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2017 (6) TMI 411 - MADRAS HIGH COURT

2017 (6) TMI 411 - MADRAS HIGH COURT - TMI - Exemption in terms of Notification issued under Section 17 of the Act - The claim for exemption was rejected by the Assessing Officer on the ground that the society was not authorized to effect sales of E.B. line materials and RTS grills to the Tamil Nadu Electricity Board - levy of penalty u/s 12(3)(b) of the Act - whether the appellant, a cooperative society engaged in industrial activity, is entitled to claim exemption on the product sold by it to .....

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at in the said letter, the Khadi and Village Industries Board specifically certified that the society, which is a unit of the Board, is authorized to purchase finished goods from the members of the society and sell the same for the benefit of its members. This aspect of the matter was not considered by the Joint Commissioner while passing the impugned order. - Merely because the product supplied by the society, which is being utilized by the Electricity Board for the purpose of supporting hi .....

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product. - The products, which were sold by the appellant society to the Tamil Nadu Electricity Board, are essentially blacksmithy products and are entitled for exemption in terms of the Notification issued under Section 17 of the Act - appeal allowed - decided in favor of appellant. - Tax Case (MD) No. 76 of 2009 - Dated:- 2-6-2017 - T. S. Sivagnanam And P. Velmurugan, JJ. For Appellant : Mr. S. Karunakar For Respondents : R. Karthikeyan, AGP JUDGMENT T. S. Sivagnanam, J. This tax case has .....

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suo motu revisional powers under Section 34 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as the Act). 3. The facts leading to the filing of this case could be summarized as follows : For the assessment year 1994-95, the appellant reported a total and taxable turnover of ₹ 1,60,11,357/- and NIL respectively. They claimed exemption in terms of G.O.Ms.No.272 Revenue Department dated 11.2.1967 and the proceedings of the Khadi and Village Industries Board in B.P.No.70 .....

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total and taxable turnover and imposing penalty, the objection raised by the appellant was that their society falls within the jurisdiction of the Khadi and Village Industries Commission in accordance with Sections 2(h) and 3(1) of the Khadi and Village Industries Commission Act, 1956 and blacksmithy is one of the items, which falls within the Schedule under the said provisions and the products supplied to the Electricity Board are blacksmithy items and that therefore, the society is entitled f .....

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the Appellate Assistant Commissioner should not be set aside and the order passed by the Assessing Officer be restored. The reason assigned in the show cause notice was that G.O.Ms.No.3131 Revenue Department dated 26.10.1963 was relied upon by the Appellate Assistant Commissioner wherein the Government granted exemption for Madras State Khadi and Village Industries Board and the units attached to it in respect of their sales of all goods produced by the Board and its units and that the appellan .....

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istant Commissioner and restored the order passed by the Assessing Officer. Aggrieved by the same, the appellant society has filed this case. 7. The questions of law, which arise for consideration in this appeal, are as follows : (i) Whether on the facts and in the circumstances of the case, the Joint Commissioner was right in restoring the levy of sales tax at 8% on the sales of RTS grills to an extent of ₹ 35,99,444/- ? (ii) Whether on the facts and in the circumstances of the case, the .....

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eyan, learned Additional Government Pleader (Taxes) for the respondent Department and carefully perused the materials placed on record. 9. As noticed above, the Assessing Officer had determined the total and taxable turnover and levied penalty under Section 12(3)(b) of the Act. Before we proceed to consider the question as to whether the appellant was entitled for the benefit of exemption, we first propose to consider as to whether the Assessing Officer was justified in levying penalty. 10. Admi .....

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e of Appollo Saline Pharmaceuticals (P) Ltd. Vs. CTO (Fac.) [reported in (2002) 125 STC 505]. Therefore, question No.2 is answered in favour of the appellant and against the Revenue. 12. Question Nos.1 and 3 are interlinked in the sense that we have to decide as to whether the appellant, a cooperative society engaged in industrial activity, is entitled to claim exemption on the product sold by it to the Tamil Nadu Electricity Board. The undisputed facts are that the appellant industry is registe .....

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rnment of India and the Commission is a funding agency and does not have any power over the administrative matters of the society registered by the Tamil Nadu Khadi and Village Industries Board. It was further stated that the Tamil Nadu Khadi and Village Industries Board is a statutory body of the Government of Tamil Nadu, administered by an Executive Officer by virtue of the powers conferred on him under Section 89(1)(i) of the Tamil Nadu Cooperative Societies Act, 1983 and he is the ex officio .....

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he observations made by the Appellate Assistant Commissioner while allowing the appeal and reversing the order passed by the Assessing Officer as to how they are entitled for exemption and the products, which were sold by the society to the Tamil Nadu Electricity Board, are blacksmithy items and the observation of the Assessing Officer that it involves painting and welding is of no consequence as essentially the product is developed by blacksmithy. Apart from that, the appellant also relied upon .....

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this proposal made by the Joint Commissioner is without appreciating the fact that the appellant is a cooperative society, registered under the provisions of the Tamil Nadu Cooperative Societies Act and the society has been established for the welfare of its members. In other words, if the society is an agricultural cooperative society, the members would be agriculturists, who would market their produce through their society. the appellant society is an industrial cooperative society registered .....

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mption of a class or category of industries or products. The Notification issued under Section 17 exempts sale of all products of village industries, which would mean that products made of iron, which is essentially a blacksmithy item, would also be entitled for the benefit of exemption. If such is the exemption Notification, which does not qualify the product to cover the sale of products of village industries, the appellant society would be entitled for the benefit of exemption. 17. The Assess .....

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on CTRE/3085 dated 13.2.1985 wherein the words 'subject to condition that they shall deal only in products of village industries specified in schedule to the Central Act 61 of 1956' have been omitted with effect from 06.10.1982 and held that the manufacture and supply of items to the Tamil Nadu Electricity Board are blacksmithy items and eligible for exemption. 18. Further, it is not in dispute that the appellant is one of the institutions certified by the Khadi and Village Industries Bo .....

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