2019 (4) TMI 318 - HC - VAT and Sales Tax

Interpretation of statute - Assessment of Turnover - classification of goods - imported access control systems, intrusion alarm systems, conventional fire alarm, analog conversory systems, closed circuit television and electronic spares - assessment confirmed by interpreting the petitioner s goods as falling under Entry No.14(iii) of Part D of the First Schedule instead of Entry 13(i) of Part C of the First Schedule - erroneous interpretation of the legislative intent. Held that - The Tribunal did not take note of the earlier order passed by the Tribunal dated 24.01.2006 in STA.Nos.273 and 294 of 2004 which arose in similar circumstances for the earlier two assessment years. Each assessment year is distinct and independent. However, there is a similar caveat to the said submission that if the nature of transaction is identical for more than one year, then obviously the department cannot take a different stand, unless there are distinguishing circumstances pointed out by the Assessing Officer or the Appellate Authority or the Tribunal. In the instant case, probably the Tribunal was not aware of the earlier orders passed in favor of the assessee. Thus, the two orders on the same type of transactions cannot be left to remain inconsistent with each other. Matter remanded to the Tribunal to take note of the decision in the assessee s own case in STA.Nos.273 of 2004 and 294 of 2004, dated 24.01.2006, which has been accepted by the department and pass fresh orders on merits and in accordance with law.

Summary

Issues:
Interpretation of legislative intent regarding the assessment of turnover under specific entries of the First Schedule of the Tamil Nadu General Sales Tax Act, 1959.

Analysis:
The tax case revision pertains to challenging an order by the Tamil Nadu Sales Tax Appellate Tribunal regarding the classification of goods under specific entries of the First Schedule. The main question of law revolves around whether the Tribunal was correct in interpreting the petitioner's goods as falling under Entry No.14(iii) of Part D instead of Entry 13(i) of Part C, leading to an alleged erroneous interpretation of legislative intent.

The petitioner argued that the goods they dealt with were accessories and parts of electronic systems, emphasizing that the items were sold individually and not as integrated units. They contended that the goods were not capable of forming individual units and were not assembled into a single product for sale. The petitioner further claimed that the goods were sold without any assembling, and buyers used third-party services for integration and installation. They asserted that the goods were parts and accessories of an electronic system employed for burglar and fire alarm systems, falling under Entry 50 of Part B of the First Schedule.

Moreover, the petitioner distinguished between electrical and electronic systems, asserting that the goods marketed by them were parts and accessories usable only in conjunction with the main electronic system. They argued that the goods should be classified as electronic systems under Sl.No.13(i) of Part C of the First Schedule, rather than under Sl.No.14 of Part D, which predominantly deals with electrical systems.

The court noted that a similar issue had been adjudicated in favor of the assessee for previous assessment years, and the revenue had not appealed those decisions. Consequently, the court opined that consistency in interpreting similar transactions across different assessment years was essential. Therefore, the court allowed the appeal filed by the assessee, remanding the matter to the Tribunal to consider the earlier decision in the assessee's favor and pass fresh orders accordingly.

In conclusion, the court directed the Tribunal to consider the precedent set in the assessee's previous cases and ensure consistency in the interpretation of the legislative intent regarding the classification of goods under the relevant entries of the First Schedule.