2020 (2) TMI 526 - HC - VAT and Sales Tax

Exemption under entry 57(v) of Part B of the Third Schedule to the TNGST Act, 1959 - interstate sales of wheat bran claimed to have been sold by the assessee as cattle feed - Circular issued by the Department dated 25.09.2002 - HELD THAT - Before holding that the sale of wheat bran by the Assessee under specified conditions of specified circumstances, the Assessing Officer ought to have undertaken the exercise of returning the finding of facts as to whether the wheat bran sold by the Assessee in the course of interstate trade and commerce was a cattle feed or not. Since this exercise was not undertaken, the denial of exemption to the Assessee, without arriving at such finding of facts cannot be sustained. The higher appellate authority also did not seem to have undertaken any such fact finding exercise. The matter deserves to be remanded back to the learned Assessing Authority for undertaking the said exercise of fact finding as to whether the wheat bran sold by the Assessee in the course of interstate sale was a cattle feed or not, which is obviously for the Assessee to establish such facts with relevant evidence before the Assessing Officer - Appeal disposed off by way of remand.

Summary

Issues:
1. Exemption denial on interstate sales of wheat bran claimed as cattle feed.
2. Interpretation of exemption provisions under TNGST Act and CST Act.
3. Assessment of sales of wheat bran for cattle feed.
4. Compliance with conditions for exemption on wheat bran sales.

Analysis:
1. The Assessee filed a Writ Petition challenging the order denying exemption on interstate sales of wheat bran claimed as cattle feed. The Tribunal rejected the exemption based on conditions not being met. The Appellants argued for exemption citing relevant Acts and clarifications. The Tribunal upheld the denial, concluding the goods were not used for cattle feed, hence taxable.

2. The Petitioner contended that exemption under TNGST Act applied to interstate sales. The Respondent argued for denial due to specific conditions for exemption. Circulars clarified the exemption criteria for wheat bran used for cattle feed under TNGST Act.

3. The Court noted the disputed turnover represented wheat bran sales claimed as cattle feed. The Assessing Authority treated it as taxable under CST Act due to non-compliance with exemption conditions. The Appellants failed to prove the goods were used as cattle feed, leading to denial of exemption.

4. The Court emphasized that wheat bran is exempt only when used for cattle feed. The Assessing Officer and higher appellate authority failed to establish this crucial fact. Thus, the case was remanded for a proper fact-finding exercise by the Assessing Authority within six months to determine if the wheat bran sold was indeed used as cattle feed.

In conclusion, the judgment highlighted the importance of meeting exemption conditions under the Acts and the necessity for factual verification before denying exemptions. The case was remanded for a thorough examination of whether the wheat bran sales qualified for exemption as cattle feed, emphasizing the need for proper evidence to support the claim.