Madras High Court
Trichur Cotton Mills Limited vs State Of Tamil Nadu on 5 January, 1990
Equivalent citations: [1990]77STC162(MAD)
JUDGMENT
1. These two tax cases arise out of a common order of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madurai, dated 22nd February, 1979 and made in T.A. Nos. 881 and 882 of 1977.
2. The assessment years in question are 1974-75 and 1975-76.
3. The petitioner, who is common in both the cases, is a dealer in cotton yarn having a sales depot at Pillayar Natham, Dindigul, Tamil Nadu, for the sales of cotton yarn. It may also be mentioned that though the petitioner is having the sales depot, as stated above, at Pillayar Natham, the spinning mills of the petitioner are situated at Nattika in Kerala State. It appears, for the sales of yarn at the sales depot of the petitioner, assessments were completed for the assessment years 1974-75 and 1975-76. Subsequently, it was found, that the petitioner had purchased cotton in this State and pressed the same into bales at Tiruppur and thereafter transported them to its mills at Nattika in Kerala State. Therefore, the assessments for the said two years were reopened and tax levied on the turnover of the purchase of cotton, treating the petitioner as the last purchaser of cotton in this State.
4. The defence put forward by the petitioner was that it (petitioner) is not the last purchaser, but only the seller of the petitioner is the last purchaser in this State and the turnover is question was treated as inter-State sale and taxed as such and the petitioner paid the tax to its seller who in turn has paid it over to the State and, therefore, the question of reopening the assessments will not arise.
5. The assessing officer, the Appellate Assistant Commissioner and finally the Sales Tax Appellate Tribunal, on a consideration of the materials placed before them, have concurrently found that the petitioner is the last purchaser of cotton in this State and, therefore, the reopening of the assessments and the tax levied on the purchase of cotton cannot be assailed.
6. In the view we propose to take, we do not consider it necessary to give elaborate reasons for agreeing with the findings of the authorities below on the issue that the transactions in question are intra-State sales and not inter-State sales except to state that we are satisfied with the reasonings given by the authorities below in this regard. Though Mr. Inbarajan, learned counsel appearing for the petitioner, was at pains to convince us that the transactions in question are inter-State sales and exigible to tax as such, and the view taken by the authorities below that they are intra-State is not sustainable, we are not convinced of the same.
7. Alternatively, Mr. Inbarajan contended that the identical transaction (turnover) having factually been subjected to tax at the last point of purchase in this State and the rate of tax also being the same, the very same turnover cannot again be subjected to tax in view of the fact that cotton being "declared goods" and liable to tax at one point and at a particular rate. In support of this, the learned counsel placed reliance on a recent judgment of the Supreme Court in State of Karnataka v. Ayyanahalli Bakappa & Sons reported in [1988] 71 STC 202.
8. When the matter was argued on an earlier occasion and the learned counsel for the petitioner cited the above said Supreme Court judgment, we adjourned the matter to enable the learned Additional Government Pleader to look into the matter further and advance arguments to get over the judgment of the Supreme Court. The learned Additional Government Pleader, after going through the judgment of the Supreme Court, is not in a position to get over the judgment of the Supreme Court. He, however, admitted that the ratio laid down in the said judgment of the Supreme Court squarely applies to the facts of this case, but he would state that the said judgment requires reconsideration.
9. The relevant facts relating to the case dealt with by the Supreme Court are briefly extracted in the head-note, which reads as follows :
"Under the Mysore Sales Tax Act, 1957, sales tax was leviable in regard to safety matches only at the first point of sale. In the original assessment of the respondent, a dealer, the Commercial Tax Officer accepted that sales safety matches to the tune of Rs. 8,79,210 were exempt as the dealer was a seller on the second point. Later the officer reopened the assessment to include those sales. The Tribunal held that since the same turnover of sales had already been assessed in the hands of three depots which had been registered as dealers, the department could not pass the reassessment order against the respondent in respect of the same turnover. The High Court, in revision, affirmed the decision of the Tribunal."
On appeal to the Supreme Court, on the above facts, the Supreme Court ruled as follows :
"Counsel for the State has fairly conceded that during the year in question the three sale depots already been registered as dealers and assessed on the same turnover to tax which has already been collected. It is not disputed that sale of safety matches is liable to first point tax at the prescribed rate. Since one set of tax already been collected from the depot holders at the point of sale to the assessee within the State, we see no justification to allow a second set of tax to be raised. In view of this finding, the answer to the second aspect has to be against the State. It is not necessary to get into the academic question as to whether the notice was sustainable in law. We leave that contention open to be examined in an appropriate case."
10. We have noticed earlier that in the case on hand, the turnovers have already been subjected to tax and the tax though on record paid by the vendor on the petitioner, ultimately, it is the petitioner who paid the tax while purchasing the cotton. We cannot agree with the contention of the learned Additional Government Pleader that the judgment of the Supreme Court requires reconsideration as the judgment is binding on us and the remedy of the Revenue lies elsewhere. Therefore, applying the ratio of the Supreme Court's decision State of Karnataka v. Ayyanahalli Bakappa & Sons [1988] 71 STC 202, we have no hesitation to hold that the same turnover cannot again be subjected to tax, particularly, when the subject-matter of the commodity is declared goods, namely, cotton.
11. In the result, we allow the tax cases and set aside the assessments on the disputed turnovers on cotton. However, there will be no order as to costs.
12. Petitions allowed.