2010 (3) TMI 1048 - HC - VAT and Sales Tax

Whether the sale by the petitioner was not as a holder of trade mark? Held that - The discussion in the order of assessment shows that there are no discussion as to why the claim for granting credit to the tune of Rs. 1, 88, 75, 256 being the tax paid to the registered dealer on the sales to the petitioner was not considered by the assessing authority. The reasons given in the order do not indicate as to whether the provisions of section 3J was considered in the proper perspective at all. The reasons for bringing the turnover under section 3J of the Act rest on grounds which are totally irrelevant. No hesitation in setting aside the order passed by the first respondent with a direction to the first respondent to consider afresh the representation made and pass orders afresh after giving opportunity to the petitioner as regards the claim as per section 3J with reference to tax paid in respect of the sales effected in favour of the petitioner

Summary

Issues:
Assessment order under Tamil Nadu General Sales Tax Act, 1959 for the assessment year 2003-04. Dispute regarding the applicability of section 3J of the Act, denial of set-off, and errors in reassessment orders.

Analysis:
The petitioner filed their return for the assessment year 2003-04 under section 3H of the Tamil Nadu General Sales Tax Act, 1959. A notice was issued proposing to levy tax under section 3J on the turnover, alleging trade discounts like Quantity Purchase Scheme (QPS). The petitioner responded with details of turnover assessable under section 3H and provided trademark certificates for registered products. They contested that certain sales were not under a registered trademark.

The reassessment order assessed the entire turnover at 16% without considering sales under the registered trademark "Mr. White." The petitioner argued that section 3J should only apply to holders of registered trademarks as per a circular by the Commissioner of Commercial Taxes. They also claimed an error in not giving credit for tax paid by the local registered dealer, amounting to Rs. 1,88,75,256. A representation for rectification was made, but it was rejected, leading to the writ petition.

The petitioner's counsel argued that the entire turnover was wrongly subjected to section 3J without considering set-offs, with sales for "Mr. White" amounting to Rs. 5,09,14,039. They contended that the notice was based on irrelevant factors like trade schemes and consumer coupons.

The reassessment order failed to consider the tax credit on purchases and did not address the dispute over sales under the name "Mr. White." The assessment lacked discussion on why the tax credit was not granted or whether section 3J was appropriately applied. The grounds for applying section 3J were deemed irrelevant.

The judgment set aside the order and directed a fresh consideration of the representation, emphasizing the need to assess the tax paid on sales to the petitioner and the assessability of items under registered trademarks. The court highlighted the importance of following the circular issued by the Commissioner of Commercial Taxes in making the assessment decision.

In conclusion, the writ petitions were disposed of without costs, and the related miscellaneous petition was closed. The judgment emphasized the necessity for a proper reassessment considering all relevant factors and giving the petitioner a fair opportunity to present their case.