9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (11) TMI 1224 - HC - VAT and Sales TaxWorks Contract services - work order for supply of Drip Irrigation materials and installation of the system for the buyers - entitlement to deduction under Section 3-B(2)(b) of TNGST Act - discharge of burden to prove - HELD THAT - During the material period in dispute, when there was no specific Entry in the Schedule, the goods have to be classified in terms of residuary item namely under Entry 63 of Part D of First Schedule and under Entry 67 of Part D of First Schedule for the period from which existed upto 16.07.96 and from 17.7.96 onwards respectively and the petitioner would have been liable to tax. When Drip Irrigation System is installed, the pipes i.e, HDPE and PVC pipes used do not lose their characteristic. They are merely cut and fixed for pumping water through the irrigation system. They do not lose their characteristic. Therefore, the petitioner was indeed entitled for deduction in terms of sub-section 2(b) of Section 3-B of the Act - the petitioner has discharged the burden of proof that is required. Sprinklers and Drip Irrigation Equipment was specifically introduced in Entry 69-A of Part B of First Schedule with effect from 05.03.1997 for the first time. The finding of fact rendered by the Tribunal, need not be interfered while exercising the extraordinary jurisdiction under Article 226 of the Constitution of India. We however, differ with conclusion arrived by the Tribunal. Pipe remains a pipe when it is integrated for use along with pumps and nozzle in a Drip Irrigation System. Therefore, the petitioner was entitled to the benefit of deduction under Section 3-B (2)(b) of the Tamil Nadu General Sales Tax Act, 1959 on the pipes used in the execution of work contract. Petition allowed.
Issues:
1. Interpretation of tax entry for Drip Irrigation System 2. Eligibility for deduction under Section 3-B of TNGST Act 3. Validity of penalty imposition Issue 1: Interpretation of tax entry for Drip Irrigation System The High Court examined the impugned order that favored the Revenue in State Appeal Nos. 738 & 735 of 2001 concerning the classification of PVC and HDPE pipes used in Drip Irrigation Systems. The Court analyzed the relevant tax entries and concluded that during the disputed period, there was no specific entry for Drip Irrigation Systems. The Court highlighted the importance of correctly classifying goods under the residuary item when specific entries are absent. The Court disagreed with the conclusion that the pipes lose their identity when integrated into the Drip Irrigation System. It emphasized that the pipes retain their characteristics and are entitled to deduction under Section 3-B of the Act. Issue 2: Eligibility for deduction under Section 3-B of TNGST Act The petitioner argued that the pipes used in the Drip Irrigation System should be eligible for deduction under Section 3-B(2)(b) of the TNGST Act. The Court agreed with the petitioner's interpretation, stating that the petitioner had met the burden of proof required for claiming the deduction. The Court referenced previous decisions to support its stance and highlighted the specific provision allowing deductions for goods purchased from registered dealers and used in works contracts. The Court held that the petitioner was entitled to the benefit of deduction under Section 3-B(2)(b) for the pipes used in the works contract. Issue 3: Validity of penalty imposition Regarding the levy of penalties, the Court analyzed the revision of assessment and the disallowance of exemptions. The Court found that as the turnover was available and the exemption was disallowed during the revision, there was no concealment of turnover. Citing a relevant decision, the Court concluded that the penalty levied by the Assessing Authority was not justified. Consequently, the Court upheld the deletion of the penalty by the Appellate Assistant Commissioner. In conclusion, the High Court allowed the writ petitions, providing consequential relief to the petitioner. The Court emphasized the correct interpretation of tax entries, eligibility for deductions under the TNGST Act, and the validity of penalty impositions, ensuring a comprehensive analysis of the issues involved in the judgment.
|
