In the High Court of Judicature at Madras
Dated : 02.11.2010
Coram :-
THE HON'BLE MR.JUSTICE F.M.IBRAHIM KALIFULLA
and
THE HON'BLE MR.JUSTICE N.KIRUBAKARAN
W.P.No.2765 of 2005
M/s.Everest Buildings Products Limited
now known as M/s Everest Industries Limited
Podanur, Podanur P.O.
Coimbatore-641 023.
.. Appellant
vs.
1.The Tamil Nadu Sales Tax Appellate
Tribunal (AB), rep. by it Secretary,
Commercial Taxes Building
Dr.Balasundaram Road,
Coimbatore-641 018.
2. The Deputy Commissioner (CT)
Appeals, C.T.Buildings
Dr.Balasundaram Road,
Coimbatore-641 018.
3. The Assistant Commissioner (CT)
Central Assessment Circle II
C.T.Buildings, Dr.Balasundaram Road,
Coimbatore-641 018.
.. Respondents
Petition filed under Special Original Jurisdiction praying this Court for the issuance of writ of certiorari calling for the records of the first respondent in C.T.A.No.513/95, quash the order dated 13.09.2004.
For Petitioner : Mr.R.Hema Muralikrishnan for
for Chandran Karuppian
For R2 & R3 : Mr.Hajah Naziruddin
Spl.Govt.Pleader (taxes)
ORDER
(Judgment of the Court was delivered by
F.M.IBRAHIM KALIFULLA,J.)
The assessee has come forward with this writ petition challenging the order of sales tax Appellate Tribunal (Additional Bench) dated 13.9.2004 in C.T.A.No.513 of 1995. Three issues arise for consideration in this writ petition. The assessment year is 1988-89. The assessee purchased fly ash from the Thermal Power Stations of Tamil Nadu Electricity Board.
2. According to the petitioner, the purchase of fly ash would not attract purchase tax under Section 7(A) of the Act. Learned counsel for the petitioner concedes that the petitioner does not insist on the said claim. Therefore, in so far as the levy of purchase tax on the purchase of fly ash from the Tamil Nadu Electricity Board is concerned, the same is sustained.
3. One other item relates to estimation of sales of gunny bags. As far as the said item is concerned, learned counsel for the petitioner fairly states that the petitioner has got no documentary evidence in support of the claim. The petitioner is not pressing the said issue. Therefore, levy of purchase tax on gunny bags for packing fly ash also stands confirmed.
4. The other issue relates to transportation charges incurred by the petitioner for transporting the fly ash from the various Thermal Power Stations of Tamil Nadu Electricity Board to the destination of the petitioner. The question was whether such transportation charges can be construed as pre-sale expenses in order to include the said charges as part of sale price. As far as the said issue is concerned, the same has been decided by the Division Bench of this Court in the decision reported in (2010) 29 VST 153 (Mad) in State of Tamil Nadu Vs. Associated Cement Companies Ltd. Therefore, following the same, the levy of purchase tax on the transportation charges incurred stands set aside.
5. One other question which arise for consideration is as to whether the petitioner was entitled to raise an additional ground for the first time before the Tribunal. As far as the said issue is concerned, according to the petitioner, it relates to the levy of additional sales tax under Section 3(4) of Tamil Nadu General Sales Tax Act. Before the Assessing Authority as well as the Appellate Assistant Commissioner, the petitioner did not raise any issue relating to payment of additional sales tax under Section 3(4) of the Act. When the appeal was pending before the first respondent/Tribunal, it is stated that the decision came to be rendered by the Tamil Nadu Taxation Special Tribunal reported in (1997) 105 STC 0202 (Eagle Flask Industries Limited V.Commercial Tax Officer and Another) wherein the Special Tribunal held that no additional sales tax was leviable in respect of the tax paid under Section 3(4) of the Act. The Judgement was dated 10.10.1996. When the petitioner wanted to raise an additional grounds based on the said decision of the Special Tribunal, the first respondent/Tribunal declined to entertain the additional grounds by stating that the petitioner having failed to agitate the said issue either before the Assessment Authority or before the Appellate Assistant Commissioner cannot be permitted to raise the same for the first time before the first respondent/Tribunal.
6. When we considered the said issue, we find that the reliance placed upon the Division Bench of this Court reported in 1986 STC 63 (The Associated Cement Companies Ltd. V. The State of Tamil Nadu) fully supports the stand of the petitioner. The Division Bench has considered that very issue and has held as under:
“It is at once clear from the decisions referred to above and the observations extracted therefrom that the view taken by the Tribunal that in the appeals preferred by the company, it is not open to it to raise a dispute with reference to a subject-matter, which did not figure either before the assessing authority or before the first appellate authority, is plainly erroneous. Normally, on such a conclusion, the company would be permitted to raise the dispute again before the Tribunal and obtain relief at its hands.”
7. Therefore, there is no difficulty in holding that the petitioner is entitled to raise an additional ground before the Tribunal even if the said issue was not specifically raised before the Assessing Authority or the Appellate Assistant Commissioner. Moreover going by the appeal provision,(viz) Section 36 of the Tamil Nadu General Sales Tax Act read along with Regulation 12(1)(b) of the Tamil Nadu Sales Tax Appeal Tribunal regulations, we are convinced that the Tribunal has been invested with necessary powers to permit the appellants before it to raise additional grounds.
