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Showing contexts for: tnvat in M/S. Aakavi Spinning Mills Pvt Ltd vs The Authority For Clarification And on 29 June, 2017Matching Fragments
3. The effect of the impugned clarification is that, 100% viscose staple fibre (VSF) hank yarn sold by the dealers/petitioners is taxable at 5%, under Entry No.3 (a) of Part B of the first schedule to the TNVAT Act.
4. With consent of the learned counsel appearing for the parties, Writ Petition No.17722 of 2017, is taken as a lead case, and it would suffice to note the facts stated thereunder :-
4.1) The petitioner is a registered dealer on the file of the second respondent/Assistant Commissioner (CT), Periya Agraharam Assessment Circle, Erode, and would state that, they were under the belief that the commodity dealt with by them, viz., staple fibre hank yarn, is exempt from taxation under Entry 44 of Part-B of the fourth schedule to the TNVAT Act, as they were informed that, some of the dealers had approached the Commissioner of Commercial Taxes during 2007, and sought for a clarification regarding the taxability of the commodity, called 'hank yarn', and to one such dealer, viz., Southern India Mills Association, Coimbatore, the Commissioner, by clarification, dated 29.03.2007, informed that, the term 'hank yarn', includes hemp yarn, which are manufactured using the raw materials other than cotton yarn also and exempted from tax under Entry 44 of Part-B of the fourth schedule to the TNVAT Act with effect from 01.01.2007. Whereas, when the other dealer, in their individual capacity, approached the Commissioner for similar clarification with regard to the taxability of the commodities, viz., polyster yarn, viscose staple fibre yarn and blended yarn, the Commissioner, by clarification dated 19.09.2007, informed that, polyster yarn and viscose staple fibre yarn are not used by handloom Industries, hence, they are liable to be taxed at 4%, under Entry No.3 (a) of Part B of the first schedule to the TNVAT Act with effect from 01.01.2007.
5.1) Entry 44 of Part-B of the fourth schedule to the TNVAT Act mentions only hank yarn, and there is no distinction or specification to the texture of the yarn, and therefore, all categories of yarn, in hank form, are exempted from payment of VAT. Clause 3(a) of Part-B of the first schedule covers all types of yarn, except hank yarn, and are taxable at 5%. Thus, clause 3 (a) specifically excludes hank yarn, which is an exempted commodity.
5.2) The power conferred on the first respondent under Section 48-A of the TNVAT Act is to clarify the rate of tax on a particular commodity, and the first respondent has no power to interpret an entry in the schedules to the Act, which fixes the rate of tax for a particular commodity. Under the provisions of the Tamil Nadu General Sales Tax Act, 1959, a notification, prescribing the rate of tax, dated 07.10.1998 was issued, which specifically states the rate of tax at 2 % on the sale of cotton hank yarn and plain reel, and under the TNVAT Act 2006, there is no specification of cotton hank yarn, and the word used in the said notification is only 'hank yarn', and therefore, it would cover all types of yarn sold in hank form.
5.6) It is submitted that the petitioners are also suppliers of hank yarn to the hand loom weavers and hand loom weavers also uses fibres such as polyester fibre, viscose fibre, blended fibre, etc., and it is incorrect to state that, hand loom products are made only with cotton hank yarn. In support of such contention, reliance was placed on the Circular issued by the Chairman of the Hand Loom Export Promotion Council, Ministry of Textiles, Government of India, dated 16.03.2013. As per the said Circular, the first respondent has no jurisdiction to invoke his power under Section 48 -A of the TNVAT Act, as there is no ambiguity in the Entry to the schedules under the TNVAT Act, and no clarification is required.
8. Mr. N. Inbarajan, the learned counsel appearing for some of the petitioners submitted that, Entry 44 of Part-B of the fourth schedule to the TNVAT Act speaks of only hank yarn and nothing more or nothing less, and expression has to be read as such, and no words can be incorporated into the said entry. Even in the Budget Speech given by the then Hon'ble Minister of Finance, no such distinction has been drawn and there is reference only to hank yarn. Therefore, the first respondent erred in adding the words into the entry, which are not found. In this regard, the learned counsel referred to Section 14 of Central Sales Tax Act 1956 (CST Act) and submitted that, the cotton yarn is referred to as 'declared goods', and in the second schedule, there are two categories under Entry 3. However, there is no such distinction insofar as the tax payable under the provisions of the TNVAT Act is concerned. To further buttress the said contention, the learned counsel has drawn the attention of this Court to Entry 37 of Part- B of the first schedule to the TNVAT Act, and pointed out that, when the legislation intends to clarify the exemptions based on the commodity, it specifically does so.