Aerochem Electronics vs Commercial Tax Officer, Luz Assessment Circle, Chennai and Another

D. Murugesan, J.—The petitioner raises the question as to whether the petitioner-assessee for the years 1994-95 and 1997-98 is liable to pay tax at the rate of 16 per cent and 20 per cent, respectively, or at eight per cent ? The petitioner is the dealer in mosquito coils, repellant, gas lighters, kitchen knives and kitchenwares. They reported a total taxable turnover of Rs. 29,37,542 in their monthly return for the year 1994-1995 under the Tamil Nadu General Sales Tax Act, 1959. They also reported a total taxable turnover of Rs. 89,43,899 in their monthly return for the year 1997-98 under the TNGST Act. The assessment for the assessment year 1994-95 was considered and the petitioner was made liable to pay the tax at the rate of 16 per cent. Since the amendment was made to item No. 18 of the First Schedule with effect from September 17, 1996, 20 per cent, tax was levied for the assessment year 1997-98. The assessment orders were questioned by the petitioner on the ground that as the goods being electronic goods, they are liable to pay tax only at the rate of four per cent. However, the appellate authority, while confirming the order of the assessing officer in respect of rate of tax at 16 per cent for the assessment year 1994-95, has modified the order passed by the assessing officer to the rate of eight per cent, for the assessment year 1997-98. The above orders were carried on by the assessee by way of appeals before the Appellate Assistant Commissioner of Commercial Taxes, Chennai, and both the appeals were dismissed. In fact as against the order of the appellate authority in reducing the rate of tax at eight per cent for the assessment year 1997-98, the Revenue has preferred an appeal before the Sales Tax Appellate Tribunal, Chennai, and the same was allowed and the order of the assessing officer levying 20 per cent tax for the assessment year 1997-98 was confirmed. The above orders are now put in issue in these writ petitions.

We have extensively heard Mr. V. Sundareswaran, learned counsel for the petitioner and Mr. Haja Naziruddin, learned Special Government Pleader for the respondents.

At the outset, the learned counsel appearing for the petitioner would submit that though the petitioner have putforth their case before the first appellate authority as well as the Tribunal on the ground that the goods are electronic goods, he would fairly submit that they are not electronic goods. But the authorities would have assessed the tax in terms of the specific entry 36, Part C of the First Schedule to the TNGST Act, 1959, which reads as under :

Pressure cookers, pressure stoves, gas stoves, gas ovens and parts and accessories of all such goods other than those specified elsewhere in this Schedule.

He would also submit that even before the said provision, i.e., prior to July 17, 1996, the very same entries were carried on from March 12, 1993. As could be seen from entry 4 of Part D of the First Schedule, the above entries relating to the assessment years have been clarified by the Commissioner on July 7, 1999. The word "accessories" was clarified to be known as "gas stove spares such as burners, ignitor, cock, spill tray". As the ignitor is one of commodity covered under entry 36, Part C of the First Schedule, the assessment ought to have been made on the basis of those entries. If that being so, the petitioner-assessee would be liable to pay tax at the rate of eight per cent.

Mr. Haja Naziruddin, Special Government Pleader, would on the other hand submit that the relevant entry to be made applicable to this case is only item 18 of Part F of the First Schedule at the rate of 16 per cent from March 12, 1993 and item 5 of Part III of the First Schedule at the rate of 17 per cent, from September 17, 1996, which has been correctly applied. He would also submit that this application is in fact supported by the clarification, which was issued at the instance of the assessee by the Special Commissioner and Commissioner of Commercial Taxes on February 27, 1995, wherein it is stated that in view of specific entry "lighters of all kinds" under entry 18(ii) of Part F, gas lighters, even if they are electronic, are liable to tax at 16 per cent. Having invited/such an order, it is not open to the petitioner to entirely take a different stand and different entry to the commodity in question.

We have considered the rival submissions. As far as the application of clarification dated February 27, 1995, which was issued prior to insertion of section 28A into the Act 60 of 1987 was introduced with effect from November 6, 1997 is concerned, we may point out that such clarification has no legal backing and therefore, it cannot be put against the assessee even though it was made at the instance of the assessee himself. This position of law was laid down by a Division Bench of this court in which one of us is a party, in the judgment reported in (2008) 18 VST 111 (Mad) (Santhosh Maize & Industries Limited v. State of Tamil Nadu). Hence placing reliance on the said circular by the Revenue is not acceptable.

This takes us to the other question as to whether the clarification issued after the amendment, viz., July 7, 1997 can be of any benefit to the assessee. As this question has not been considered by the authorities below, apart from the question as to which of the entry would be applicable to the case on hand as contended by the learned counsel for the assessee was also not considered, we set aside the order on that ground and remit the matter to the assessing officer for consideration as to whether the commodity in question, viz., electronic gas stove ignitor/lighters is liable to tax in terms of entry 36 of Part C of the First Schedule or item No. 18 of Part F of the First Schedule for the period from March 12, 1993 and item No. 5 of Part G of the Fist Schedule from July 17, 1996. In view of the remittal, we have to necessarily set aside the order and for that reason, the common order passed by the Tribunal is set aside. Accordingly, these writ petitions are allowed and the matter is remitted for consideration in terms of the observations made in this order. No costs. Consequently connected miscellaneous petitions are closed.