8. Under Section 36(3)(a)(iii), it is stated that the Tribunal while hearing the appeal and for sufficient reasons to be recorded in writing in the appeal preferred against the order of assessment can pass such other orders as it may think fit. Under Regulation 12(1)(b), it is specifically provided that the party or the respondent seeking to adduce additional evidence satisfies the Appellate Tribunal that such evidence notwithstanding the exercise of due diligence was not within his knowledge or could not be produced at or before the time when the order under appeal was passed, the party or the respondent can be permitted to produce it before the Tribunal. Therefore, when the appellant before the Tribunal was able to gather necessary evidence in support of its stand and such evidence was not available with it in spite of its due diligence or the said evidence was not within its knowledge though in the normal course before the Tribunal, the appellant may be entitled to seek for letting in such additional evidence.
9. In the exceptional circumstances stated above, the Tribunal can allow the appellant to let in such additional evidence. Therefore, when the appeal was very much pending before the Tribunal, if some additional evidence were to be let in on the exceptional grounds referred to in Regulation 12(1)(b), the appellant will have to necessarily be permitted to raise such additional grounds in support of such additional evidence that it may seek to rely upon. Therefore, the statutory provisions contained in Section 36 of the Tamil Nadu General Sales Tax Act and Regulation 12(1)(b) also empowers the Tribunal to grant such permission.
10. We therefore, hold that, that part of the order of the Tribunal rejecting the claim of the petitioner to raise additional grounds cannot be sustained. Though we could have remitted the matter back on the said issue before the Tribunal, we find that the same was unnecessary, inasmuch as the said issue relates to the payment of additional sales tax in respect of the tax levied under Section 3(4) under the provisions of the Tamil Nadu Additional Sales Tax Act.
11. The said issue has been dealt with by the Tamil Nadu Taxation Special Tribunal in the decision reported in (1997) 105 STC 0202 (cited supra). The question as to the liability to pay additional sales tax has been examined by the Special Tribunal and it has rendered its finding as under in paragraph 8,9 and 10:
8. In support of the above contention the petitioner draws specific attention to sub-section (4) to section 3 which deals with the imposition of liability of the petitioner to pay the balance of 2 per cent of the tax for violation of declaration in form XVII. He would highlight the fact that the Legislature has very carefully did not use the expression that the additional liability of 2 per cent is the turnover of the purchaser. He draws distinction between the proviso to clause (b) to section 3 (3) where the expression used is “turnover relating to sale of such goods” and the expression used in sub-section (4) to section 3″ on the value of the goods so purchased.
9. Since the petitioner has violated the declaration in form XVII, rightly the liability is imposed on him to pay the balance of 2 per cent tax on the value of the goods purchased by the petitioner which went into the manufacture of the end-product. The words “taxable turnover”defined under section 2(p) reads as follows:
” ‘Taxable turnover’ means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed.”
10. In the instant case when various registered dealers in the State of Tamil Nadu sold component parts/raw materials to the petitioner, it is their duty and responsibility to include such sale value in their taxable turnover. It is rightly contended that the said turnover was assessed at the concessional rate of 3 per cent on condition of satisfaction of sub-section (3) to section 3. When there a violation, the balance of 2 per cent tax is payable and that is collected from the purchaser who violated the declaration. But for such a declaration, tax would have been collected from the registered dealer at the point of first sale by them to the petitioner. Therefore, by no stretch of imagination the value of goods of Rs.22,65,828 which went into the manufacture of end-products but were stock transferred in violation of declaration can be included as the taxable turnover of the petitioner attracting the provisions of the Tamil Nadu Additional Sales Tax Act, 1970. Since the petition is filed at the time of show cause notice, the petitioners are granted time till 30th January, 1997 to file their objections in respect of other issues.”
12. The said decision was said to have become final and conclusive. Inasmuch as there is no challenge to the order of the Special Tribunal, the reasoning of the Tribunal passed on different set of expressions used in the proviso to clause (b) of Section 3(3) and Subsection 4 to Section 3 was well justified. We also fully concur with the conclusion of the Special Tribunal on the interpretation of Sec(2) of the Tamil Nadu Additional Sales Tax Act vis-a-vis Section 3(4) of Tamil Nadu General Sales Tax Act as regards the payment of additional sales tax.
13. We therefore, sustain the stand of the appellant that no additional sales tax was leviable under the provisos of the Tamil Nadu General Sales Tax in respect of the tax paid under Section 3(4) of Tamil Nadu General Sales Tax Act. To the above extent, the order of the Tribunal is set aside.
14. Writ petition is partly allowed. No costs.
Index : yes (F.M.I.K.J) (N.K.K.J.) Internet: yes 02.11.2010. kua F.M.IBRAHIM KALIFULLA,J. and N.KIRUBAKARAN,J. kua To 1.The Secretary, Tamil Nadu Sales Tax Appellate Tribunal (AB), Commercial Taxes Building Dr.Balasundaram Road,Coimbatore-641 018. 2. The Deputy Commissioner (CT) Appeals, C.T.Buildings Dr.Balasundaram Road, Coimbatore-641 018. 3. The Assistant Commissioner (CT) Central Assessment Circle II C.T.Buildings, Dr.Balasundaram Road, Coimbatore-641 018. W.P.No.2765 of 2005 02.12.2010