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TMI Blog2003 (11) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... tax at their hands due to exemption granted by the Government under section 17(1) of the Tamil Nadu General Sales Tax Act, 1959, in respect of sales tax payable on their sales turnover up to Rs. 300 crores, issued notices for revision of assessment for the said years, proposing to levy purchase tax under section 7-A(1)(c) and penalty under section 16(2) read with section 12(3) of the Tamil Nadu General Sales Tax Act, 1959. The petitioner filed his objection on April 9, 2003. Without properly considering the objections, the first respondent has confirmed his proposal contained in the revision notices. The entire orders suffer from jurisdiction and from errors of law apparent on the face of the record. Though statute provides for appeal remedy, the filing of appeal would cause irreparable injury to the petitioner by way of payment of pre-condition deposit for entertainment of appeal and further payment for obtaining stay. As the matter involves question of law, the petitioner is approaching this Special Tribunal. 3.. Mr. C. Natarajan, learned Senior Counsel appearing for the petitioner, argued that generally, vegetable oil is liable to tax under section 3(2) of the Act read with e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances in which no tax is payable under section 3 or 4, as the case may be". The provision looks to circumstances operating under the Act, i.e., the circumstances in which tax is payable under the Act and the circumstances in which no tax is payable under the Act. The circumstances are that under section 3(1), the sale is not liable, because the registered dealer has a turnover not exceeding rupees three lakhs. Under section 3 read with section 2(r) the agriculturists are not to be taxed as per the Scheme of the Act. The exemption under section 17(1) was with regard to payability of the tax in respect of sale or purchase and therefore, the notification comes under section 17(1)(iii) of the Act. The power to exempt is only to exempt the tax payable in respect of sale or purchase and the point of taxation under the Schedule to the Act cannot be shifted under the powers vested in the Government in section 17. Therefore, when the first sale is exempt, the sale of vegetable oil by the first seller ceases to be taxable goods. The learned Senior Counsel relied on the decisions reported in [1989] 73 STC 175 (AP) [Vinod Solvent Extracts (P.) Ltd. v. State of Andhra Pradesh], [1975] 36 ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court of Kerala reported in [1972] 30 STC 537 (Malabar Fruit Products Company v. Sales Tax Officer) explaining the scheme of the section 5-A, which is identical to section 7-A of the Tamil Nadu General Sales Tax Act, 1959, wherein one of the circumstances in which liability under section 7-A is attracted has been stated as the circumstance wherein the seller is not liable to tax for the reason that his turnover is below the specified minimum. Similarly, in this case also, the seller is not liable because his total turnover did not exceed Rs. 300 crores, as notified by Government in G.O. Ms. No. 93 dated June 2, 2000 read with G.O. Ms. No. 105 dated June 22, 2000 effective from April 1, 1999. The petitioner has admittedly purchased the vegetable oil from the sellers, who had availed exemption and whose total turnover did not exceed Rs. 300 crores per year and despatched the same to his branches outside the State not as a direct result of sale or purchase in the course of inter-State trade or commerce. Further, the vegetable oil is not totally exempted by the Government and the exemption is only in respect of tax payable by dealers whose total turnover does not exceed Rs. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll exemption in respect of the tax payable under the Tamil Nadu General Sales Tax Act, 1959 on the sale of coconut oil, gingelly oil, groundnut oil, sunflower oil, cotton seed oil, rice bran oil and all refined oils including refined palm oil, refined cotton seed oil and refined rice bran oil from March 27, 1998 to March 31, 1999 without any turnover limit and a ceiling was fixed at Rs. 300 crores for the enjoyment of exemption only from April 1, 1999 to November 30, 2001 and on and from December 1, 2001, exemption already issued was cancelled and there was no exemption and the said oils are quite taxable under section 3(2) of the Act. 8.. Both the counsels relied on the judgment of the Supreme Court reported in [1975] 36 STC 191 (SC) (State of Tamil Nadu v. M.K. Kandaswami) to their favour in respect of taxability of the goods, especially, the following paragraph at page 197 which reads as under: "The focal point in the expression, 'goods, the sale or purchase of which is liable to tax under the Act', is the character and class of goods in relation to their exigibility. In a way, this expression contains a definition of 'taxable goods', that is, goods mentioned in the First ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mi) cannot be simply followed in the present cases. On the other hand, the Learned Additional Advocate-General argued that as elaborately discussed by the Supreme Court, the words, "the sale or purchase of which is liable to tax under the Act" qualify the term "goods" and exclude by necessary implication goods, the sale or purchase of which is totally exempted from tax at all points under section 8 or section 17(1) of the Act and in the present case, the exemption is not a total exemption under section 17(1) of the Act, but a conditional exemption in respect of tax payable by a dealer on his sale transaction, provided his total turnover does not exceed Rs. 300 crores per year and the goods in question are still taxable at the point of first sale under section 3(2) of the Act beyond Rs. 300 crores. Therefore, the goods are still taxable goods. In respect of circumstance in which no tax is payable under section 3 or 4, the seller was exempt up to a total turnover of Rs. 300 crores on his sale transaction of vegetable oil. A circumstance has been created that no tax is payable by the seller under section 3 up to a total turnover of Rs. 300 crores. Since the sale transaction had not su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption was granted by the Government through various notifications on the sale of vegetable oils up to a turnover of Rs. 300 crores, still the goods retain the character of taxability beyond Rs. 300 crores and the goods are still taxable goods. There was no total exemption from tax under section 17(1) at the sale point, even though the levy is only at single point of first sale within the State. The exemption is purported for a dealer whose total turnover is below Rs. 300 crores. Therefore, the goods in question cannot be said to be non-taxable goods and the goods purchased in this case by the petitioner are "goods, the sale or purchase of which is liable to tax under the Tamil Nadu General Sales Tax Act, 1959 or taxable goods". Hence, the contention that levy of purchase tax would amount to shifting of point of taxation from the scheduled sale point to purchase point, is not accepted. With respect to the other ingredient, "in circumstances in which no tax is payable under section 3 or 4", I have to hold that the circumstance in which no tax was payable under section 3 by the seller on his sales due to exemption notification in force, in the present cases, will attract levy und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner was allowed exemption on the sales turnover of edible oil for all the years. Only on noticing the exemption given to the seller and the provisions in section 7-A, the first respondent has revised the assessments. Thus, there was no wilful suppression so as to warrant levy under section 16(2) of the Act. For levying penalty under section 16(2), the element of wilful non-disclosure is essential, which is absent in these cases. Therefore, in all the cases, the levy of penalty is deleted. 13.. In the result, the order impugned in O.P. No. 692 of 2003 is set aside in full and the Original Petition in O.P. No. 692 of 2003 (for the year 1998-99) is allowed. The orders impugned in O.P. Nos. 693 and 694 of 2003 relating to levy of penalty alone, are set aside and the Original Petitions in O.P. Nos. 693 and 694 of 2003 (for the years 1999-2000 and 2000-2001) are dismissed in respect of tax portion. Consequently, the miscellaneous petitions therein do not survive. And this Tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned. Issued under my hand and the seal of this Tribunal on the 10th day of Novem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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