TMI Blog2022 (6) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner. Levy of penalty - HELD THAT:- As rightly held by the third respondent, when the petitioner is not entitled to claim concessional rate of tax under section 3% of the TNGST Act, they are liable to pay penalty under section 23 of the TNGST Act, for violation of the provision of section 3(3). Accordingly, the assessing officer levied penalty and the same was affirmed by the appellate authorities, which in the opinion of this court, warrants no interference, as the issue relating to claim of concessional rate of tax under section 3(3), is decided against the petitioner. The issue regarding levy of penalty is also answered against the petitioner. Quantum of penalty at 150% determined by the first respondent / assessing officer, which was subsequently, restricted to 100% by the second respondent / appellate authority as affirmed by the third respondent / Tribunal - HELD THAT:- In the facts and circumstances of the case, the penalty is slightly on the higher side and hence, the same is reduced to 50%, in the opinion of this court. Accordingly, the issue raised herein is answered in favour of the petitioner. Petition allowed in part. - Writ Petition Nos. 44296, 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm XVII for their purchases of packing material prior to 1993 under section 3(3); and contravention of the provision of the Act resulted in misuse of Form XVII and such an act was punishable under section 23 of the TNGST Act. 4.Aggrieved over the revised assessment orders, the petitioner preferred appeals before the Appellate Authority / second respondent, who, by a common order dated 14.02.2003, confirmed the revised assessment made by the first respondent / assessing officer with respect to levy of tax, but modified the order relating to penalty, by restricting it to 100% of the tax due. Challenging the order of the Appellate Authority, both the petitioner and the State preferred appeals before the third respondent / Tamil Nadu Sales Tax Appellate Tribunal. Upon hearing both sides, the Tribunal dismissed all the appeals, by a common order dated 15.09.2006, which is impugned in all these writ petitions. 5.The learned counsel for the petitioner in all these writ petitions submitted that the tin containers purchased by the petitioner against Form XVII, were used for packing Vanaspathi and they formed an inextricable part of the manufacturing activity. Adding further, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner against form XVII did not fulfil the condition incorporated in the TNGST Act namely for use by the latter in the manufacture inside the State . The Assessing Officer, upon considering the objections raised by the petitioner categorically held that the tin containers would be eligible for concessional rate of tax, only if they are used as an integral component in the manufacturing process and not otherwise. According to Section 3 (3) of the Act, the goods which are used in the manufacture of other product alone, can be purchased at concessional duty against form XVII. Accordingly, the Assessing Officer was wholly justified in disallowing the claim of concessional rate of tax made by the petitioner, which is in accordance with the law prevailing during the relevant assessment years. The said finding of the assessing officer was rightly confirmed by the appellate authorities. Therefore, the learned counsel prayed for dismissal of the writ petitions. 7.We have considered the rival submissions made by the parties and also perused the materials placed on record. 8.The issues involved in the present writ petitions are (i)whether the purchase of tin containers during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Industries Limited, [(1989) 4 SCC 244], wherein, it was held by the Hon'ble Supreme Court that anything required to make the goods marketable, must form part of the manufacture and any raw material or any materials used for the same would be component part of the end product; the paper to be marketed is not complete until it is wrapped in wrapping paper; hence, under Rule 56A of the Rules, the assessee would be entitled to the benefit of deduction of the duty to be charged on all wrapping papers, if any. (iii) Brooke Bond Lipton India Limited v. State of Karnataka [109 STC 265] , in which, it was observed by Karnataka High Court that the packaged blended tea produced in the industrial unit of the petitioner is a manufactured product, the contributing inputs being garden teas of various colour and flavour and the packing materials . (iv) Appollo Saline Pharmaceuticals (P) Ltd v. Deputy Commercial Tax Officer and another [125 STC 500], wherein, it was held that having regard to the nature of the goods and the need for a container in order to make those goods marketable, it must necessarily be held that the bottles used by the petitioner were bottles used in or for m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2), but subject to the provisions of sub section (1), the tax payable by a dealer in respect of sale of any goods, including consumables, packing material and labels, but excluding plant and machinery, to another dealer for use by the latter in the manufacture and assembling, packing or labelling in connection with such manufacture inside the State, for sale by him of any goods mentioned in the First Schedule other than those falling under item 56 in Part D of the said Schedule and arrack, shall be at the rate of only three percent on the turnover relating to such sale . Thus, it is evident from the aforesaid provisions that the packing materials were not included for the purpose of availing concessional rate of tax against issuance of Form XVII declaration and the same were taken into consideration only after amendment of section 3(3) of the Act i.e., with effect from 12.03.1993. 13.Concededly, the dispute arisen for consideration herein pertains to the assessment years 1990-91, 1991-92 and 1992-93 and the petitioner purchased tin containers against the form XVII declaration, during that period i.e., prior to amendment. After taking note of the same and also in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the legislature. An intention to produce an unreasonable result , said Danckwerts, L.J. in Artemiou v. Procopiou (1966) 1 QB 878 : (1965) 3 All ER 539 (CA) (All ER p.544 I), is not to be imputed to a statute if there is some other construction available . Where to apply words literally would defeat the obvious intention of the legislation and produce a wholly unreasonable result we must do some violence to the words and so achieve that obvious intention and produce a rational construction. [Per Lord Reid in Luke v. IRC 1963 AC 557 : (1963) 1 All ER 655 (HL)] where AC at p.577 (All ER p.664 I) he also observed: This is not a new problem, though our standard of drafting is such that it rarely emerges .] 15.In view of the aforesaid legal principles and also considering the fact that prior to amendment of section 3(3), the packing materials were excluded from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty in a sum not exceeding 1-1/2 times the tax payable on the turnover that means the quantum of penalty should not exceed 150%. Thus it enables the assessing authority to levy penalty either 50% or 100% or at 150%. In this case the assessing officer has levied maximum penalty at 150% whereas the first appellate authority has reduced the same to 100% which is no doubt is in accordance with the provisions of Section 23 of the TNGST Act and so we find no illegality in the order of the first appellate authority and we sustain the order of the first appellate authority . As rightly held by the third respondent, when the petitioner is not entitled to claim concessional rate of tax under section 3% of the TNGST Act, they are liable to pay penalty under section 23 of the TNGST Act, for violation of the provision of section 3(3). Accordingly, the assessing officer levied penalty and the same was affirmed by the appellate authorities, which in the opinion of this court, warrants no interference, as the first issue relating to claim of concessional rate of tax under section 3(3), is decided against the petitioner. Accordingly, the second issue is also answered against the petitioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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