Madras High Court
The State Of Tamil Nadu vs Tvl.S.S.M.Processing Mills on 6 July, 2018
Bench: S.Manikumar, Subramonium Prasad
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 06.07.2018 CORAM: THE HON'BLE MR.JUSTICE S.MANIKUMAR AND THE HON'BLE MR.JUSTICE SUBRAMONIUM PRASAD T.C.R.No.109 of 2018 The State of Tamil Nadu, Represented by The Deputy Commissioner, (Commercial Taxes), Salem Division, Salem ... Petitioner ..Vs.. Tvl.S.S.M.Processing Mills, 90, Idappadi Road, Komarapalayam ... Respondent PRAYER: Tax Case Revision is filed under Section 38 of the TNGST Act, 1959, to revise the order dated 07.05.2003 passed in CTSA.No.71 of 2001 on the file of the Tamilnadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore. For Petitioner : Mr.V.Hari Babu Additional Government Pleader (Taxes) For Respondent : Mr.K.Venkatasubramanian ORDER
(Order of the Court was made by S.MANIKUMAR, J) At the outset, Mr.K.Venkatasubramanian, learned counsel for the respondent accepted that this Court vide common order dated 23.08.2013 in TCR Nos.69 of 2009 and 80 & 81 of 2011, has upheld the exigibility of tax. Therefore, vide note dated 06.07.2018, captioned as "Counter" agrees to the proposition of law decided in the abovesaid case. Note is reproduced hereunder.
"The abovenamed Respondent most respectfully states the following:
1. The following question of law has already been decided by this Hon'ble Court in the Tax Case Revision preferred by the STATE against the common orders of the Sales Tax Appellate Tribunal: TC(R) No.348/2011 dated 03.07.2013 (against common order dated 07.05.2003 - CTA 276/2000 TNGST 1988-1989. QUESTIONS OF LAW framed by this Hon'ble Court:-
i) "1. Whether in the facts and circumstances of the case, the Tribunal is legally correct in holding that there is no transfer of property involved in the use of dyes and chemicals used in works contract of dyeing and hence not assessable under Section 3-B of the Tamil Nadu General Sales Tax Act, 1959?"
2. Whether on the facts and in the circumstances of the case and on a true and correct interpretation of provisions of the Tamil Nadu General Sales Tax Act on the transfer of property in goods involved in the execution of works contracts, the Tribunal is justified in holding that the processes of dyeing and printing of cloth do not fall within the ambit or purview of the said Act?
3. Whether on the facts and in the circumstances of the case and on a true and correct interpretation of the provisions of the Tamil Nadu General Sales Tax on the transfer of property in goods involved in the execution of works contracts, the Tribunal was justified in law in holding that the activity in which the transfer of property in goods is too insignificant will not attract the provisions of the said Act?"
ii) This Hon'ble Court was pleased to pass orders as follows (at para 2 of common order dated 03.07.2013):-
2. The assessee is engaged in the job work of dyeing of yarn, for which it purchased dyes and chemicals on inter-state transactions. On the question of liability of an assessee under Section 3-B of the Tamil Nadu General Sales Tax Act, under Similar circumstances, this Court had considered the said issue in T.C.No.78 of 2011 by order dated 22.09.2011 (The State of Tamil Nadu represented by the Deputy Commissioner (CT) Salem Division, Salem Vs. Sri Bhavani Textiles Processors Akkarikodivery, Gobichettipalayam) wherein following the decision of this Court dated 01.01.2011 in a batch of cases in T.C.(R) Nos.842, 817, 818, 819 to 823, 826, 811, 843, 849, 850, 870, 982,987,990,1036,1038 and 1040 of 2006, this Court confirmed the levy of tax under the Tamil Nadu General Sales Tax Act, holding that there was transfer of goods involved in the works contract under Section 3-B of the Tamil Nadu General Sales Tax Act.
3. Considering the fact that the assessee had purchased the dyes and chemicals on inter-state transaction, we have no hesitation in allowing these Tax cases. Consequently, the order of the Tribunal is set aside and the Tax Case Revisions stands allowed. No costs.
iii) It is most respectfully submitted that the present Tax Case Revision (filed on 11th June 2004) pertaining to the same year TNGST 1988-89 against the very same common order of the Appellate Tribunal in CTSA No.71/2001 dated 07.05.2003.
iv) The Revision Petitioner - STATE's contentions in the Grounds filed in the above Revision for TNGST 1988-89, are as follows:-
a) At para 4 relied on a clarification D.Dis Act Cell II/69115/2001 dated 27.11.2001 issued by the Special Commissioner of Commercial Taxes directing that dyeing contract would fall under works contract and dyes purchased from other states and other dyes which had not suffered tax under TNGST act and used in dyeing contract are liable to tax on the deemed sale value under Sec.3B of the TNGST Act 1959-92 STC 509 relied.
b) At Para 5 the State has contended against the application of the decisions of the Hon'ble Supreme Court reported in 118 STC 9 - Rainbow case and 100 STC 213 (Mad) - Vijayalakshmi Mills case and contends that there is contractual transfer of dyes and chemicals and therefore the entire value used should be assessed.
c) At Para 6 the State relies on the decision of the WBTT reported in 92 STC 509 (503) in support of their contention that in the said decision it has been observed that it does not necessarily follow that accretion has to be in the form of materials, it may be in the form of colour, reaction or strength. The State therefore would contend that the Tribunal did not consider this important aspect.
