1975 (4) TMI 125 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of exemption under section 8 of the Tamil Nadu General Sales Tax Act, 1959.
- Applicability of excise duty payment under different acts for claiming exemption.
- Consideration of countervailing duty under section 18-A of the Madras Prohibition Act, 1937 for exemption eligibility.

Interpretation of Exemption under Section 8:
The case involved disputes regarding the exemption claimed by a company under item 3 of Schedule III of the Act, which exempts goods from sales tax if duty is levied under the Madras Prohibition Act, 1937. The assessing officer rejected the claim citing non-payment of excise duty in Tamil Nadu. The Appellate Assistant Commissioner ruled that excise duty was paid on the entire quantity of goods, but the payment location was crucial. The Tribunal, invoking the General Clauses Act, held the payment in Calcutta was deemed as payment under the Madras Prohibition Act. However, the High Court disagreed, citing precedent (Orient Pharma Private Ltd. v. Government of Tamil Nadu) that duty under a different act does not warrant exemption under the Sales Tax Act.

Applicability of Excise Duty Payment for Exemption:
The High Court emphasized that duty payment under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 in Calcutta did not equate to payment under the Madras Prohibition Act for exemption eligibility. The respondents' claim of duty payment in West Bengal was deemed insufficient to support exemption under section 8 of the Act. The Court reiterated that duty payment location and the specific act under which duty is paid are crucial factors for exemption under the Sales Tax Act.

Consideration of Countervailing Duty under Section 18-A:
The respondents argued that countervailing duty under section 18-A of the Madras Prohibition Act should entitle them to exemption, even if not levied. However, the Court clarified that for countervailing duty to be relevant, a notification specifying the duty amount must be issued by the State Government. Since no such notification was presented, the Court ruled that the absence of a legal levy precluded the respondents from claiming exemption based on countervailing duty.

In conclusion, the High Court set aside the Tribunal's order, allowing the tax revision cases in favor of the State. The judgment highlighted the importance of duty payment location, the specific act under which duty is paid, and the necessity of legal levies for claiming exemptions under the Sales Tax Act.