2008 (7) TMI 934 - HC - VAT and Sales Tax

Whether the honourable Trade Tax Tribunal is legally justified in reducing the turnover and rate of tax on electric wire made of copper and aluminium whereas the assessing authority has assessed the turnover on the basis of evasion detected on the survey dated November 25 1983 and imposed the tax at the rate of 12 per cent as the dealer has manufactured the electric wire made of aluminium and copper? Whether on the facts and in the circumstances of the case the Trade Tax Tribunal has properly utilized the material available on record? Held that - In the present case the learned standing counsel could not point out any illegality or perversity in the finding of the Tribunal reducing the estimated turnover. In this view of the matter no justification to interfere with the order of the Tribunal estimating the suppressed taxable turnover. Sufficient force in the argument of the learned standing counsel that the commodity in question was liable to be taxed as unclassified item as was taxed by the assessing officer and not under the aforestated notification at the rate of four per cent. Aluminium and copper wires are not included in metal and thus are liable to be taxed as unclassified item. In the result the revision succeeds and is allowed in part. Question No.1 so far as it relates to rate of tax at the rate of four per cent on the aluminium and copper wires is concerned is answered in favour of the Department by holding that the said commodities were taxable at the rate of 12 per cent. So far as the remaining part of question No. 1 is concerned find no force in the revision.

Summary

Issues:
1. Reduction of assessed turnover based on adverse material found in survey.
2. Legality of levying tax on electric wires made of copper and aluminium.
3. Interpretation of notification regarding tax rate on aluminium and copper wires.

Analysis:
1. The revision challenged the Trade Tax Tribunal's decision to reduce the assessed turnover for the dealer's business of manufacturing and selling electric aluminium and copper wires. The Tribunal estimated suppressed turnover based on adverse material found during a survey and reduced it after considering relevant factors. The High Court noted that the Tribunal's decision was based on valid grounds and did not find any illegality or perversity in the reduction of turnover. Citing legal precedents, the Court emphasized its limited jurisdiction to interfere only on questions of law, especially when findings are not vitiated by non-consideration of relevant material.

2. The issue of levying tax on electric wires made of copper and aluminium at a lower rate was also raised. The Department argued that the wires should be taxed at 12 percent, not the four percent rate applied by the Tribunal, as they were not covered under the notification pertaining to "metal." The Court examined the relevant notifications and legal precedents, including judgments on similar cases. It concluded that the wires should be treated as unclassified items and taxed at 12 percent, not four percent as contended by the dealer.

3. Regarding the interpretation of the notification on tax rates for aluminium and copper wires, the Court found merit in the argument presented by the Department. It held that the wires did not fall under the category of "metal" as per the notification and were liable to be taxed as unclassified items at the rate of 12 percent. The revision was partially allowed in favor of the Department on the issue of tax rate, while the remaining part of the revision was dismissed. No costs were awarded in the judgment.