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Judgment
Vinod K. Sharma, J.—The petitioner has invoked the writ jurisdiction of this court, with the prayer for issuance of a writ in the nature of certiorari, for quashing the order dated May 22, 2008, passed by the learned Special Commissioner and Commissioner of Commercial Taxes, Chepauk, Chennai, in exercise of power conferred u/s 28-A of the Tamil Nadu General Sales Tax Act, 1959. The impugned order reads as under:
Commercial Taxes Department From
Lr. No. D. Dis. Acts Cell II/33003/06 dated 26.9.2006 Clarification No. 116/06
Sir,
Sub: Tamil Nadu General Sales Tax Act, 1959-Rate of tax for ''textile machine clearer roller cleaner''- ''Clarification u/s 28-A of the TNGST Act requested''-Reg.
Ref: Tvl. SIMTA Clear Coats Pvt. Ltd., Sulur, Lr. dated June 16, 2006
....
With reference to the application dated June 16, 2006, you are informed that ''textile machine clearer roller cleaner'' is taxable at 12 percent under entry No. 20 in Part D of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959.
If imported, it is taxable at 20 percent under entry No. 9 of the Eleventh Schedule to the Tamil Nadu General Sales Tax Act, 1959.
Sd/- S. Malathi Special Commissioner and Commissioner of Commercial Taxes.
The petitioner challenged the impugned order by contending that the impugned order is totally arbitrary and amount to colourable exercise of power, as the learned Special Commissioner and Commissioner of Commercial Taxes, has given no reason to arrive at a decision, though he was to act as quasi-judicial authority while deciding a question u/s 28-A of the Tamil Nadu General Sales Tax Act.
The contention of the learned counsel for the petitioner is that the "textile machine clearer roller cleaner" is an item, which can only be used in textile machinery, and for no other purpose. It is also the contention of the learned counsel for the petitioner that as this item cannot be used as general item, therefore, it could not be brought under entry 20 in Part D of the First Schedule to assess sales tax at 12 per cent.
In support of the contention, learned counsel for the petitioner placed reliance on clarification dated November 8, 2002, issued u/s 28-A, with regard to yarn bundling press and yard bundle balling press, which reads as under:
Clarification No. 281/2002
D. Dis. Acts Cell. II/70818/2002,
Date: 8.11.2002
Textile machinery such as yarn bundling press and yard bundle balling press: Yarn bundling press and yard bundle balling press are taxable at 4 percent under entry No. 63 in Part B of the First Schedule to the TNGST Act, 1959.
and clarification dated June 4, 2004 with regard to overhead travelling equipment and parts and accessories, order dated June 4, 2004, issued u/s 28-A is as under:
Commercial Taxes Department
Clarification No. 145/2004.
Sir,
Sub: TNGST Act, 1959-Rate of tax clarification u/s 28-A of the Act-For high performance over-head travelling equipment and parts and accessories--Requested--Regarding.
Ref: From Tvl. Elgi Electric and Industries Ltd., Coimbatore, letter dated 8-7-2002.
....
Tvl. Elgi Electric and Industries Ltd., Coimbatore-45, in their letter cited have requested clarification on rate of tax u/s 28-A of the TNGST Act, 1959 for high performance overhead travelling equipment/cleaner and parts and accessories.
The details furnished by the petitioners have been perused.
They are informed that ''overhead travelling cleaning machine/equipment, parts and accessories'', will fall under entry No. 63 in Part B of the First Schedule to the TNGST Act 1959, taxable at four percent on first sale. The decision of the Sales Tax Appellate Tribunal (AB), Coimbatore, in CTA 220/91/9-10-91 is followed.
Sd-Abul Hassan Commissioner of Commercial Taxes.
The learned counsel for the petitioner also placed reliance on a judgment of this court in the case of (2000) 120 STC 430 , wherein, the Tribunal, while considering the question of items of machinery falling in a particular schedule, answered the question as under:
After referring to the two entries in the First Schedule, the Appellate Assistant Commissioner gives the following reasons for reversing the order of the assessing authority:
(1) Entry 81 says ''(all machinery other than those specifically mentioned in this schedule)''. The goods in question, namely ''Premier card control-L system'' and ''yarn cleaner'' are not mentioned in any other items of the First Schedule including 41C.
(2) Decisions in F. Rose Mary Carpentry Works Vs. The State of Madras, Commissioner of Sales Tax Vs. Abdul Khaliq Mistri, and Pioneer Electronics Vs. The State of Andhra Pradesh, ) support the contention that the goods are accessories of textile machinery.
(3) 41C is a general provision whereas entry 81 is a specific provision.
(4) Reliance placed on the Andhra Pradesh Sales Tax Appellate Tribunal in relation to certain electrical goods.
We may straightly point but that the last two reasons given by the Appellate Assistant Commissioner are totally unwarranted and only shows his over-enthusiasm. But the first two reasons are sound and could be countenanced. The assessee filed an appeal to the Appellate Tribunal (STAT). The State filed an enhancement petition so far as the turnover of Rs. 26,96,576. The Sales Tax Appellate Tribunal took into consideration that the goods manufactured by the assessee cannot function independently and they can be used only in the textile industry. They upheld the order of the Appellate Assistant Commissioner. Hence, this revision by the State. The relevant entries may be first noticed. Entry 41C of the First Schedule is as follows:
Electronic systems, instruments, apparatus, appliance (other than those specified elsewhere in this Schedule), but including electronic cash registering, indexing, card punching, franking and addressing machines, computers of analog and digital varieties, one-record units and other electronic goods and parts and accessories of all such goods.
