9911796707
TMI Blog2014 (11) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... er leasing out the same for its business; sells the same. Obviously the sale effected then should be of second-hand freezers. The assessee had been collecting four per cent tax on its sale, which the fast track team/assessing authority found to be not in order since, according to it, the product comes under the Fifth Schedule of the Act, exigible to multipoint levy. The assessee's purchase having not suffered tax, the fast track team found that the levy of tax is at 16 per cent. The Tribunal found the same to be in accordance with law. The assessee's counsel would urge that once the sale of the SSI unit, the first sale; was exempted, the levy occurs and there cannot be any shifting of the levy for the reason that there was exemption on the first point of sale. 3. We have heard the learned counsel for the assessee and the learned Government Pleader. The assessee contends for the position that the first point of sale having been exempted, the liability of the assessee would only be for the point of second sale and the second point of levy being the point of last sale is exigible only at four per cent as per the Fifth Schedule to the Act. It is also the submission of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinction between "liability" and "payability" as held by the honourable Supreme Court in Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC); [2004] 10 SCC 1. 6. To understand the contentions better, we thought it fit that the provisos under sub-clause (v) of sub-section (1) of section 5 have to be examined closely. We, hence, extract sub-clause (v) hereunder along with the provisos: "(v) in the case of goods specified in the Fifth Schedule at the rates and at the two points specified against such goods in the Schedule: Provided that where there are no two points of sale in the State for any goods coming under the Fifth Schedule and the first sale is to a person other than a registered dealer, the rate specified in column (8) of that Schedule shall apply to such sales: Provided further that the registered dealer effecting the last sale within the State to a person other than a registered dealer shall, pay tax at the rates shown in column (6) or in column (8), as the case may be, of the Fifth Schedule irrespective of his turnover: Provided also that where a registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who is liable to pay tax under section 5; to a registered dealer for sale", and the rate is 12 per cent. The second point levy is "at the point of last sale in the State by a dealer who is liable to tax under section 5", and the rate is four per cent. The Fifth Schedule also provides that where there are no two points of sale in the State, the levy shall be at the rate of 16 per cent. The respective rates of 12 per cent, four per cent and 16 per cent are provided in the Fifth Schedule at column Nos. (4), (6) and (8), respectively and the various points of levy at column Nos. (3), (5) and (7). The second point of levy being the last sale, the Legislature visualized more than two points of sales and the multi-point levy as per clause (v), was on the first sale and the last sale. The first three provisos are not applicable to the transaction which is the subject-matter of our consideration in this revision. Admittedly, the first sale in the State was exempted, since the first seller was an SSI unit, entitled to exemption. The fourth proviso deals with instances wherein no tax is payable by a dealer effecting the first sale within the State. We are also of the opinion that the said pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exempted goods, if to a person other than a registered dealer or a registered dealer other than for sale, the same would be the last sale. Then the rate applicable should be that shown in column (8), being 16 per cent as applicable to sale within the State to a person other than a registered dealer or to a registered dealer other than for sale. The deemed first sale then would also be the last sale in the State. 9. The subsequent sales referred to in the first limb and second limb of the proviso are one and the same. The distinction is, in so far as a registered dealer having made a purchase, where no tax was payable, his subsequent sale if made to a registered dealer for sale would be deemed to be the first point of levy (column (3)), taxable at 12 per cent (column (4)) and then the second point of levy at four per cent (column (6)) would be on the last sale (column (5)). But, if the subsequent sale made by the purchasing dealer is to a person other than a registered dealer or a registered dealer not for sale (column (7)), then the rate applicable would be 16 per cent (column (8)), deeming the same to be the first sale, which also would be the last sale within the State. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... du v. M.K. Kandaswami [1975] 36 STC 191 (SC); [1975] 4 SCC 745. Though M.K. Kandaswami's case [1975] 36 STC 191 (SC); [1975] 4 SCC 745 was referred to in Peekay Re-rolling Mills case [2007] 6 VST 541 (SC); [2007] 4 SCC 30; it was distinguished, since Peekay Re-rolling Mills case [2007] 6 VST 541 (SC); [2007] 4 SCC 30 essentially was on the prohibition under section 15 of the Central Sales Tax Act and was concerned with whether declared goods could be made liable to tax more than once. In M.K. Kandaswami's case [1975] 36 STC 191 (SC); [1975] 4 SCC 745, the Supreme Court was concerned with section 7A of the Madras General Sales Tax Act, 1959, which is in pari materia with the provisions of section 5A of the KGST Act, 1963, and upheld it approving the decision of the Kerala High Court. The third proviso to section 5(v) also is similar to the said provision. It was categorically found that section 7A itself is a charging section, which creates a liability against a dealer on his purchase turnover with regard to goods, the sale or purchase of which though generally liable to tax, have not suffered tax. Adopting a purposive interpretation, the Supreme Court held so in M.K. Kandas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover of Rs. 14,98,257 freezer sales will be assessed at the following rates: 16% on Rs. 5,15,860 4% on Rs. 9,82,397 -------------- Rs. 14,98,257" -------------- 14. The assessee only disputes the levy at the rate of 16 per cent and is agreeable to levy at the rate of four per cent. As per the proposal, it is seen that the claim of the assessee for four per cent was examined against the purchase bills; which were not tax-suffered. Such exempted purchase turnover of Rs. 4,53,305 was multiplied with gross profit at the rate of 13.8 per cent, which resulted in a taxable turnover of Rs. 5,15,860 and levy of tax at 16 per cent. If, the sale was of second-hand deep freezers which the revision petitioner purchased earlier and let out on lease to others, then the addition of gross profit on the purchase value would be grossly and blatantly erroneous. We have also noticed the reply of the assessee extracted in page 6 of the assessment order, wherein it is stated that the assessee is an intermediary dealer with respect to the turnover of fixed assets (deep freezers) for Rs. 14,98,258. 15. If the assessee is an intermediary dealer and the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of "sale" includes a lease cannot hold good. The transfer of right to use resulting from a transaction of lease is taxable at the rate of eight per cent under sub-clause (iii) of sub-section (1) of section 5 of the Act. 18. Fundamentally, what is discernible from the clear words of the fourth proviso is that the goods under the Fifth Schedule being levied tax at multipoint, any first sale being exempted; such exemption from payability shall not deprive the Revenue of the multi-point levy in instances of such multipoints of sale arising within the State. Distinguishing "liability" and "payability", the honourable Supreme Court in Azadi Bachao Andolan case [2003] 263 ITR 706 (SC); [2004] 10 SCC 1 held that "liability to taxation is a legal situation; payment of tax is a fiscal fact" (sic). We notice that the Legislature has specifically used "if no tax is payable" in the subject proviso. This is the intention that can be gathered from the clear and unambiguous language employed. 19. As noticed by us, the assessment order also does not give us a complete picture. The action of the assessing officer in adding gross profit and the submission of the assessee that they are intermediar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
