2019 (3) TMI 338 - HC - VAT and Sales Tax

Levy of sales tax - job-work - TNGST Act - no concrete evidences from the revenue to prove that the petitioners have transferred the materials in the job work - demand on the ground that there was no written agreement for stitching of job work, but in contrary supported by delivery challans, only job work - Held that - The Tribunal proceeded on independent footing which was not the manner in which the Assessing Officer had completed the assessment. One important fact is that the Tribunal noted that the petitioner carries on job work also apart from manufacturing for export. However, the petitioner was denied relief on the ground that the purchase value of fabric and embellishments used for job work could not be dissected and arrived at. The petitioner s specific case is that the delivery challan of fabric and material for the purpose of job work will only contain the quantity and not the price, since the petitioner has to complete this job of stitching and returning the finishing goods to the principal. Once the revenue accepts that the petitioner has also done job work, it has to analyse as to whether the documents produced by the petitioner support the stand taken by the petitioner that they have done job work. We are of the view that the Tribunal should not have rejected the documents solely on the ground that the value of the material has not been mentioned. The matter requires to be re-examined by the Assessing Officer in proper perspective - appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of provisions of the Tamil Nadu General Sales Tax Act, 1959.
2. Confirmation of levy of tax under Section 3(b) of the TNGST Act without concrete evidence.
3. Justification of confirming levy of tax on job work without a written agreement.

Issue 1: Interpretation of provisions of the Tamil Nadu General Sales Tax Act, 1959
The case involved a Tax Case Revision under Section 38 of the Income Tax Act, 1961 against an order of the Tamil Nadu Sales Tax Appellate Tribunal. The Tribunal confirmed the levy of tax under Section 3(b) of the TNGST Act without concrete evidence. The petitioner argued that they received fabric and material for stitching and redelivery, constituting job work. The First Appellate Authority set aside the assessment, emphasizing the lack of property transfer in the job work. However, the Tribunal reversed this decision, noting the petitioner's job work activities and the absence of pricing details in the delivery challans.

Issue 2: Confirmation of levy of tax under Section 3(b) of the TNGST Act without concrete evidence
The Tribunal's decision to uphold the tax levy without concrete evidence was challenged. The petitioner contended that the documents presented supported their claim of job work, despite lacking pricing details. The Tribunal's rejection of the documents based on missing pricing information was criticized, as the nature of job work did not necessitate pricing details in delivery challans. The Court emphasized the need for a thorough re-examination by the Assessing Officer to consider the job work aspect and documents without focusing on material value.

Issue 3: Justification of confirming levy of tax on job work without a written agreement
The Tribunal's justification for confirming the tax levy on job work without a written agreement was examined. The Court emphasized the need for a detailed analysis of the documents supporting the job work claim, irrespective of the absence of pricing details. The Tribunal's decision was set aside, and the matter was remanded to the Assessing Officer for a fresh decision, allowing the petitioner to provide additional evidence and oral testimony to substantiate their job work activities. The Court stressed the importance of evaluating the job work aspect independently from the pricing details in the documents.