Madras High Court
The State Of Tamil Nadu Represented vs Tvl.Vanavil Colours on 4 May, 2017
Bench: T.S.Sivagnanam, P.Velmurugan
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 04.05.2017 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MR.JUSTICE P.VELMURUGAN T.C.(MD) No.183 of 2011 The State of Tamil Nadu represented by the Deputy Commissioner of Commercial Taxes, Tiruchirappalli Division, Tiruchirappalli. ... Petitioner Vs. Tvl.Vanavil Colours, Vadivel Nagar, L.N.S. Post, Karur. ... Respondent prayer: Tax Case Petition filed under the Tamil Nadu General Sales Tax Act, 1959 to revise the order of the Tamil Nadu Sales Tax Appellate Tribunal (AB), Madurai in MTSA. Nos.515/2000, 517/2000, 541/2000, 555/2000, 619/2000, 624/2000, 625/2000, 628/2000, 636/2000, 639/2000, 642/2000, 645/2000 and 660/2000, dated 11.12.2000. !For Petitioner : Mr.Raja Karthikeyan, Additional Government Pleader. ^For Respondent : Mr.R.D.Ganesan :ORDER
(Order of the Court was made by T.S.SIVAGNANAM,J) Heard Mr.R.Karthikeyan, learned Additional Government Pleader for the petitioner and Mr.R.D.Ganesan, learned counsel for the respondent.
2.This revision petition has been filed by the revenue challenging the order passed by the Tamil Nadu by the Sales Tax Appellate Tribunal (Additional Bench) Madurai in Nos.515/2000, 517/2000, 541/2000, 555/2000, 619/2000, 624/2000, 625/2000, 628/2000, 636/2000, 639/2000, 642/2000, 645/2000 and 660/2000, dated 11.12.2000. In fact, the said order is a common order in respect of all cases and this revision relates to only one dealer namely, the respondent-M/s.Vanavil Colours, Karur.
3.The questions of law which arise for consideration are as follows:-
?1. The order of the Tribunal is perverse and legally sustainable, not
2. The Tribunal being the final fact finding authority ought not to have summarily dismissed the Cross Appeals and Enhancement Petitions filed by the State without examining the same and without arriving at a reasonable and just conclusion on the points raised therein.
3. The Tribunal ought not have simply accepted the version of the respondent that pollution was caused due to the entirely letting out the dyes and chemicals since due to the bleaching done prior to the application of the dyes and chemicals alone most of the impurity as also the natural colour substances are washed away forming the primary source of pollution.
4. The Tribunal has utterly failed to consider that goods to be incorporated in works contract may either be as good or in some other form similar to the accretion or accession due to the application of dyes and chemicals.
5. The Tribunal has not properly understood that dyes and chemicals used ink the process are deposited permanently on the yarn or cloth changing its shade and colour and in this process the entire dyes becoming part and parcel of the yarn or cloth and remaining permanently on it.
6. The Tribunal ought to have distinguished dyes and chemicals from that of consumables like fule, welding electrodes which are exhausted or disappeared after the work is over and no remanent is left over.
7. The decisions relied on by the Tribunal are not relevant in as much as they pertained to consumables which dissipiate or disappear during the exemption of the works.
8. The Tribunal has failed to follow the decision of this Hon'ble Special Tribunal in the case of Tvl. Perumal colour Company Vs. State of Tamil Nadu reported in 105 STC 223 following the earlier decision reported in 92 STC 503.
9.The Tribunal has erred to note that the Appellate Assistant Commissioner ought not to have arrived at the accretion or accession of a certain percentage different from the findings of this Hon'ble Tamil Nadu Taxation Special Tribunal reported in 105 STC 223.
10. As the respondent has failed to adduce any scientific data or material proof for the percentage or accretion of accession in each individual case, the Tribunal ought to have allowed only the the statury exemption of 50% in dyes contract as per Sl.No.5 of the table under clause
(e) of sub-section (2) of Section 3-B of the TNGST ACT 1959 as enunciated by this. Hon'ble Tamil Nadu Taxation Special Tribunal reported in STC 223.?
4.The above questions were considered by the Principal Bench in the case of State of Tamil Nadu represented by the Deputy Commissioner (Commercial Taxes), Salem Division, Salem Vs.S.S.M.Processing Mills, Komarapalayam in Tax Case (Revision) Nos.69 of 2009, 80 and 81 of 2011, dated 23.08.2013.
5.The Division Bench after considering the decision in the case of Apparels and Handloom Exporters Association and others Vs.State of Tamil Nadu and others reported in (2003) 129 STC 167 and the decision of the Full Bench in the case of Enviro Chemcials Vs. State of Kerala reported in (2011) 39 VST 434 (Kerala) (FB), held the fact that the chemicals used for bleaching is washed away in the process, by itself, would not be a justifiable ground to accept the case of the assessee that there was no transfer of property of any goods. The very fact of the yarn being bleached by a chemical process by applying the chemical will clearly point out that there is transfer of property of the chemicals, hence, bleaching contract attracts sales tax as in the case of dyeing contract, when the chemicals are purchased from outside the State. With the above finding, Tax Case Revision filed by the revenue was allowed. However, by referring to the decision in the case of State of Tamil Nadu Vs.Jansons Textile Processors reported in [2014] Vol 69 VST 443, the Division Bench cancelled the levy of penalty on the ground that there was no suppression of sale in the turnover and the claim of the assessee was rejected only on the interpretation placed on Section 3B of the Act.
6.Thus, following the above referred decisions in the case of M/s.S.S.M.Processing Mills's case (supra), the Tax Case Revision is allowed. However, levy of penalty stands cancelled by following the decision in Jansons Textile Processors's (supra). No costs.
To
1.The Deputy Commissioner (CT), Tiruchirappalli Division, Tiruchirappalli.
2.The Tamil Nadu Sales Tax Appellate Tribunal (AB), Madurai.