BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 08/08/2011
CORAM
THE HONOURABLE MR. JUSTICE VINOD K.SHARMA
W.P.(MD)No.10563 of 2006
Tvl. Boot Captive Power Service(P)Ltd.,
represented by its Director, M.Manjula Devi,
Abirami Illam, 26, Krishna Street,
Nehru Nagar,
Madurai 16.
..Petitioner
Vs
1. The State of Tamil Nadu,
represented by Secretary to Government,
Commercial Taxes Department,
Fort.St.George,
Chennai-9.
2. The Deputy Commercial Tax Officer,
Madurai Rural(South),
Madurai-20. ...Respodents.
Prayer
Writ Petition filed under Article 226 of the Constitution of India,
praying this Court to issue a Writ of declaration declaring the notification
No.II(1)CTRE/100/97 issued in G.O.Ms.No.528, CT & RE, dated 21.11.1997 as
amended by Notification No.II(i)/CTRE/43(a-3)/98, issued in G.O.Ms.No.104,
CT&RE, dated 01.04.1998 as illegal and ultravires of Section 4-E of the TNGST
Act, 1959, insofar as the restriction of the exemption from tax on the sale of
raw materials, packing materials and consumable goods alone to 100% EOU is
concerned.
!For Petitioner ... M/s.P.Radhakrishnan
^For Respondents ... Ms.S.Bharathi
Govt. Advocate
:ORDER
The petitioner seeks a Writ in the nature of declaration declaring the
notification No.No.II(1)CTRE/100/97 issued vide G.O.Ms.No.528, CT & RE, dated
21.11.1997, as amended by Notification No.II(i)/CTRE/43(a-3)/98, issued vide
G.O.Ms.No.104, CT&RE, dated 01.04.1998 as illegal and ultra vires of Section 4-E
of the Tamil Nadu General Sales Tax Act, 1959 and Central Sales Tax Act, 1956.
2. In the course of business, the petitioner effects the sales of the
Engine Spares to Retail Dealers, manufacturers of other goods for being used in
their machineries to the consumers, Exporters and Export Oriented Units. The
sales effected to Retail Dealers and consumers are liable to be taxed at the
rate specified in the schedule -I to the TNGST Act. The petitioner has been
collecting the sales tax and remitting it to the second respondent.
3. Section 4-E of the TNGST Act, 1959, reads as under:
” A registered 100% export oriented unit or unit located in the Madras
Export Processing Zone shall be entitled for refund of the whole of the tax paid
by it on the purchase of any goods, including consumable, packing materials and
labels, but excluding plant and machinery, which has been used by such unit in
the manufacture and assembling packing or labeling of goods manufactured within
the State and assembling, packing or labeling of goods manufactured within the
State and sold byway of export by such unit.
Provided that the unit shall satisfy such conditions and shall submit an
application for refund in such manner and in such form as may be prescribed.”
G.O.Ms.No.528, CT&RE, dated 21.11.1997 – Notification No.II(!)/CTRE/100/97 – as
amended by G.O.Ms.No.104 CT&RE, dated 01.04.1998 – Notification
No.II(1)/CTRE/43(a-3)/98 – grants.
“Exemption in respect of the payable by any dealer on the sale of raw
materials, packing materials and consumable goods to the registered 100% Export
Oriented Units in this State and units located in the Chennai Export Processing
Zone”.
4. The Development Commissioner requested the Government that instead of
refund of tax the export oriented units may be exempted from payment of sales
tax as the amount involved for the year 1996-1997 was only Rs.26 lakhs. On the
recommendations of the Development Commissioner, State Government in exercise of
powers under Section 17(1) of the TNGST ACt, issued impugned notification dated
21.11.1997, which reads as under:
COMMERCIAL TAXES AND RELIGIOUS ENDOWMENTS(B2)
DEPARTMENT
G.O.Ms.No.528 Dated: 21.11.1997
READ:
From Development Commissioner, MEPZ,Chennai-45.
(D.O.No.19/50/96/EOA-TN/2423, dated 17.10.1996 and 18.2.97
From SC&CCT,Chennai.
(D.O. Lr.No.A3/17816/97, dated 26.2.1997)
********
Section 4(E) of the Tamil Nadu General Sales Tax Act, 1959 provides as below:
“A registered 100% export oriented unit or unit located in the Madras Export
Processing Zone shall be entitled for refund of the whole of the tax paid by it
on the purchase of any goods, including consumables, packing materials and
labels, but excluding plant and machinery, which has been used by such unit in
the manufacture and assembling packing of labelling of goods manufactured within
the State and sold by way of export of such Unit.
Provided that the unit shall satisfy such conditions and shall submit an
application for refund in such manner and in such form as may be prescribed.”
2. In his letter first read above, the Development Commissioner, Madras Export
Processing Zone has indicated that the Tamil Nadu Government has been refunding
sales tax paid by the Units in Madras Export Processing Zone under the Tamil
Nadu General Sales Tax Act and that the refund has been made by SIPCOT Tax Act
and the amount involved byway of reimbursement has been of the order of Rs.26
lakhs only during 1996-97. He has requested the Government that instead of the
refund of tax, the 100% Export oriented units and the units located in Madras
Export Processing Zone(MEPZ) may be exempted from payment of sales tax.
