TMI Blog2018 (2) TMI 2085X X X X Extracts X X X X X X X X Extracts X X X X ..... thus, taking the taxable turnover for the entire year, the taxable turnover up to the period July 31, 1996, has to be worked out to attract the liability at the rates specified therein and beyond that, the liability of the turnover has to be worked out based on the amended provision depending on the taxable turnover crossing rupees 100 crores for the whole year. The Tax Case Revision is dismissed. - T.C. (R). No. 23 of 2018 - - - Dated:- 19-2-2018 - The Honourable Mr. Justice S. Manikumar And The Honourable Mrs. Justice V. Bhavani Subbaroyan For the Petitioner : Mr. V. Haribabu Additional Govt. Pleader (Taxes). For the Respondent : None. ORDER Order of this Court was made by S. MANIKUMAR, J. Tax Case Revision is filed to revise the order of the Tamil Nadu Taxation Special Tribunal, Chennai dated 30.12.2003, passed in M.T.S.A.No.176 of 2003. 2. Short facts leading to the Tax Case Revision are that the respondent, Thiru.R.K.Tikmany, Sivakasi, was finally assessed by the Deputy Commercial Tax Officer-IV, Sivakasi, in his original assessment by determining the total and taxable turnover of Rs.68,66,088/-, as against the reported total and taxable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold paper board and this paper board had been used for making paper cartons and they were used as packing materials. Hence, they stated that the order of the Appellate Assistant Commissioner in deleting the sales of packing materials effected to exporters, from assessment to tax liability, is incorrect. 8. In respect of deletion of Additional Sales Tax by the Appellate Assistant Commissioner, revenue has submitted that the taxable turnover for a dealer is for the year only, which is unique and that there are no two taxable turnover, as alleged by the Appellate Assistant Commissioner. The taxable turnover of the respondent for 1996-97 was Rs.68,66,088/-, which was greater than Rs.10 lakhs but did not exceed Rs.100 Crores. Hence, they have stated that the respondent is liable to pay Additional Sales Tax on the turnover effected during the period from 01.04.1996 to 31.07.1996 by giving set off to first Rs.10 Lakhs. In support of the said contention, the appellant cited decisions in Sri Murugan Timber Traders, Tenkasi vs. C.T.O. Tenkasi [O.P.No.410/2001, dated 10.7.2001] and Commissioner of Sales Tax vs. Indra Industries etc [122 STC 100]. Thus, the appellant has prayed to restore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rter to the effect that the packing materials had been used for packing the goods exported by him. In this case, the view of the appellants/revenue is that the exporter had not used the paper board as packing materials but used the paper board for conversion of packing cases. The learned Appellate Assistant Commissioner verified the fact and found that the respondents had produced the certificate issued by the exporters for having utilised the paper as packing material. In this case, there is no dispute that the paper has been used as packing material or used for conversion of packing cases. As per the decision relied only by the learned Additional State Representative which has been relied on by the Appellate Assistant Commissioner, the Honourable Higher Appellate Forum held that paper means writing paper, packing paper, drawing paper etc. In this case, one of the use of the paper is as packing material. It is also covered by the certificate issued by the respondents which is in accordance with Notification issued by the Government of Tamil Nadu. Even assuming that the buyer had converted the paper into cartons the purpose is for packing goods intended for export. In the above cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Additional Sales Tax of Rs.27,401/- which was deleted by the Appellate Assistant Commissioner. In the result, the State appeal stands modified. 12. The above said order is challenged in the instant Tax Case Revision, on the following grounds:- (i) The Tribunal failed to note that the first appellate authority had erred in deleting the turnover, because it is not clear that the sale of packing materials effected by the dealer is an outright sale. The dealer in this case had sold the duplex board to Limtex India Ltd, who had converted the same into cartons and used it for their export purpose as packing material. Therefore, they are not eligible to claim exemption as per section 5(3) of the CST Act because the transaction took place outside the State of Tamil Nadu and that the goods exported are different commodities. Therefore, the assessment made in the instant case is quite reasonable and justified. (ii) The Tribunal erred in observing that no additional sales tax is leviable if the turnover falls below 100 crores. (iii) The finding of the Tribunal that the taxable turnover for the assessment year cannot be split for the purpose of additional sales tax is ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . reported in 39 VST 247. Heard Mr.V.Haribabu, learned Additional Government Pleader (Taxes), and perused all the materials available on record. 15. Before adverting to the rival contentions, let us consider the provision dealing with levy of additional tax, in the case of certain dealers, in Tamil Nadu Additional Sales Act, 1976. 16. In Tamil Nadu Additional Sales Tax Act, 1970, as it was originally enacted, Section 2 was the charging section, imposed a levy of additional tax in the case of certain dealers, whose total turnover for a year exceeded a particular limit. Thereafter, Section 2(1)(a) was omitted by the Tamil Nadu Amendment Act 37 of 1999. Section 2(1)(aa) was inserted, reproducing the very language of Section 2(1)(a), with slight modification in the quantum of taxable turnover and the rate of tax. Section 2(1)(aa) of the said Amendment Act, is extracted hereunder: The tax payable under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) (hereinafter in this section referred to as the said Act),shall, in the case of a dealer including the principal selling or buying goods through agents whose taxable turnover for a year exceeds ten crores of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 7-C of the said Act for the financial years commencing on the 1st day of April 1993, shall be the total value referred to in the said section. 