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TMI Blog2018 (5) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings dated 29.10.1999, the assessment was revised, so as to levy a higher rate of 8% on the turnover of ₹ 7,17,108/- instead of 3% under Section 16(1)(b) and also to levy a penalty of ₹ 61,850/- under Section 16(2) of the said Act. 3. On appeal, the Appellate Assistant Commissioner (CT) (Main), Coimbatore, in his proceedings in AP No.578 of 1999 dated 31.01.2000, has confirmed the higher levy of tax at 8%, but allowed the appeal in respect of the levy of penalty under Section 16(2) for ₹ 61,850/- only. 4. Aggrieved against the order of the first appellate authority, the respondent/dealer filed second appeal in CTA No.232 of 2000, before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore. 5. On a careful consideration of the submissions made, and following the decision of this Court in M/s.T.S.R.Company, Madras Vs. State of Tamil Nadu, reported in 102 STC 70 [W.P.No.6689 of 1983 dated 02.03.1995], the Tribunal, vide common order dated 18.07.2001, refixed the levy of tax from 8% to 3% on the disputed turnover, as hereunder: 7. We have carefully considered the contentions of the learned counsel for the appellants and the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not less than 10 cms. They were sold not by volume or by the number of pieces. The wood was offered with a particular kind of user in mind, viz, as a source of industrial-raw material for 'pulp' in the manufacture of synthetic fibre. As pointed out by the High-Court, in the returns filed by the respondents, it was mentioned that eucalyptus-plantation was a recent development and promoted with the specific- purpose for use in specifically in the preparation of pulp and sold throughout the state with this specific object. The Commodity dealt with by the assessee is only pulpwood which could not come under 'timber' as held by the Supreme Court in the above mentioned judgment. Under these circumstances, the provisions of Section 3(#) are as below:- 3(3). Notwithstanding anything contained in sub-section (1) or sub-section (2), the tax payable by a dealer in respect of any sale of goods mentioned in the First Schedule by such dealer to another for use by the latter as a component part of any other goods mentioned in that Schedule, which he intends to manufacture inside the State for sale shall be at the rate of only three per cent on the turnover relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rate prescribed in the first schedule. The purchaser is also liable to tax under the first schedule. In such circumstances, the buyer who furnishes the declaration forms is entitled to purchase the goods at the concessional rate provided under Section 3(3). As rightly argued by the learned counsel the decision of the Madras High Court in the case of T.S.R. and company reported in 1 TNCTJ Page 12, would squarely apply; that the final products produced by the manufacturer under any one of the entry under the first schedule is liable to pay tax at 3%. In that instance, the final product of the appellants would fall under entry 37 and Telecom Powder under entry 51 of the first schedule and therefore directly entitled to the concessional rate of tax. On a comparison of the judgment of the High Court of Madras, it is clear that the rate of tax prescribed for pulp is mentioned in the first schedule under residuary item and the purchaser who manufactured the goods also falls under the first schedule. In such circumstances the decision of the Madras High Court cited by the appellants would apply to the instant case. It would be more appropriate to cit the decision of Madras Elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate is enabled to recover from him not only the legitimate tax due to the State on a transaction which came to be lost to the State by the misconduct and abuse committed by the purchaser/defaulter, but also the penalty. That such is the aim, purpose and object of these provisions is also made clear by the judicial pronouncements that if the declaration given in form XVII turns out to be false in the sense that the goods purchased have not been used as declared in the prescribed form the purchaser alone is exposed to the penalties under sections 23 and 45(2)(e) and not the seller who has been held to be automatically entitled to the concessional rate of tax on the production to his assessing authority the declaration in form XVII furnished by the purchaser to the seller vide [1968] 22 STC 269 (Mad.) (Premier Electro-Mechanical Fabricators v. State of Madras) and [1993] 89 STC 438 (Mad.) (State of Tamil Nadu v. Madras Petro Chem Ltd.). The said view was taken by the Division Benches which decided those cases even de hors the amendment which inserted the 2nd proviso to section 3(3) in 1986, though the later decision in [1993] 89 STC 438 (Mad.) (State of Tamil Nadu v. Madras Petro Chem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, State has filed the instant Tax case (Revision) on the following substantial question of law: 1. The tribunal failed to consider that the Special Commissioner and Commissioner of Commercial Taxes, Chennai in the letter No.Acts, Cell.I/59532/98, dt.06.07.99 has clarified that pulpwood fall under entry 84(1) of First Schedule which relates to Timber and which is not eligible to purchase against Form XVII for the period from 01.04.1994 to 16.07.1996. 2. The tribunal failed to consider that pulpwood is nothing but timber and it was shifted to sixth schedule with effect from 01.04.1995, therefore, the order of the assessing authority is just and proper in disallowing the claim of concessional levy of tax under Sec. 3(3) of the TNGST Act. 3. The Tribunal as well as the First Appellate Authority failed to consider that the assessment years relate to 1994-95 and 95-96 and the commodity Timber was shifted to sixth schedule with effect from 01.04.1994, the concessional levy of tax under Sec.3(3) is not applicable to the dealer's case for the assessment years under reference. 7. Though, Mr.V.Hari Babu, learned Additional Government Pleader (Taxes) sought for reversal on gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chedule during the period from 1.4.1994 to 16.7.1996, levy of tax at concessional rate of tax against Form XVII under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 is not allowable since concessional rate of levy is allowable in respect of goods falling under First Schedule only. It was also clarified that the goods falling under Sixth Schedule were not eligible to purchase against Form XVII for the period from 1.4.1994 to 16.7.1996. Accordingly, in the reference first read above, the Government issued orders for waiver for an amount of ₹ 1,69,90,128/- in respect of 41 dealers being the differential rate of tax between 85 and 3%. Surcharge, Additional Surcharge and penalty payable in respect of the period from 1.4.1994 to 16.7.1996 on the sale of Eucalyptus timber under the Tamil Nadu General Sales Tax Act, 1959. 3. Subsequently, the Principal Secretary / Commissioner of Commercial Taxes in his letter second read above sent a proposal in respect of three dealers who were not included in the Government Order first read above for waiver of differential concessional rate of tax (8% - 3% = 5%) for the period from 1.4.1994 to 16.7.1996 on the sale of Eucalyptus t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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