2020 (4) TMI 637 - HC - VAT and Sales Tax

Classification of goods - Bio Marine - Ecornax - Zoonami - whether fall under the categories of aqua feed/bacterial culture/organic manure or not? - HELD THAT - These products are organic manures that are used for environmental protection and stability in prawn hatcheries and shrimp culture. The order of the Assessing Authority is completely bereft of any facts at all in support of his conclusion adverse to the petitioner and reliance is placed solely on the clarification issued in the case of the third party dealer. Mr.Hariharan requests that the matter may be remanded back for de novo consideration - there are no reason to accede to this request insofar as the period of assessment is 2004-05 and there is a lapse of 15 years from the period of assessment till date - Petition allowed - decided in favor of petitioner.

Summary

Issues: Classification of products for tax exemption under the Tamil Nadu General Sales Tax Act, 1959 based on expert opinion and certificates, reliance on a clarification issued by the Commissioner of Commercial Taxes, interpretation of relevant entry in the Third Schedule to the Act, reliance on incorrect schedule by the Revenue, lack of factual basis in the order of assessment, request for remand for de novo consideration, time lapse since the period of assessment.

Classification of Products for Tax Exemption: The petitioner, engaged in manufacturing and selling bacterial culture/organic manure, claimed tax exemption for certain products like Bio Marine, Ecomax, and Zoonami based on a certificate from an expert authority. The expert confirmed the products' classification as organic manure (Bacterial Culture) used for water quality maintenance and shrimp production, falling under Entry 7 of the Third Schedule to the Act.

Reliance on Commissioner's Clarification: The Assessing Authority relied on a clarification issued by the Commissioner of Commercial Taxes in a different case, despite the unavailability of the clarification in the present case. The Commissioner's opinion in the other case was based on a third party dealer's activities, leading to a conclusion of taxable goods at the highest rate, but there was no evidence linking the products of the third party dealer to those of the petitioner.

Interpretation of Relevant Entry and Incorrect Schedule: The Revenue mistakenly referred to Entry 9 of the 11th Schedule, which did not exist, and the Government Advocate corrected it to Entry 40 of the First Schedule for taxing goods not specified elsewhere. The court analyzed the product descriptions provided by the petitioner, highlighting the organic nature of the products and their specific use in environmental protection and shrimp culture.

Lack of Factual Basis and Remand Request: The court noted the lack of factual support in the Assessing Authority's order, solely relying on the third party dealer's clarification. The Government Advocate requested a remand for fresh consideration, which the court denied due to the significant time lapse since the assessment period and the absence of factual examination in the original assessment.

Conclusion: The Writ Petition was allowed, setting aside the impugned order of assessment, with no costs imposed. The court emphasized the importance of considering uncontroverted facts presented by the assessee and criticized the lack of examination of facts or application of mind by the Assessing Authority in the original assessment. The connected Miscellaneous Petition was closed as a result of the judgment.