2020 (3) TMI 698 - HC - VAT and Sales Tax

Valuation - freight and pumping charges on the ready mix cement concrete sold by the assessee, billed separately - to be included in taxable turnover or not - HELD THAT - Reliance can be placed in the case of M/S. LARSEN TOUBRO LIMITED VERSUS STATE OF TAMIL NADU REP. BY THE JOINT COMMISSIONER (CT) 2019 (1) TMI 711 - MADRAS HIGH COURT where the Tribunal committed a serious error in deciding the questions against the assessee - the issue decided in favor of assessee. Sale in the course of import exempted under section 5(2) of the Central Sales Tax Act, 1956 - HELD THAT - The issue is covered by the decision of the Supreme Court in the case of INDURE LTD. AND ANOTHER VERSUS COMMERCIAL TAX OFFICER AND OTHERS 2010 (9) TMI 883 - SUPREME COURT where it was held that appellant-company was entitled to claim the benefit of section 5(2) of the act in relation to the import of ms pipes from south korea - thus, the issue is covered in favour of the assessee, because the sales in course of import taken place in the course of import and was inextricably related to the import itself and therefore the same has been rightly exempted by the tribunal. Imposition of penalty under section 9(2-A) of the Central Sales Tax Act, 1956 - HELD THAT - Since the imposition of tax itself has been set aside by the tribunal and has been upheld, consequential penalty imposed on the assessee has been rightly deleted by the tribunal. There are no merit in the present case filed by the Revenue Department - appeal dismissed.

Summary

Issues:
1. Taxability of freight and pumping charges on ready mix cement concrete.
2. Exemption under section 5(2) of the Central Sales Tax Act, 1956 for sales in the course of import.
3. Imposition of penalty under section 9(2-A) of the Central Sales Tax Act, 1956.

Analysis:
1. The first issue pertains to the taxability of freight and pumping charges on ready mix cement concrete. The Tribunal ruled in favor of the assessee, stating that the cost of freight or delivery should be excluded from the sale price if separately charged. Citing relevant case laws, the Tribunal held that such charges cannot be included in the sale price, especially when separately shown and charged. The Co-ordinate Bench decision further supported this stance, emphasizing that the transportation was undertaken on behalf of the buyer, and the sale was completed only upon delivery at the buyer's site. Consequently, the issue was decided in favor of the assessee based on established legal principles and precedents.

2. The second issue concerns exemption under section 5(2) of the Central Sales Tax Act, 1956 for sales in the course of import. The Tribunal examined the import of goods in relation to contracts between the dealer and purchasers, such as TNEB and Indian Oil Corporation Limited. By analyzing the contracts and invoices, the Tribunal concluded that the goods were imported as per contractual obligations, thereby qualifying for exemption under section 5(2). Referring to the Supreme Court's decision in a similar case, the Tribunal upheld that the sales in the course of import were inextricably linked to the import itself, thus justifying the exemption. Both parties agreed that this issue was covered by established legal precedents, leading to a favorable decision for the assessee.

3. The final issue revolves around the imposition of penalty under section 9(2-A) of the Central Sales Tax Act, 1956. The Tribunal set aside the penalty, highlighting that all turnovers were derived from the books of accounts, and no undisclosed turnover was identified. Relying on legal interpretations and precedents, the Tribunal emphasized that the penalty was not warranted as the assessment was made under a specific section of the Tamilnadu General Sales Tax Act, 1959. The Tribunal's decision to delete the penalty was upheld, as the assessment itself was overturned, leading to the dismissal of the State Appeal. The absence of undisclosed turnover and the application of relevant legal provisions supported the decision to annul the penalty, ultimately favoring the assessee.

In conclusion, the judgment by the Madras High Court addressed and resolved the three key issues comprehensively, relying on legal interpretations, established case laws, and factual analyses to deliver a fair and reasoned decision in favor of the assessee across all aspects.