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TMI Blog2016 (10) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... llants : Mr. R. Karthikeyan For the Respondent : Mr. A. Chandrasekaran JUDGMENT The respondent/writ petitioner made a challenge to the constitutional authority of Explanation V under Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970, introduced by the Amendment Act 23 of 2002, to be ultra vires the Constitution of India and beyond the legislative competence of the State and the learned Single Judge, vide order dated 27.09.2011, had upheld the said plea and held that the said Explanation is ultra vires the Constitution of India, being beyond the competence of the State Legislature. 2. The appellants/Revenue aggrieved by the said order, had filed this writ appeal. 3. The facts leading to the filing of this appeal, briefly narrated, are as follows: 3.1. The respondent/writ petitioner is in the field of manufacturing, laying, joining, testing and commissioning of PSC pipes, for water supply scheme on contract basis and it is a registered dealer under the Tamil Nadu General Sales Tax Act, 1959 (in short 'the TNGST Act') and assessee on the file of the second appellant. 3.2. According to the respondent/writ petitioner, the nature of work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract in relation to which, the assessee had opted to pay under Section 7-C of the TNGST Act and no further challenge has been made and it has become final. 3.6. The State of Tamil Nadu, in order get over the effect of the said judgment, introduced an amendment to the Tamil Nadu Sales Tax Act, by introducing Explanations III, IV and V to Section 2(1)(aa) of the said Act by Amendment Act 23 of 2002 and Explanation V is applicable to the assessees, like the respondent/writ petitioner and as per the said Explanation, 'taxable turnover' for the purpose of this clause in respect of a dealer liable to pay tax under Section 7-C of the said Act for the financial years commencing from 01.04.1993, shall be the total value referred to in the said Section. Thus, in respect of the assessees covered by Section 7-C of the Act, who had opted to pay taxes therein, the total value of contracts entered into during the year formed the basis for levy of additional tax and it was introduced with retrospective effect from 01.04.1993. 3.7. The second appellant, as a consequence of the said amendment, sought to levy tax on the total value of the contract entered into during the year in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n held that the impugned Explanation V to Section 2(1)(aa) of the Act is contrary to the provisions of the Act and therefore, declared as arbitrary and beyond the competence of the State Legislature. 4. The learned Special Government Pleader appearing for the appellants/Revenue would contend that the respondent/writ petitioner admittedly had opted to pay tax under Section 7-C of the Act and as such, it is bound by the impugned amended provisions. In terms of Section 53 of the TNGST Act, the Government is having power to make Rules and under Section 53(2)(b) of the said Act to determine the total turnover or turnover of a dealer for the purposes and any amendment introduced or substituted under the said Act in the interest and to protect the Government Revenue will not be declared ultra vires or unconstitutional and the retrospective amendment is also held to be valid and therefore, prays for setting aside the impugned order and allowing the writ appeal. 5. Per contra, the learned Counsel for the respondent/writ petitioner would contend that the question whether the additional sales tax could be claimed on the taxable turnover relating to works contract, came up for considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ite the declared intention to levy additional tax on the sale or purchase of goods, the tax levied under that Act having been linked solely to the taxable turnover, mere payment of tax under the principal enactment would not render the dealer liable for the additional sales tax unless taxable turnover of that dealer is determinable under the principal Act. 9. It has been further held in the said judgment that the determination of turnover of a dealer who has opted for payment of tax under Section 7-C of the TNGST Act is not possible at all under the parent Act, as the amount computed under Section 7-C of the Act is not an amount which is determined as tax on the taxable turnover, but is determined with reference to the total value of the works contract in respect of which option is exercised and there is no provision in the Act which deems the said total contract value as total turnover. 10. It is relevant to extract paragraphs 17 to 19 of the said judgment hereunder: 17. Turnover, as defined in the Act, is the aggregate of value of sales effected or purchase effected by the dealer. The works contract not only involves the transfer of goods but also involves the renderin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) SCC 82, and contended that the Legislature can change in general by changing on the basis of the decision has been given by the Court and the impugned Explanation was added and the same submission has also been put forth in this writ appeal also. 13. In the case on hand, in the form of Explanation, in order to get over the effect of the judgment in South India Corporation Ltd. v. Commercial Tax Officer, Coimbatore and others reported in 124 STC 654, the scope of Charging Sections has been expanded. The learned Single Judge has considered the scope of Charging Sections, viz., amended Section 2(1)(aa) of the Act, and by placing reliance on the judgment of the Honourable Supreme Court in S.Sundaram v. V.R.Pattabhiraman reported in AIR 1985 SC 582 and also the opinion of the learned Authors, has held that it is contrary to the provisions of the Act. 14. It is a settled position of law that the Explanation normally should be read so as to harmonise with and clear up any ambiguity in the main section and it should not be so construed as to widen the ambit of the section and also to clarify the doubtful point in law and to serve as a proviso to main section. 15. In S.Sundaram v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order has taken into consideration the well settled position of law and held that the impugned Explanation is contrary to the provisions of the Act and allowed the writ petition. 19. In paragraph 19 of the judgment in South India Corporation Ltd. v. Commercial Tax Officer, Coimbatore and others reported in 124 STC 654. the Division Bench of this Court also held that the claim for additional sales tax by treating the contract value as the taxable turnover is not permissible under the provisions of either the TNGST Act or the Additional Sales Tax Act. The said judgment has also reached finality as no further challenge has been made and therefore, on that ground also, the impugned Explanation is to be declared as ultra vires and it was rightly declared so in the impugned order passed in the writ petition. 20. This Court upon scrutiny and consideration of the relevant materials and in the light of the above judgment is the considered opinion that there is no error apparent or infirmity in the reasons assigned in the impugned order in allowing the writ petition and finds no merit in the writ appeal. 21. Therefore, this writ appeal is dismissed and the order passed in W.P(MD)N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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