2015 (4) TMI 168 - HC - VAT and Sales Tax

Whether the butter and ghee sold by the assessee under a brand name registered under Trade Marks and Merchandise Act 1958 falls under Entry 8(1) of Part D of I Schedule to the Tamil Nadu General Sales Tax Act at the reduced rate of tax at 10% - Held that - It is not in dispute that the goods falling under Entry 8 of Part D of I Schedule are taxable at the rate of 11% in relation to butter and ghee if sold under the brand name prior to 04.05.1998. The dispute relates to the period on or after 04.05.1998. The rate of tax as understood by the Department in respect of butter and ghee sold under the brand name registered under the Trade Marks and Merchandise Act 1958 continued to have the benefit of reduced rate of tax at 10% in terms of Notification No.73 dated 05.03.1997 as is evident from the Entry itself. Once the Entry shows that the rate of tax would be 10% in terms of the said notification dated 05.03.1997 even after 4.5.1998 the question of the Department demanding tax at the rate of 11% cannot be justified - prior to the issuance of erratum Notification No.73 dated 5.3.1997 would hold good and therefore the assessee was justified in paying 10% tax. Hence the Tribunal failed to consider the said Entry 8 of Part D of the I Schedule to Tamil Nadu General Sales Tax Act - Decided in favour of assessee.

Summary

Issues:
Interpretation of Entry 8 of Part D of I Schedule to the Tamil Nadu General Sales Tax Act for the assessment year 1998-99.

Analysis:
The case involves a Co-operative Milk Producers Union, known as Aavin, engaged in selling milk products like butter and ghee. The dispute arises from the assessment year 1998-99 when the Assessing Officer demanded tax at 11% on sales turnover of butter and ghee, contrary to the assessee's claim of 10% based on a government order. The Department relied on an amendment to Entry 8 of Part D of the I Schedule, effective from 04.05.1998, to justify the 11% tax rate. The Appellate Assistant Commissioner partially accepted the assessee's plea and remanded the matter. However, the Tamil Nadu Sales Tax Appellate Tribunal ruled in favor of the Department, directing the Assessing Authority to levy tax at 11% on the disputed turnover.

The High Court considered whether butter and ghee sold under a brand name registered under the Trade Marks and Merchandise Act, 1958 fall under Entry 8(1) of Part D of I Schedule for the assessment year 1998-99. Entry 8 specifies that butter and ghee sold under a brand name registered under the Trade and Merchandise Marks Act, 1958 are taxable at 11% from 04.05.1998. The Court analyzed the relevant government notifications, including G.O.Ms.No.73 dated 05.03.1997, which reduced the tax rate to 10% for specified goods. The Court noted an erratum issued by the Department clarifying the tax rates, which supported the assessee's position of paying 10% tax even after 04.05.1998. The Court concluded that the assessee was justified in paying 10% tax based on the Entry 8 of Part D of the I Schedule, and hence allowed the Tax Case (Revision) in favor of the assessee, setting aside the Tribunal's order.

In summary, the judgment revolves around the correct interpretation of Entry 8 of Part D of I Schedule to the Tamil Nadu General Sales Tax Act for the assessment year 1998-99, determining the applicable tax rate for butter and ghee sold under a specific brand name. The Court's detailed analysis of government notifications and the erratum issued by the Department led to the conclusion that the assessee was entitled to pay tax at 10% as per the relevant provisions, overturning the Tribunal's decision and ruling in favor of the assessee.