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2014 (5) TMI 174 - HC - VAT and Sales TaxExemption of Tax - Classification Common salt Res Judicata - Whether common salt purchased and used in the manufacture of biscuits and other items, is an exempted item under Entry 7 of Part B of the Third Schedule of the TNGST Act Held that - Judgment in MUNICIPAL CORPN. OF THANE v. VIDYUT METALLICS 2007 (9) TMI 399 - SUPREME COURT OF INDIA followed - SC while considering the question of res judicata in the matter of similar nature, observed that it would indeed be very difficult to hold that such a decision would not continue to operate in subsequent years unless it is shown that there are changed circumstances or the goods imported by the company in subsequent years were different than the ones which were imported earlier and in respect of which decision had been arrived at by the court - Thus by pointing out that the corporation therein has not brought any such contention or any material before the Court to take a different view, the Apex Court has held that the benefit of the earlier decision given by the High Court was right - Here also, by applying the said principle we find that there are no materials placed before this Court that the commodity which is the subject matter in both the occasions viz., for the assessment years 1997-98 and 1998-99 and for the present assessment years is different and distinct one - There are no change of circumstances also - On the other hand it is admitted that the commodity purchased and used by the assessee herein is only a common salt - Therefore, having accepted the decision rendered by the Tribunal in respect of the very same commodity and treated it as an exempted goods under Entry 7 of Part B of the Third Schedule, there was no reason as to why the State took different view. Relying upon SHREE RAM MULTI TECH. LTD v. CCE 2006 (1) TMI 7 - SUPREME COURT wherein Supreme Court considered the question of res judicata in classification dispute Held that - Assessee was entitled to challenge the classification, especially when they were parties to earlier proceedings - Applying the said SC reasoning and the finding that the Revenue being a party to the earlier decision of the Tribunal in respect of the very same classification dispute and having allowed the same to become final, it is not justified in contending otherwise in this case especially in the absence of any change or circumstances - Even on merits, we find that the Revenue is not justified in treating the common salt, purchased and used by the assessee under Entry 62 of Part B of the First Schedule. Interpretation of Statute Held that - A bare perusal of the Entry 62 in Part B of the First Schedule would only show that what is placed therein is the salt for industrial use , whereas, Entry 7 of Part B of the Third Schedule shows the common salt (sodium chloride) other than the salt for industrial use - Thus, by a mere reading of these two entries, a distinction can certainly be made between the words salt for industrial use and common salt other than the salt for industrial use - If the intention of the legislature is to bring the common salt used for industrial purpose also under Entry 62 of Part B of the First Schedule, then they would have not avoided the word common salt in such entry - On the other hand the word used under Entry 62 is only salt for industrial use and not common salt for industrial use - Likewise exemption granted to the item under Entry 7 of Part B of the Third Schedule, is common salt (sodium chloride) other than the salt for industrial use - It is to be noted here that what is excluded from exemption is only the salt for industrial use and not the common salt - The Tribunal has not noted the distinction between the salt referable to Entry 62 of Part B of the First Schedule and common salt referable to Entry 7 of Part B of the Third Schedule - There is no hesitation in accepting the case of the assessee - Revisions are allowed Decided in favour of the assessee.
Issues Involved:
1. Whether the Tribunal erred in law in interpreting the words "used for cattle feed" in Serial No. 57(V) of Part B of the First Schedule to the TNGST Act. 2. Whether the Tribunal committed an error in law in interpreting Serial No. 62 of Part B of the First Schedule to the Act regarding salt unfit for human consumption or denatured salt. Issue-Wise Detailed Analysis: 1. Interpretation of "used for cattle feed" in Serial No. 57(V) of Part B of the First Schedule to the TNGST Act: The Tribunal had remitted the matter back to the Assessing Officer to determine whether the wheat bran sold by the assessee was used for cattle feed. The Assessing Authority, upon re-evaluation, granted exemption for the wheat bran. Consequently, the assessee had no grievance regarding this issue, and the court found no necessity to address the first question of law in these revisions. 2. Interpretation of Serial No. 62 of Part B of the First Schedule regarding salt unfit for human consumption or denatured salt: The assessee argued that the common salt purchased for manufacturing biscuits and other items was exempt under Entry 7 of Part B of the Third Schedule of the Tamil Nadu General Sales Tax Act, claiming it was not liable for tax. The Revenue contended that the common salt used for industrial purposes fell under Entry 62 of Part B of the First Schedule, thus making it taxable. The Assessing Officer, supported by the first Appellate Authority and the Sales Tax Appellate Tribunal, concluded that the common salt used by the assessee for industrial purposes was taxable under Entry 62. However, it was noted that for the earlier assessment years 1997-98 and 1998-99, the Tribunal had ruled in favor of the assessee, stating that the common salt used was consumable for human use and thus fell under Entry 7 of Part B of the Third Schedule. The Revenue had accepted this decision without further appeal. The court found no change in the commodity's character or circumstances to warrant a different view for the current assessment years. The court referenced the Supreme Court's decision in MUNICIPAL CORPN. OF THANE v. VIDYUT METALLICS, emphasizing that unless changed circumstances or different goods are shown, earlier decisions should continue to operate in subsequent years. The court also cited SHREE RAM MULTI TECH. LTD v. CCE, where the Supreme Court held that a party cannot challenge a classification if it was a party to an earlier decision and allowed it to become final. On merits, the court found the Revenue's classification of common salt under Entry 62 unjustified. Entry 62 of Part B of the First Schedule pertains to "salt for industrial use," whereas Entry 7 of Part B of the Third Schedule exempts "common salt (sodium chloride) including iodised or vitaminized salt for human consumption, other than salt for industrial use." The court emphasized the distinction between "salt" for industrial use and "common salt" for human consumption, noting that the legislature's intention was clear in differentiating these terms. The court rejected the Revenue's reliance on the Punjab and Haryana High Court's decision in BALLARPUR INDUSTRIES LIMITED AND ANR v. STATE OF HARYANA AND ORS, which addressed the levy of octroi on common salt for industrial purposes versus human consumption. The court found this analogy inapplicable to the classification of goods for taxation purposes. Conclusion: The court concluded that the common salt purchased and used by the assessee should be classified under Entry 7 of Part B of the Third Schedule, granting exemption. The second question of law was answered in favor of the assessee, and the Tax Case Revisions were allowed with no costs.
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