2014 (3) TMI 232 - HC - VAT and Sales Tax

Exemption from the sales turnover - additional sales tax - whether the petitioner is entitled for exemption from the sales turnover for the period from 17.7.1996 to 31.8.1996 - Held that - Held that - Tribunal has not dealt with the matter in detail and it has failed to discuss the issue as to whether the assessee would be liable to pay additional Sales Tax in the light of amended sections 2(1)(a) and 2(1)(aa). All along, the contention of the assessee is that it is liable for exemption from 01.8.1996 in view of the amended sections and before the end of the year, the taxable turnover has not exceeded Rs. One Hundred Crores. Though the said contention was accepted by the appellate authority, the Tribunal has reversed the said decision without assigning any reason - payment of additional Sales Tax would arise only if the taxable turnover for the whole of the financial year exceeded Rs. One Hundred Crores. Moreover, for the period up to July 31, 1996, the liability has to be worked out as per the provision prevailing on that date, i.e., under unamended Section 2(1)(a) and for the consequent period as per the amended position - Following decision of State of Tamil Nadu v. National Time Co. 2010 (7) TMI 842 - MADRAS HIGH COURT - Decided in favour of assessee.

Summary

Issues:
1. Transfer of Tax Case Revision from Special Tribunal to High Court
2. Assessment of taxable turnover for the petitioner for the year 1996-97
3. Appeal process and decisions made by lower authorities
4. Contention regarding exemption from sales turnover
5. Application of amended provisions of Section 2(1)(a) and 2(1)(aa)
6. Lack of reasoning in the decision of Sales Tax Appellate Tribunal
7. Interpretation of liability for additional Sales Tax based on turnover

Transfer of Tax Case Revision:
The Tax Case Revision was transferred from the Special Tribunal to the High Court upon the Tribunal's abolition. The case involved a substantial question of law regarding the Tribunal's role as a final fact-finding authority and whether it correctly confirmed findings without independent application of its mind.

Assessment of Taxable Turnover:
The petitioner, engaged in the business of Zandu balm and pharmaceutical items, reported taxable turnover for the assessment year 1996-97. The Commercial Tax Officer and the Appellate Assistant Commissioner made decisions regarding the taxable sales turnover, leading to subsequent appeals and modifications.

Exemption from Sales Turnover:
The issue arose whether the petitioner was entitled to exemption from sales turnover for a specific period in 1996. The petitioner argued for exemption based on turnover not exceeding a certain amount and the application of unamended provisions.

Application of Amended Provisions:
The case involved the interpretation and application of amended provisions of Section 2(1)(a) and 2(1)(aa) concerning the liability for additional Sales Tax based on the turnover exceeding a specified amount during the financial year.

Lack of Reasoning in Tribunal's Decision:
The Sales Tax Appellate Tribunal's decision was challenged due to the lack of reasoning for reversing the Appellate Assistant Commissioner's order. The Tribunal was criticized for not discussing the issue of liability for additional Sales Tax adequately.

Interpretation of Liability for Additional Sales Tax:
The High Court analyzed the liability for additional Sales Tax based on turnover exceeding a certain threshold and the applicability of unamended and amended provisions. Referring to a previous Division Bench decision, the Court concluded that the Tribunal's decision lacked merit and needed to be reversed.

In conclusion, the High Court allowed the Tax Case, setting aside the Tribunal's decision due to the incorrect application of legal principles and lack of reasoning. The Court emphasized the importance of considering relevant provisions and previous decisions in determining the liability for additional Sales Tax based on turnover.