IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1591-1592 OF 2009
(Arising out of S.L.P.(C) Nos.24422-24423/2007)
M/s Sony India Pvt. Ltd. ...Appellant(s)
Versus
Commercial Tax Officer & Anr. ...Respondent(s)
ORDER
Leave granted.
Appellant had a factory at Dharuhera, Haryana wherein it was
manufacturing, inter alia, Televisions, Audio systems, Walkman-Pocket size Radio
Cassette Player, which apart from being sold locally, were branch transferred to
various States wherein local sales were made. They also imported certain items from
abroad either at New Delhi or at Mumbai and after filing Bills of Entry for home
consumption, paid customs duty and cleared the goods. The goods were thereafter
branch transferred to their warehouses located in different parts of the country
including Tamil Nadu. Prior to the period in question, appellant’s products, both
indigenously produced as well as those imported from outside India, were assessed
under Entry 14(vi) and (viii) of Part D of the First Schedule to the Tamil Nadu
General Sales Tax Act, 1959. They were, accordingly, taxed at 12% at the point of
first sale in the State of Tamil Nadu. However, in 2002, an amendment was made for
the first time and ‘imported’ goods falling in Part D of the First Schedule of the Act
1
were sought to be taxed at enhanced rate of 20%. Appellant sought a clarification
from the Commissioner under Section 28-A of the Act. While the clarification was
pending, the appellant challenged the said amendment vide O.P.Nos.969-970/2002
before the Tamil Nadu Taxation Special Tribunal constituted under the Tamil Nadu
Taxation Special Tribunal Act, 1992 in terms of Article 323B of the Constitution.
One of the grounds of challenge was that there was no distinction between imported
goods and indigenously manufactured goods particularly when they answer the same
description, more so since the goods after import became part of the landmass of
India. The appellant also alleged that identical goods manufactured by multinational
corporations like LG, Samsung etc. were also subjected to levy of 12% only, since the
said multinationals (who were competitors of the appellant) produced those goods in
India. The Tribunal dismissed the O.Ps. against which Writ Petitions were filed by
the appellant which were also dismissed by the High Court by the impugned
judgment, hence these Civil Appeals.
As repeatedly observed by this Court, in tax matters, each word in the
Entry requires a factual foundation to be established. In the present case, therefore,
we need to look at the subject Entries.
We quote hereinbelow Part-D of the First Schedule to the Act – Sl.No.14
(vi):
Sl. DESCRIPTION OF GOODS Point of Rate of Tax
Levy in the
No.
State
2
14 (vi) Audio and video cassettes, CDs, corresponding First Sale 12% w.e.f
recorders and players, Gramophones of all kinds 27.03.2002
including record players, radio gramophones,
gramophone records, matrices for records and
record changers, sound recording and reproducing
equipments including dicta-phones, car cassette
players, tape-decks, tape players, compact disc
players (including a combination of any of them)
with or without wireless reception instrument and
pagers[xxx]@.
@ ‘Cellular telephones’ have been taken as item 1 of Part DD from 21st March 2003 – See that Part of
this Schedule. Before this transfer, the rate of tax on their sales was reduced from 12% to 4% from
24th December 2002 by Notification No.II(I)/CT/74(d)/2002 of that date.
We also quote hereinbelow from the same Part Sl.No.14(viii), which reads
as under:
Sl. DESCRIPTION OF GOODS Point of Rate of Tax
Levy in the
No.
State
14 (viii) Television sets, antenna, television and video First Sale 12% w.e.f
cameras, projectors, teleprompters, dish antenna and 27.03.2002
boosters, all electronic toys and games (The previous
rates could not be indicated as the groupings of the
goods varied from time to time)
We also quote hereinbelow, item 9 of the 11th Schedule, which reads as under:
Sl. DESCRIPTION OF GOODS Point of Rate of Tax
Levy
No.
9 Imported cigarettes, medium density fibre boards, First Sale 20%
textile and other items falling in Parts D and E of the
First Schedule
The controversy has arisen because some of the times are imported from
Japan by the Assessee whereas others are manufactured in India. As far as items
3
manufactured locally in India, there is no dispute. The tax is levied at 12%. The
dispute is basically confined to imported items in which the rate of tax is 20% (after
27.03.2002).
In the O.P. filed before the Tribunal, it was urged that once the
importation stands completed, then the goods lose their character of imported goods
and, consequently, there would be no difference between the locally manufactured
goods and imported goods (see page 54 of the SLP Paper Book). One more contention
raised by the assessee in its Original Petition before the Tribunal was:
“It is submitted that similar goods manufactured in India and
sold by other dealer like Samsung, LG etc. in Tamil Nadu are being taxed
at 12% after 27.03.2002. However, the petitioners (assessee) herein alone
are now required to pay tax at 20%. Presently, the Act imposes a higher
rate of 20% on sales tax whereas other similar goods suffer sales tax at
12%.”
We do not wish to comment about the above contentions. Suffice it to state
that these contentions would require adjudication, which has not taken place in the
present case. Against the assessment orders, the assessee chose to move the Tribunal
without exhausting statutory remedy under the Act. In our view, looking to the
contentions advanced by the assessee, they ought to have proceeded to file appeals for
each assessment year before the First Appellate Authority under the Act which they
have failed to do. However, since an important question of law arises for
determination and since the liability is likely to recur in future, we direct the
appellant-assessee herein to prefer statutory appeal(s) within a period of four weeks.
It is made clear that the First Appellate Authority will decide the said appeal(s)
4
within a period of six months, uninfluenced by the observations made by the
Tribunal as well as by the High Court in the impugned judgment. We express no
opinion on the merits of the case. Whatever is stated hereinabove is only in the
support of our order remitting the matter to the First Appellate Authority and that
Authority shall not be bound by any of our observations mentioned hereinabove.
The First Appellate Authority shall decide the matter on merits and it shall condone
the delay, if any, in filing the appeals.
Civil Appeals are disposed of accordingly.
No order as to costs.
……………….J.
(S.H. KAPADIA)
……………….J.
(H.L. DATTU)
New Delhi,
March 05, 2009.
5