Entry 81 of the First Schedule is as follows:
All machinery (other than those specifically mentioned in this Schedule) worked by (i) electricity, (ii) diesel or petrol, (iii) furnace oil, (iv) kerosene, (v) coal including charcoal or (vi) any other form of fuel or power, and parts and accessories of such machinery and tools used with such machinery.
Entry 41C relates to electronic system or other apparatus including parts and accessories of such goods. Therefore, if the goods in question are capable of being classified as electronic system and could be used as such or could be used in any other machinery in general, then it is possible to construe such goods as falling under entry 41C. But in this case the records show that the goods manufactured are not capable of being used by themselves. Nor is it possible to say that the goods can be utilised generally in any type of machinery or sold as general goods. On the other hand, the goods can be used only in textile machineries. The purpose and use of the goods in the textile industries has also been clearly explained by the assessee. Therefore, the goods sold by the assessee are parts or accessories of machineries in textile industry. In this connection; the decisions cited by the Appellate Assistant Commissioner are relevant and apposite. We may also add one more decision of the Supreme Court in M/s. Mehra Bros Vs. The Joint Commercial Officer, Madras, The apex court held that car seat covers and upholstery manufactured by an assessee are accessories to motor vehicles, even though they are made of leather, plastic cloth or such other materials. Similarly, in T. C. (R) No. 95 of 1997 reported - in, (2000) 120 STC 428 this Special Tribunal has taken a similar view in respect of leather belting and rubber belting used in textile industry. It was held that they will fall under entry 81. Looked from this view, we are satisfied that the goods in question are used only as accessories of machineries in the textile industry. Therefore, it clearly falls under entry 81 of the First Schedule. The tax revision case filed by the Revenue fails and is dismissed.
The learned Government Advocate (Taxes), on the other hand, raised objection qua the maintainability of the writ petition, by contending that only notice of assessment has been issued to the petitioner, therefore, writ is premature, as it will be open to the petitioner, to raise all the pleas before the assessing authority.
The contention of the learned Government Advocate on the merit is that, as the item, "textile machine clearer roller cleaner", is not part and parcel of textile machinery being detachable, therefore, it is to be classified, as the one falling under general item. Thus, no ground exists to interfere with the impugned order.
On consideration, I find force in the contention raised by the learned counsel for the petitioner. Section 28-A of the Tamil Nadu General Sales Tax Act, 1959 reads as under:
28A. Power to issue clarification by Commissioner of Commercial Taxes.-(1) The Commissioner of Commercial Taxes on an application by a registered dealer, may clarify any point concerning the rate of tax under the Act. Such clarification shall be applicable to the goods specified in the application:
Provided that no such application shall be entertained unless it is accompanied by proof of payment of such fee paid in such manner, as may be prescribed.
(2) The Commissioner of Commercial Taxes may, if he considers it necessary or expedient so to do, for the purpose of uniformity in the work of assessment and collection of tax, clarify any point concerning the rate of tax under this Act or the procedure relating to assessment and collection of tax as provided for under this Act.
(3) All persons working under the control of Commissioner of Commercial Taxes shall observe and follow the clarification issued under sub-section (1) and sub-section (2).
The reading of section 28A shows that it is the final order, which is binding on all the assessing authorities. The contention of learned Government Advocate (Taxes) that the writ is premature, is/thus, misconceived. The other contention of learned Government Advocate that item being detachable, and not part of machinery, therefore, will fall under general category, also cannot be accepted, in view of the judgment of this- court in the case of (2000) 120 STC 430 wherein, this court has held, that the goods, which can be utilised generally in any type of machinery or sold, as general goods, can be included under general item, but, not the items, which cannot be used in any other machinery except textile machinery. The "textile machine clearer roller cleaner'''' can only be used in textile machinery and no other machinery. Learned counsel for the petitioner, therefore, is correct in contending that the impugned order, passed by the Special Commissioner and Commissioner of Commercial Taxes, cannot be sustained in law.
The contention of the learned counsel for the petitioner that the impugned order is arbitrary and non-speaking, also deserves to be accepted, for the reasons that even though the power exercised by the Special Commissioner and Commissioner of Commercial Taxes, was u/s 28A, i.e., statutory power, but order is totally silent, with regard to reasons for coming to the conclusion, especially when with regard to other two items of similar nature, were held to be part of textile machinery.
Though, normally after setting aside the impugned order, the case should have been remitted back to the Special Commissioner and Commissioner of Commercial Taxes for re-determination, but this situation may not arise in view of judgment of this court in the case of (2000) 120 STC 430 , holding that the general item, only will fall under general category and not the like of one under consideration in this writ. The "textile machine clearer roller cleaner", being special item, only to be used in textile machinery and no other machine would, therefore, not fall under general category to attract 12 percent tax. Consequently, the writ petition is allowed. The impugned order is set aside and the respondents are directed to treat the textile machine clearer roller cleaner, be a part of textile machinery, assessable to four percent tax. No costs. Connected miscellaneous petition is closed.