2020 (2) TMI 305 - HC - VAT and Sales Tax

Interpretation of statute - Base Production Volume and the Base Sales Volume as eligibility for claiming the sales tax - Interest Free Sales Tax Deferral Scheme - HELD THAT - While no valid exception can be taken to the Clause 5.3 of the Eligibility Certificate issued in terms of the G.O.Ms.No.119 dated 13.04.1994 read with original notification G.O.Ms.No.500 dated 14.05.1990, but they seems to have genuine confusion which is arising on the computation of the Base Production Volume/Base Sales Volume on availing taxable turnover in the present case. Whether the Base Sales Volume comprises only local sales taxable under the TNGST Act or would include the Global Sales made by the Assessee viz., Branch transfers, interstate sales and even Export Sales. Since there was no clarity with regard to the same, in the Eligibility Certificate issued to the petitioner, the Revenue has taken a different stand in the Notice dated 29.09.2009 and which resulted in this litigation. The clarity about the inclusion of the sales which are not taxable under the provisions of the TNGST Act to be taken as Base Sales Volume or not, it ought to have been discussed even before issuance of the Eligibility Certificate itself, so that any confusion with regard to availment of the benefit of deferral in terms of the EC could have been removed at that time itself. We should relegate the Appellant/Assessee back to the stage where the confusion about determination of the Base Production Volume/Base Turnover arose and the respondents/SIPCOT as well as the Commercial Tax Department should take a joint decision in the matter with regard to the said terms definite in the Scheme itself after giving an opportunity of hearing to the Appellant/Assessee. The respondents/SIPCOT and Commercial Taxes Department are directed to constitute a Joint Committee of the two Senior Officials of the respective Departments to re-decide the issue of the Base Turnover in the light of the contentions raised by the Appellant/Assessee in this Court - appeal disposed off.

Summary

Issues:

1. Interpretation of terms 'Base Production Volume and the Base Sales Volume as eligibility for claiming the sales tax by the Assessee.

Detailed Analysis:

Issue 1: Interpretation of terms 'Base Production Volume and the Base Sales Volume as eligibility for claiming the sales tax by the Assessee.

The Appeals arose from an order where the learned Single Judge dismissed the Writ Petitions filed by the petitioner company regarding the Interest Free Sales Tax Deferral Scheme. The controversy centered around the interpretation of the terms 'Base Production Volume and the Base Sales Volume as eligibility for claiming the sales tax by the Assessee. The State Government issued G.O.Ms.No.119 in 1994, providing criteria for deferral of sales tax based on production and sales volumes. The Eligibility Certificate was issued to the appellant by SIPCOT, which computed the benefit of deferral based on the highest production/sales volume in the last 3 years. However, a notice was issued by the Deputy Commissioner of Commercial Taxes questioning the Assessee's compliance with the conditions of the Eligibility Certificate.

The Assessee challenged the notice in Writ Petitions, which were dismissed by the Single Judge. The High Court observed a genuine confusion in the computation of Base Production Volume/Base Sales Volume for availing taxable turnover. The lack of clarity regarding the inclusion of sales not taxable under TNGST Act led to differing interpretations. The Court noted the absence of coordination between Revenue Authorities and SIPCOT, causing confusion in determining the deferral amount. The Court emphasized that such factual exercises cannot be undertaken under Article 226 jurisdiction. The Court directed SIPCOT and Commercial Taxes Department to form a Joint Committee to re-decide the issue of Base Turnover, allowing the Assessee to raise contentions and ensuring a fresh decision within six months.

In conclusion, the Court relegates the Assessee back to the stage where confusion arose regarding Base Production Volume/Base Turnover, directing a Joint Committee to re-decide the issue within a specified timeframe, emphasizing the need for clarity and coordination in determining the eligibility for sales tax deferral.