligibility of traction batteries for concession under Section 3(5) of the TNGST Act, emphasizing their specific design for electrically operated material handling equipments. Additionally, the court supported the Tribunal's decision to vacate the penalty under Section 16(2) of the Act, finding no turnover escapement in the case.

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