9911796707
TMI Blog2000 (7) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... he dealer does not have any branch transfer or consignment transfer during the year and the petitioner also paid tax only at 2 per cent on the sales of staple fibre yarn provided the dealer does not have any branch transfer or consignment transfer during the year and the petitioner also paid tax only at 2 per cent for the sales of staple fibre yarn, but from their "B" unit, there was stock transfer of polyester cone yarn and for that reason, the second respondent, Commercial Tax Officer has issued the notice for payment of the difference in the normal rate which is at 8 per cent alleging that the petitioner had effected stock transfer from unit "B" and they are not eligible for the concessional rate of tax provided under the abovesaid Government order. In view of this notice for the payment of the difference in tax which is at 6 per cent, the petitioner has come forward with this original petition contending that the condition, namely, that the dealer shall not make any branch transfer or consignment transfer during the year is violative of articles 301 and 304(a) and therefore, such condition should be struck down. 2.. The Government of Tamil Nadu, by virtue of the powers under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice dated August 9, 1999 which calls upon the petitioner to pay the difference in the sales tax. On a reading of this notice, it reveals that the petitioner had despatched polyester staple fibre yarn by way of branch transfer and the check-post records of delivery prove that the staple fibre yarn to the value of Rs. 336.61 lakhs was despatched by branch transfer. Even though in the affidavit, the petitioner would contend that the staple fibre yarn was not despatched by branch transfer but only the polyester yarn was despatched, in this original petition, a roving enquiry cannot be made as to the nature of the goods despatched by the petitioner by consignment transfer. As the notice reads that from the check-post records of delivery note, the petitioner had made branch transfer of staple fibre yarn, that fact cannot be disputed in this original petition and as the branch transfer of staple fibre yarn is said to have been effected, it was violation and for the breach of the condition mentioned in the Government order for availing the concessional rate of tax at 2 per cent, naturally, the revenue is entitled to proceed to recover the difference in the tax. Therefore, on that g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yarn and waste of any of them, etc. As a matter of fact, even the heading for G.O. Ms. No. 108, CT RE, dated April 7, 1998 reads that the reduction of tax payable on sale of man-made staple fibre, etc., to certain dealer under TNGST Act. Therefore, the Government order was intended only to certain kind of dealers against whom conditions have been imposed from making branch transfer or consignment transfer of any commodity. In this case, in the affidavit itself, the petitioner has admitted that the polyester cone yarn were sent outside the State by consignment transfer. Therefore, on that ground also, the second respondent-assessing authority is entitled to direct the petitioner to pay the difference in the rate of tax. 5.. Finally, we come to the vires of the restriction to make branch transfer or consignment transfer outside the State. The learned Mr. K.J. Chandran argued that article 301 of the Constitution enables any trader to carry on trade and commerce throughout the territory of India freely and article 304(a) also enables for the free movement of the goods from one State to the other without discrimination between the goods so imported or manufactured, but in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different for the goods manufactured within the State and the similar goods imported from outside the State. In Weston Electroniks v. State of Gujarat [1988] 70 STC 52 (SC), the rate of tax for the television sets manufactured within the Gujarat State was lower than the television sets imported from outside the State. In the same way, State of Maharashtra and also Andhra Pradesh issued notifications for the products manufactured within the State giving concession for those goods. In [1990] 78 STC 243 (SC) (Andhra Steel Corporation v. Commissioner of Commercial Taxes in Karnataka), the discrimination was made between the goods manufactured out of the raw materials locally purchased and the goods manufactured from imported raw materials. Therefore, in all these cases, there was difference in the rate of tax for the goods manufactured within the State or manufactured with the raw materials purchased within the State and those of the goods imported from outside or raw materials from outside. Therefore, this discrimination was found to be violative of article 304(a) of the Constitution. The learned counsel also referred to [1968] 22 STC 376 (SC) (State of Madras v. Nataraja Mudaliar) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the consignment transfer or branch transfer is permitted on payment of full rate of tax at 8 per cent. So, the difference in the rate of tax is not discriminative but reasonable in the interests of the State. The apex Court, in Video Electronics Pvt. Ltd. v. State of Punjab [1990] 77 STC 82; AIR 1990 SC 820, has observed that if the differentiation is on justifiable and rational reasons, there is no discrimination. The apex Court while upholding the concessional rate of tax for the goods manufactured in the backward areas, has observed: "A backward State or a disturbed State cannot with parity engage in competition with advanced or developed States. Even within a State, there are often backward areas which can be developed only if some special incentives are granted. If the incentives in the form of subsidies or grant are given to any part of unit of a State so that it may come out of its limping or infancy to compete as equals with others, that, in our opinion, does not and cannot contravene the spirit and the letter of Part XIII of the Constitution. However, this is permissible only if there is a valid reason, that is to say, if there are justifiable and rational reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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