The single bench of Madras High Court in a recent ruling, held that no additional sales tax is payable in respect of turnover of exempted goods under the provisions of the Tamil Nadu General Sales Tax Act, 1956. While allowing the writ petition, the Court directed the State to refund the amount of additional sales tax paid by the petitioner.
The petitioner M/s.Neel Auto Private Limited is a registered dealer under the provisions of Tamil Nadu General Sales Tax Act, and engaged in the manufacture of two wheeler spare parts and accessories for supplies to TVS Motor Company Limited, Hosur.
The petitioner had filed its returns and claimed exemption from payment of Sales Tax with regard to the raw materials which were supplied to M/s TVS Motor Company for manufacture of two and three wheelers in their factory at Hosur. The claim for exemption was based on a notification issued by the Government in G.O.Ms.No.181. The Government while issuing the said notification passed three orders, all bearing same Government Order Number and date viz. Notification Nos. I, II and III.in view of the notification no. II, they were granted refund of tax and Surcharge, but was denied the amount paid as additional sales tax on ground that the notification is silent about the same.
Justice T.S Sivagnanam held that,“there is no specific provision exempting additional sales tax in the exemption notification and therefore, the petitioner is not entitled for exemption. This view is not sustainable for more than one reason, in the light of the decision of the Hon’ble Supreme Court as well as the decision of the Hon’ble Division Bench of this Court”.
The Court relied on two decisions ASHOK SERVICES CENTRE AND ANOTHER v. STATE OF ORISSA and HSI AUTOMOTIVES LIMITED v. THE STATE OF TAMIL NADU, and observed that, the levy of penalty was wrong. Thus, by applying the above referred two decisions, the petitioner herein is entitled to the relief.
“any dealer who is not liable to pay tax under the principal Act, either by reason of his not having sufficient gross turnover of goods or by reason of exemption given under section 7 of the principal Act, is not liable to pay the additional sales tax. If a dealer is exempted by the State Government under the second proviso to section 3(1) of the Act of 1975, he is also not liable to pay the additional sales Tax. Further, the turnover in respect of goods whose sales or purchases are not taxable under the principal Act in the hands of any dealer by reason of section 8 of the principal Act is not liable to the payment of additional tax by reason of the first proviso to section3(1). Any other turnover which is exempted by the State Government under the second proviso to section 3(1) is also not liable to additional tax.”
Based on the above findings, the Court observed that the turnover in respect of the goods, which is sales or purchases are not taxable under the principal Act in the hands of any dealer by reason of section 8 of the principal Act, is not liable to payment of additional tax.
The Court also directed to extend the benefit of the exemption notification and effect the refund of the Additional Sales Tax paid by the petitioner, by considering their claim date 18.07.2013, under section 55 of the TNGST Act.
Read the full text of the Judgment below.
