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2014 (5) TMI 255 - HC - VAT and Sales TaxWhether Tribunal has erred in not classifying the top hat sections sold by assessee under Serial No.4(v) of the Second Schedule to the TNGST Act, 1959, in view of the words Other Rolling Sections found in that Entry Rate of Tax - Classification - Other Rolling Sections Held That - In the absence of restrictive words in the entry relating to steel structurals as relatable to steel structurals used in building works or building structures alone, No justifiable ground found to treat the top hat section sold by the assessee could be treated as I Schedule goods as automobiles parts by reason of sale to the automobile manufactures Relying upon INDIAN METALS AND FERRO ALLOYS LIMITED v. COLLECTOR OF CENTRAL EXCISE 1990 (11) TMI 143 - SUPREME COURT OF INDIA the circumstances that certain processes are applied to the structurals or that to identify the particular type of tube one uses, different names are given is not sufficient to treat the article dealt with by the assessee, as automobiles component - So too the use to which the top hat section has been put into cannot be taken as a decisive factor for the purpose of understanding the width of the entry which is general in character - It is hold that the item in question is taxable as declared item under Entry 4 - The fact that the assessee had admittedly sold the top hat section to the automobile industries would not in any manner be a decisive test for the purpose of understanding the entry and rate of tax to be applied to the case on hand - Going by the entry, order of the Tribunal is set aside. Levy of penalty Held that - even though the Tribunal upheld the levy of penalty upto 75%, admittedly, the same was with reference to other heads of taxation - The Tribunal had cancelled the levy of penalty with reference to the non-inclusion of the turn over relating to top hat section - The penalty thus imposed at 75% instead of 150% however stands confirmed as no serious dispute is raised on this aspect -Revision) is allowed Decided in favour of Assessee.
Issues Involved:
1. Classification of top hat sections under the Tamil Nadu General Sales Tax Act. 2. Imposition of penalty on the assessee. Issue-wise Detailed Analysis: 1. Classification of Top Hat Sections: The primary issue was whether the top hat sections sold by the petitioner should be classified under Serial No. 4(v) of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959, which pertains to "Other Rolling Sections," or under the I Schedule as auto components taxable at 8%. The assessee, a manufacturer of auto components and fabricated items, argued that the top hat sections should fall under Entry 4(v) of the II Schedule as they are rolled sections with wide applications beyond the automobile industry. The Enforcement Wing Officials and the Assessing Officer, however, classified the top hat sections under the I Schedule, asserting they were auto components due to their sale to the bus body building industry. The Tribunal, upon reviewing the materials, concluded that the top hat sections were designed, manufactured, and sold exclusively to the automobile industry, thus fitting the classification under the I Schedule as auto components. The Tribunal referenced an earlier judgment in T.A.No. 157/93, distinguishing between straight and bent steel tubes, to support their decision. However, the High Court highlighted that iron and steel are declared goods under Entry 4 of the II Schedule and noted that the classification should not depend on the end use of the product. The Court referred to the decision in 129 STC 238 TUBE INVESTMENTS OF INDIA LIMITED v. D.C.T.O., which emphasized that the end use of declared goods does not alter their classification. The Court also cited 52 STC 94 T.I. & M. SALES LIMITED v. STATE OF TAMIL NADU, stating that the classification should be generic and not based on usage. Ultimately, the High Court concluded that the top hat sections should be classified under Entry 4(v) of the II Schedule as rolled sections, irrespective of their use in the automobile industry. The Tribunal's decision was thus set aside, and the top hat sections were deemed taxable as declared goods under Entry 4. 2. Imposition of Penalty: The second issue concerned the imposition of penalty on the assessee. The Tribunal had reduced the penalty from 150% to 75% for other items but had canceled the penalty concerning the non-inclusion of turnover related to the top hat sections. The High Court upheld the Tribunal's decision to reduce the penalty to 75%, noting that there was no material evidence to suggest that the assessee had deliberately misclassified the top hat sections. The penalty reduction was confirmed as no serious dispute was raised regarding this aspect. Conclusion: The High Court allowed the Tax Case Revision, setting aside the Tribunal's order on the classification of top hat sections and confirming the reduced penalty. The top hat sections were classified under Entry 4(v) of the II Schedule, taxable as declared goods.
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