2020 (12) TMI 314 - HC - VAT and Sales Tax

Classification of goods - hybrid cotton seeds - validity of Clarification No. 147/2005 in D. Dis Acts Cell II/39022/05 dated 26.09.2005 issued by the First Respondent - taxable at the rate of 4% under entry No. 6(iii) of the Second Schedule to TNGST Act - grievance is that exemption has been denied for sale of hybrid cotton seeds for seeding purpose by pointing out that as per entry 7 of Part B in the Third Schedule of the TNGST Act - HELD THAT - It is brought to notice that in respect of person similarly placed to the Petitioner, this Court in TVL. RASI SEEDS (P) LTD. VERSUS THE SPECIAL COMMISSIONER AND COMMISSIONER OF COMMERCIAL TAXES, THE DEPUTY COMMERCIAL TAX OFFICER 2019 (5) TMI 124 - MADRAS HIGH COURT has set aside the assessment order, where similar claim for exemption was refused, and the matter has been remitted for consideration afresh in the light of the principles laid down in that decision. Matter remitted to the Second Respondent for fresh consideration - It is incumbent upon the Second Respondent to afford full opportunity of personal hearing, follow the prescribed procedure in consonance with the principles of natural justice, deal with each of the contentions of the Petitioner with particular reference to the principles laid down in the decision in TVL. RASI SEEDS (P) LTD. VERSUS THE SPECIAL COMMISSIONER and pass reasoned order on merits and in accordance with law and communicate the decision taken to the Petitioner under written acknowledgment. Petition disposed off.

Summary

Issues:
1. Challenge to the Order in Clarification regarding taxation of hybrid cotton seeds.
2. Challenge to the liability determination and penalty imposition under the Central Sales Tax Act.
3. Claim of exemption for sale of hybrid cotton seeds for seeding purpose.
4. Comparison with a similar case where exemption was granted.

Analysis:
1. The first issue pertains to the challenge against the Order in Clarification No. 147/2005, which clarified the tax rate for hybrid cotton seeds under the TNGST Act. The petitioner contested this clarification, arguing that hybrid cotton seeds should be exempt from taxation for seeding purposes. The court noted the specific entry in the Third Schedule of the TNGST Act regarding exemptions for certain agricultural products, emphasizing the need for a detailed examination of the petitioner's claim for exemption.

2. The second issue involves challenges in Writ Petitions against the liability determination and penalty imposition by the Second Respondent under the Central Sales Tax Act for the year 2003-2004. The court highlighted the penalty provisions under Section 9(2A) of the Central Sales Tax Act and Section 12(3)(b) of the TNGST Act. The court directed that the liability determination and penalty imposition orders be set aside, and the matter be reconsidered by the Second Respondent following the principles established in a previous judgment.

3. The third issue addresses the petitioner's claim for exemption for the sale of hybrid cotton seeds for seeding purposes. The court referenced a previous case where a similar exemption claim was upheld, leading to the setting aside of the assessment order. The court emphasized the need for the Second Respondent to provide a full opportunity for a personal hearing, adhere to procedural requirements, consider the petitioner's contentions in light of the previous judgment, and issue a reasoned decision in accordance with the law.

4. The final issue compares the petitioner's case with a previous judgment involving a similar claim for exemption. The court found that the petitioner in the present case was similarly situated to the party in the previous case where exemption was granted. Consequently, the court directed that the impugned orders be set aside, and the matter be remitted to the Second Respondent for a fresh consideration, ensuring adherence to principles of natural justice and the specific guidelines outlined in the previous judgment.