2020 (3) TMI 521 - HC - VAT and Sales Tax

Validity of clarification issued by the learned Commissioner of Commercial Taxes under Section 28A of the Tamil Nadu General Sales Tax Act, 1959 - Imported Pile Fabrics - whether taxable at 16% as per entry No.22A Part E of the First Schedule to the TNGST Act, 1959 for the Assessment year 2000-01? - HELD THAT - The learned Commissioner, while exercising the powers under Section 28A of the Act, which empowers him to pass a quasi judicial order on any point concerning the rate of tax under the Act and which is a wide and significant quasi-judicial power of Advancing Ruling given to the higher authority of the Commercial Excise Department with a view to remove the difficulties and doubts about the rate of tax, has issued such orders prima facie without application of mind at all. The said order firstly has been issued in the form of a letter instead of an order and we quote below the one liner order of the learned Commissioner dated 28.03.2009. The non discussion of the facts and controversy, no reasons assigned in the order and simply holding the commodity in question viz., Imported Pile fabrics to the taxable at 16% under the Entry 22A, in our opinion, is no order in the eye of law at all under Section 28A of the Act. The Assessee not only challenged this order, but under the garb of this order even laid a frivolous challenge to the entry 22A itself without disclosing how the said entry was in any way in conflict with Section 14(vii) of the CST Act - Section 14(vii) of the CST Act gives the list of Declared Goods and it includes in clause (vii) thereof description of various types of 'man made fabrics' covered under heading 60.01 of the Central Excise Tariff Act, 1985. Unless one establishes that the commodity in question falls under the particular category of Declared Goods, there is no question of disbelieving the applicability of the Entry 22A of the TNGST Act which on its own force applied a rate of 16% on the entry relating to 22A Textiles Imported into India from foreign country under the First Schedule to the Act. This Entry 22A is wide enough to cover even the goods in question but we are not expressing any opinion on the same. We would like also to observe that some such other non speaking orders passed by the Commissioner in exercise of Section 28A of the Old TNGST Act, 1959 and Section 48A of the TNVAT Act, 2006 have come on our notice quite often and some kind of non-speaking orders are passed by the learned Commissioners without appreciating the responsibility which lies upon them to pass well reasoned quasi judicial orders - Since we have directed above for the fresh assessment order to be passed, at this stage, the impugned order passed in the present case on 27.05.2009 for Assessment Year 2000-01 is set aside. The Writ Petitions is disposed off by relegating the Petitioner/Assessee before the learned Commissioner so that fresh orders are passed under Section 28A of the Act and then consequential appropriate assessment orders be passed in the case of the Assessee for Assessment Year 2000-01 involved in the present case.

Summary

Issues:
Challenge to clarification on tax rate for "Imported Pile Fabrics" under TNGST Act, 1959.
Challenge to entry No.22A Part E of the First Schedule to the Act.
Validity of the order passed by the learned Commissioner under Section 28A of the Act.

Analysis:
The Assessee filed writ petitions challenging the clarification by the Commissioner of Commercial Taxes on the tax rate for "Imported Pile Fabrics" under the TNGST Act, 1959. The Assessee argued that the fabrics should not be taxed at 16% as per the clarification, citing conflict with Section 14(vii) of the CST Act, 1956. The Commissioner's order lacked discussion, reasons, and failed to address essential aspects required for a valid decision under Section 28A of the Act.

The Court criticized the Commissioner's non-speaking order under Section 28A, emphasizing the need for a well-reasoned quasi-judicial order. The Court found the order to be legally insufficient and set it aside, directing the Assessee to appear before the Authority for a detailed and reasoned decision. The Court highlighted the recurring issue of non-speaking orders by Commissioners, leading to unnecessary litigation, and urged senior officers to ensure responsible exercise of powers.

The Court held that the Assessee's challenge to the assessment order was consequential to the Commissioner's order under Section 28A. As the Commissioner's order was deemed invalid, the assessment order for the year 2000-01 was set aside. The Court did not delve into the challenge against Entry 22A due to lack of proper grounds. The Court disposed of the writ petitions, instructing the Assessee to undergo fresh assessment under Section 28A, with no costs imposed.

In conclusion, the judgment highlighted the importance of reasoned quasi-judicial orders under Section 28A of the Act, criticized the lack of clarity in the Commissioner's decision, and emphasized the need for responsible exercise of powers by tax department officers to avoid unnecessary litigation.