1991 (7) TMI 347 - HC - VAT and Sales Tax

Summary

Issues:
1. Deletion of penalty under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959.

Detailed Analysis:
The High Court of Madras addressed the controversy in a tax revision case filed by the Revenue against the order of the Tamil Nadu Sales Tax Appellate Tribunal. The central issue revolved around the deletion of penalty under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959. The Tribunal held that the assessee was entitled to pass on the sales tax paid on controlled oil to the Tamil Nadu Civil Supplies Corporation, as the price of the oil was controlled at the relevant time. The Tribunal's decision was based on the proviso to section 22(1) of the Act, which allows a registered dealer to collect an amount towards the tax already suffered for goods with controlled prices. The Tribunal found that the assessee had purchased oil at a higher price to fulfill obligations under a government order, but sold it to the Corporation at a lower price, passing on the burden of sales tax. The Court noted that the Tribunal's decision was in line with the Act's provisions, particularly the proviso to section 22(1), and that the assessee was justified in passing on the tax burden to the Corporation. The Court rejected the argument that the tax burden could not be passed on since it was not separately shown in the bill, emphasizing that there was no such requirement in the proviso. As the sales tax had been paid by the assessee to the original seller, the Tribunal's decision to delete the penalty under section 22(2) was upheld, and the tax revision case was dismissed.

In conclusion, the High Court found that the Tribunal's order was legally sound and did not contain any errors. The Court upheld the Tribunal's decision to delete the penalty under section 22(2) of the Act, as the assessee was within their rights to pass on the sales tax burden to the Tamil Nadu Civil Supplies Corporation. The Court dismissed the tax revision case, emphasizing that the assessee had complied with the relevant provisions of the Act and had acted in accordance with the law.