3. Government examined the matter in consultation with the Special Commissioner
and Commissioner of Commercial Taxes. With a view to encourage the exports from
Tamil Nadu they arrived at a decision that all raw materials purchased within
the State by registered 100% Export Oriented Units and units located in Chennai
Export Processing Zone(CEPZ) will be fully exempted from payment of sales tax.
4. The appended notification will be published in the Tamil Nadu Government
Gazette.
ANNEXURE
NOTIFICATION
In exercise of the powers conferred by sub-section(1) section 17 of the Tamil
Nadu General Sales Tax Act, 1959(Tamil Nadu Act 1 of 1959), the Governor of
Tamil Nadu hereby makes an exemption in respect of the tax payable by any dealer
on the sale of raw materials to the registered 100% Export Oriented Units in
this State and units located in the Chennai Exporting Processing Zone.
EXPLANATORY NOTE
(This does not form part of the notification but is intended to indicate the
general purport).
Section 4(E) of the Tamil Nadu Sales Tax Act, 1959 provides that a registered
100% export oriented unit or unit located in the Chennai Export Processing Zone
shall be entitled for refund of the whole of the tax paid by it on the purchase
of any goods, including consumables, packing materials, labels, but excluding
plant and machinery.
The Development Commissioner requested the Government that instead of refund of
tax, the said units may be exempted from payment of sales tax. The amount
involved by way of refund was Rs.26,00 lakhs during 1996-97.
With a view to encourage the exports from Tamil Nadu, Government have decided
that all raw materials purchased within the State by registered 100% Export
oriented units and units in Chennai Export Processing Zone(CEPZ) will be fully
exempted from payment of sales tax.
This notification is intended to achieve the above object.
5. The notification further modified vide notification dated 1.4.98,
which reads as under:
EXEMPTION OF TAX PAYABLE BY ANY DEALER ON SALE OF RAW
MATERIALS TO REGISTERED 100 PERCENT EXPORT ORIENTED
UNITS IN THIS STATE AND UNITS LOCATED IN THE CHENNAI
EXPORT PROCESSING ZONE
VARIATION TO NOTIFICATION
NO.ii(1)/ctre/43(A-3)/98 (TNGST Part II – Section 1/April
1,1998
(G.O.Ms.No.104, Commercial Taxes and Religious
Endowments 1st April 1998)
In exercise of the powers conferred by sub-section(3) of Section 17 of the Tamil
Nadu General Sales Tax Act, 1959(Tamil Nadu Act 1 of 1959), the Governor of
Tamil Nadu hereby makes the following variation to the Commercial Taxes and
Religious Endowments Department Notification No.II(1)/CTRE/100/97 published at
Page 90 of part II– Section 1 of the Tamil Nadu Government Gazette dated the
17th December 1997.
VARIATION
In the said notification for the expression ‘raw materials’, the expression “raw
materials, packing materials and consumable goods” shall be substituted.
EXPLANATORY NOTE
(This does not form part of the notification but it
intended to indicate its general purport)
With a view to encourage the exports from Tamil Nadu the Government have decided
that packing materials and consumable goods purchased within the State by
registered 100 percent Export Oriented Units and Units of the Madras Export
Processing Zone(MEPZ) may also be exempted from payment of sales Tax.
The notification is intended to achieve the above object.
6. The only ground of challenge by the petitioner, is that while granting
exemption, the State Government has only exempted raw, material, packing
materials, consumable goods whereas in Section 4-E “any goods” is included.
Therefore, the notification being contrary to Section 4-E of the Act, is not
sustainable in law.
7. This contention cannot be accepted. The notification issued under
Section 17(1), is in exercise of delegated legislative power of the State
Government. It is open to the Government to exempt any type/category of goods.
This Court in exercise of jurisdiction under Article 226 of the Constitution of
India cannot interfere with the exercise of legislative powers of the
Government.
8. Under Section 17(1), it is for the State Government to decide, as to
the exemptions to be granted. “Any goods” mentioned under Section 4-E is subject
to exclusion of plants and machinery.
9. Therefore, it is not for this Court to order the inclusion of any other
items in the notification issued under Section 17(1) of the Act, it being
legislative function, therefore is not subject to judicial review.
10. This court can only look into the validity of the Act or notification
to see whether it is in consonance with law, but, certainly cannot direct the
State Government to issue a notification in particular manner as contended by
the learned counsel for the petitioner.
11. The inclusion of raw material, packing materials, consumable goods,
only for exemption cannot be said to be violative of Section 4-E of Tamil
Nadu General Sales Tax Act,to call for any interference, as prayed for. This
Court cannot legislate the prayer in the Writ is in the nature asking this Court
to direct,the respondent to include additional issues for exemption, which is
not permissible in law.
12. Consequently, the Writ Petition is dismissed.
13. No costs.
vsn
To
1. The Secretary to Government,
State of Tamil Nadu,
Commercial Taxes Department,
Fort.St.George,
Chennai-9.
2. The Deputy Commercial Tax Officer,
Madurai Rural(South),
Madurai-20.