d) At para 7 the State relies on the decision reported in 105 STC 223 - Perumal Colour Co., to contend that deletion of the taxable turnover was erroneous.
e) At Para 8 the State would contend that the chemicals have their own role and there was clear transfer of property by placing reliance in the decision reported in 92 STC 503. In that same para after relying on the certificate issued by the SITRA, Coimbatore the State contends that the theory of accretion has been upheld in the decisions reported in 92 STC 503, 89 STC 307 (WBTT) 105 STC 223 and 73 STC 370 (SC).
f) At para 11 the State placing reliance on the observation of Hon'ble Supreme Court's decision reported in 124 STC 59 - AC Ltd., has contended that the State has the power to levy sales tax on the deemed sale value whether those goods were washed away or of incidental to the contract etc., and thereby all the case laws relied by the Tribunal becomes infructuous.
g) At para 12 the State relies on the decision reported in 132 STC 4539 wherein the Maharashtra High Court had confirmed the assessment made on dyes and chemicals involved in the execution of works contract.
2. However, in the note dated 06.07.2018, respondent has raised the following substantial questions of law for consideration of this Court, based on the observations / directions issued in SLP (C) Nos.10166 - 10168 of 2014, dated 11.08.2014.
A) Whether in the facts and circumstances of the case, Sec.3B(2)(a) to (e) of the TNGST Act 1959 is mandatory and applicable in the determination of the taxable turnover in respect of the assessment of the Respondent' works contract and therefore the assessee/dealer ought to be heard by the Assessing/Appellate Authority and is entitled to such an opportunity to place all its contentions, evidences and proceedings involving in the determination of the deemed transfer of property in goods in the processing job work in view of the observations / directions in SLP (C) Nos.10166 - 10168 of 2014 dated 11/08/2014?
B) Whether in the facts and circumstances of the case, the categorical findings of the Appellate Authority:-
(i) that in the bleaching process there is no transfer of chemicals (Bleaching Chemical cleaning of fabric prior to dyeing / colour) in the works contract, as the entire bleaching chemical solution (not containing colour/dyes) get totally washed away while treating and preparing the Cotton Manmade fibers and
(ii) that in so far as the chemical solution of dyes (dyeing / colour process) 50% deduction is allowable based on the trade Certificates / reports (certificate issued by the SITRA, Coimbatore) and the affidavits showing the estimation of proportionate accretion of chemical solution of dyes upon the fact that the chemical solution containing dyes involved in dyeing stage also gets wasted and washed away in the process of dyeing without getting added or accreted are binding on the respondent in the absence of materials to discredit these findings?
3. Perusal of the order of the Hon'ble Supreme Court in SLP (C) Nos.10166 - 10168 of 2014 dated 11.08.2014 shows that when TVL. SSM Processing Mills filed the abovesaid Special Leave Appeals against the common order made in TCR Nos.69 of 2009, 80 & 81 of 2011, dated 23.08.2013, the Hon'ble Supreme Court has permitted the appellant therein to withdraw the SLP (C) Nos.10166 - 10168 of 2014 and granted permission to raise other additional queries before the appropriate forum. Hon'ble Supreme Court has also made it clear that there was no opinion on the abovesaid aspect. Thus, granting liberty, SLP has been dismissed as withdrawn.
4. On the specific question as to whether it is open to the respondent herein to raise questions of law in the revision petition filed by the State, answer of Mr.K.Venkatasubramaniam, learned counsel for the respondent, was in the negative. However, learned counsel for the respondent submitted that in the absence of any notice issued by the assessing officer, dealer was not in a position to raise the issue before the assessing officer and thus, substantial questions of law now raised in the note dated 06.07.2018, captioned as "counter" requires to be considered by this Court.
5. As stated supra, liberty has already been granted by the Hon'ble Supreme Court to raise every additional queries before the appropriate forum, which the learned counsel for the respondent has categorically admitted that it should be only before the assessing officer.
6. Though, Hon'ble Supreme Court has granted liberty as early as on 11.08.2014, dealer has failed to raise any query before the appropriate forum. At this stage, after four years, from the date of dismissal of SLPs and that too in TCR No.109 of 2018, filed by the State, the same cannot be permitted to be raised. Respondent has failed to raise any query, before the appropriate forum and therefore he cannot be permitted to raise as substantial questions of law, in the Tax Case Revision filed by the State.
7. As facts and submissions are common to that of the decision in T.C.Nos.69 of 2009 and 80 & 81 of 2011 dated 23.08.2013, issue is covered by the abovesaid decision. Therefore, following the same, order of the Tamilnadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore made in CTSA.No.71 of 2001 dated 07.05.2003, is set aside. Tax Case (Revision) is allowed. Substantial questions of law, are answered in favour of the State. No Costs.
8. Learned counsel for the respondent, also fairly submitted that pursuant to the order of this Court, in the above batch of Tax Case (Revisions), dated 23.08.2013, assessment order has been passed and the subsequent assessment has not been challenged by the dealer / respondent. Submission is placed on record.
(S.M.K., J.) (S.P., J.) 06.07.2018 Index: Yes/No. Internet: Yes/No. Speaking/Non speaking ars S.MANIKUMAR, J.
AND SUBRAMONIUM PRASAD, J.
ars T.C.R.No.109 of 2018 06.07.2018