2021 (3) TMI 796 - HC - VAT and Sales Tax

Assessment of turnover - hank yarn obligation - HELD THAT - Tribunal was right in holding that the hank yarn obligation represented the consideration received for the hank yarn manufactured and transferred to other mills' accounts to discharge the statutory obligation imposed for other mills by the Statutory Authority and in that process, they received the hank yarn obligation. Hence, the Tribunal was right in holding that the same represented the consideration received for the hank yarn manufactured and transferred to other mills' accounts - the factual details are rightly re-appreciated by the Tribunal and that there are no reasons to interfere with the same - Petition dismissed. Assessment made on the disputed turnover of ₹ 7,86,81,405/- - cotton purchases effected by the petitioner from the Maharashtra Federation in the Maharashtra State - HELD THAT - The said issue is covered in favour of the petitioner in the light of the Larger Bench decision of the Special Tribunal in the case of JAMBAI KNM. TEXTILES (P.) LIMITED AND OTHERS VERSUS STATE OF TAMIL NADU AND OTHERS 1999 (11) TMI 840 - TAMIL NADU TAXATION SPECIAL TRIBUNAL where it was held that the transaction cannot be considered as local sale, but only as inter state purchase and the same was not liable to tax under the TNGST Act 1959 at the point of last purchase in the State. The finding rendered by the Tribunal with regard to hank yarn obligation is confirmed and the finding rendered by the Tribunal with regard to the cotton purchases effected by the petitioner is set aside - appeal allowed in part.

Summary

Issues:
1. Assessment of turnover related to hank yarn obligation.
2. Assessment of turnover related to cotton purchases from Maharashtra Federation.

Issue 1: Assessment of turnover related to hank yarn obligation

The Tribunal upheld the assessment of &8377; 16,77,494 pertaining to hank yarn obligation, stating it represented consideration received for hank yarn manufactured and transferred to other mills to fulfill statutory obligations. The Court found the Tribunal's decision appropriate, reasoning the consideration was for hank yarn transferred to other mills' accounts. The factual details were deemed correctly re-evaluated by the Tribunal, leading to dismissal of the writ petition and confirmation of the Tribunal's order.

Issue 2: Assessment of turnover related to cotton purchases from Maharashtra Federation

The Tribunal's decision on the assessment of disputed turnover of &8377; 7,86,81,405 for cotton purchases from Maharashtra Federation favored the petitioner. Citing a Larger Bench decision and a Division Bench ruling, the Court supported the petitioner's position. The Tribunal's detailed examination of the transactions, contracts, and movement of goods established the purchases as interstate transactions, not liable to tax under the TNGST Act. The Court concurred with the Tribunal's findings, based on factual evidence and legal principles, dismissing the Tax Case Revision and allowing the petitioner's appeals.

In conclusion, the writ petition was partly allowed, confirming the Tribunal's decision on hank yarn obligation but setting aside its decision on cotton purchases from Maharashtra Federation. The Court followed precedents and upheld the petitioner's position on the second issue, leading to the dismissal of the Tax Case Revision. No costs were awarded, and the connected WPMPs were closed as a result of the judgment.