17. The issue as regards the levy of additional sales tax in respect of the assessment year 1996-97 is covered by the decision of this court in the case of State of Tamil Nadu v. National Time Co. reported in [2011] 39 VST 247 (Mad), wherein, it has been held that after taking the taxable turnover for the entire year, the taxable turnover upto the date of amendment has to be assessed with reference to the relevant tax rate therein applicable to the period. 18. Issue considered in a decision in State of Tamil Nadu v. National Time Co. reported in [2011] 39 VST 247 (Mad), is as follows: The vital question required to be considered in this revision is, as to how to apply Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970, which existed prior to Act 31 of 1996, since by Act 31 of 1996, the previous section 2(1)(a) came to be amended and after the amendment, Section 2(1)(a) and 2(1)(aa) came to be introduced. Further, Act 31 of 1996 was the subject matter of challenge before the Tamil Nadu Taxation Special Tribunal, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional tax payable under this sub-section, exceeds four per cent of the sale or purchase price thereof, the rate of additional tax in respect of such goods shall be reduced to such an extent that the tax and the additional tax together shall not exceed four per cent of the sale or purchase price of such goods. 5. The amended Sections 2(1)(a) and 2(1)(aa) were as under:- Amendment of Section 2:- In section 2 of the Tamil Nadu Additional Sales Tax Act, 1970 (hereinafter referred to as the principal Act), in sub-section (1)-- (i) in clause (a), for the word dealer the words casual trader or agent of a non-resident dealer or a local branch of a firm or company situate outside the State shall be substituted; (ii) after clause (a) and before the proviso thereto, the following shall be inserted, namely:- (aa) The tax payable under the said Act, shall in the case of a dealer including the principal selling or buying goods in this State though agents other than the casual trader or agent of a non-resident dealer or a local branch of a firm or company situated outside the State whose taxable turnover for a year exceeds one hundred crores of rupees, be increased by an addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Pleader was that since section 2(1)(a) as it originally stood prior to amendment, was very much in force up to 31.7.1996, as the said provision came to be amended by introducing sections 2(1)(a) and 2(1)(aa) on and from 1.8.1996, the liability of the respondent-assessee for payment of additional sales tax has to be worked out based on the provisions, both unamended upto 31.7.1996 and as amended based on the Siemens case on and after 1.8.1996 which were in force during the relevant period. The further contention of the learned Special Government Pleader is that the definition of the expression year in the Tamil Nadu General Sales Tax Act, though means the 'financial year', the same will not in any way affect the authority of the Assessing Officer to determine the tax liability as per the prevailing rate, which was applicable in that year up to 31.7.1996 and for the period subsequent to 1.8.1996. 10. As against the above submission, learned counsel appearing for the respondent-assessee would contend that since as per the Act, the expression year refers to the whole of the financial year, when once Section 2(1)(a) came to be amended, the liability could be fastened ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpact, while applying the liability or the rate of tax to be worked out during the financial year. In other words, if in the very same financial year, different rates are to be worked out by virtue of prescription of such different rates, due to statutory amendments, the only exercise to be carried out would be to ascertain the period for which the different rates of tax are to be worked out. In our considered view, such prescription of different rates in that financial year will not in any way affect the very basis of the liability created. Once we steer clear of the said position, we do not find hurdle at all in bifurcating the financial year in the case of any assessee, while applying the un-amended Section 2(1)(a) upto 31.7.1996 and the liability after its amendment on and after 1.8.1996, for the purpose of calculating the additional sales tax liability. 14. In the case on hand, having regard to the decision of the Special Tribunal in Siemens' case, the Additional Sales Tax liability upto 31.7.1996 is to be worked out based on the un-amended Section 2(1)(a), which was prevailing upto that date. As per the provision as it stood as on 31.7.1996, in the case of a dealer who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation of additional sales tax, since for the whole of the financial year, the taxable turnover did not exceed one hundred crores, there would be no necessity to make any further calculation for the period beyond 31.7.1996. The Assessing Authority calculated the additional sales tax at the rate of 2% on the taxable turn over for the whole of the year. 18. The learned Special Government Pleader fairly pointed out that since the unamended provision was very much in force upto 31.7.1996, the calculation of additional sales tax would have to be made by the Assessing Authority for the taxable turnover which was prevailing only upto the period 31.7.1996 and for the period subsequent to 1.8.1996, the liability would have been assessed, if at all the taxable turn over upto the end of the financial year exceeded one hundred crores of rupees and not otherwise. Consequently, the rate of tax applied viz., 2% was not in consonance with the statutory provision as was prevailing as on 31.7.1996. Since the taxable turnover did not cross Rs.100 crores during the said financial year, in the case of the respondent - assessee, the liability of additional sales tax will have to be calculated only fo ..... 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