2019 (3) TMI 545 - HC - VAT and Sales Tax

Levy of tax - transfer of property in dyes and chemicals - inter-state trade or commerce - export of goods outside the territory of India - deduction contained in Sec.3-B(2)(a) of the TNGST Act, 1959 - Held that - Nowhere it is found that the plea was raised by the petitioner, i.e. claiming deduction under Section 3B(2)(a) of the TNGST Act. The petitioner consciously restricted their claim for deduction only under Section 3B(2)(a) of the TNGST Act. Thus, in these tax case revisions, for the first time such a plea cannot be allowed to be raised. We support this conclusion by stating that Section 3B deals with levy of tax on transfer of goods involved in works contract - Sub-section (2) of Section 3B of the TNGST Act states that the taxable turnover of the dealer on transfer of property involved in the execution of works contract shall, on and from 26.06.1986, be arrived at after deducting the amounts from the total turnover of the dealer. The deduction requires to be claimed by the assessee and consciously the petitioner did not make any claim under Section 3B(2) of the TNGST Act and restricted the claim only under Section 3B(2)(e) of the TNGST Act at 50%. Hence, at this distance of time to raise such a plea which was never ever canvassed by the petitioner at any point of time cannot be permitted. Secondly, the assessee never even raised an alternate plea before the first appellate authority as raised by them in the appeals for the assessment years 1996-97 and 2001-02. Thus, the present attempt of the petitioner is to reopen settled matter on grounds which were never canvassed or in other words, on points which they were never aggrieved. Petition dismissed.

Summary

Issues:
Challenge to order passed by Tamil Nadu Sales Tax Appellate Tribunal for multiple assessment years regarding levy of tax on transfer of property in dyes and chemicals in works contract, entitlement for deduction under Section 3B(2)(a) of TNGST Act, and raising new plea for deduction in tax case revisions.

Analysis:
1. The petitioner, engaged in cotton yarn business, challenged the Tribunal's order on levying tax on transfer of property in dyes and chemicals used in works contract. The petitioner claimed the works contract to be a service contract not liable to tax under TNGST Act. The Assessing Officer added tax on interstate purchases of dyes and chemicals, which was upheld by the Tribunal. The petitioner appealed, arguing for deduction under Section 3B(2)(a) of TNGST Act.

2. The primary issue revolved around the entitlement for deduction under Section 3B(2)(a) of the TNGST Act. The petitioner sought to raise this claim for the first time during the tax case revisions, inspired by partial relief granted in previous assessments. However, the Court noted that the petitioner had not raised this plea earlier, limiting their claim to a different section of the Act. The Court emphasized that Section 3B deals with the levy of tax on transfer of goods in works contracts, outlining specific deductions permissible under the Act.

3. The Court examined the provisions of Section 3B(2) of the TNGST Act, highlighting the deductions allowed, including amounts involved in works contracts in the course of export or interstate trade, and labor charges not involving property transfer in goods. The petitioner's claim for a flat rate deduction towards labor charges indicated a lack of contemplation for deduction under Section 3B(2)(a) of the Act. The Court rejected the petitioner's plea for deduction under Clause (a) due to the absence of such a claim in prior proceedings.

4. The petitioner contended that the entire assessment order was contrary to Section 3B of the TNGST Act, justifying the new plea for deduction in tax case revisions. However, the Court emphasized that the petitioner had consciously not claimed deduction under Section 3B(2) of the Act previously. The attempt to raise a new plea at this stage, without prior assertion or alternate plea before the appellate authority, was deemed impermissible. The Court dismissed the revision petitions, concluding that the petitioner's attempt to reopen settled matters on unraised grounds lacked merit.

5. In the final analysis, the Court dismissed the revision petitions, upholding the Tribunal's decision and answering the substantial questions of law against the assessee. The judgment emphasized the importance of raising specific claims and pleas within the appropriate legal framework, barring new assertions at later stages. The Court's decision highlighted the significance of adherence to procedural requirements and limitations in tax disputes.