State of Tamil Nadu vs Ramakrishna Mills (CBE) Ltd.

P. Jyothimani, J.—The issue involved in this case is admittedly covered by the judgment of the Division Bench of this court in State of Tamil Nadu Vs. National Time Co., The issue relates to the year to be bifurcated and unamended provision to be applied for the period prior to the amendment to the Sales Tax Act. Prior to the amendment by-Act 31 of 1996 with effect from August 1, 1996, section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970 provided for liability to pay additional tax in the case of a dealer whose taxable turnover for a year exceeded ten lakhs of rupees. By the amendment, section 2(1)(a) was amended and section 2(1)(aa) was introduced providing for payment of additional tax in the case of a dealer including the principal selling or buying goods through agents whose taxable turnover for a year exceeded one hundred crores of rupees. The Division Bench of this court, in the judgment cited supra, has held as follows (pages 255 and 256 in 39 VST):

To make the position more clear, for instance, in the financial year April 1, 1996 to March 31, 1997, for the period up to July 31, 1996, if the taxable turnover was Rs. 50 lakhs, for the first ten lakhs of rupees, there would be no additional tax liability, for the rest forty lakhs of rupees, the liability by way of additional tax should be calculated at the rate of 1.5 per cent, and if for the whole of the financial year, the taxable turnover exceeded Rs. 100 crores, for the remaining amount of Rs. 99.50 lakhs, i.e., excluding Rs. 50 lakhs, which is relatable to the period only up to July 31, 1996, the rate of tax as per the amended section 2(1)(aa) will have to be worked out.

Keeping the above statutory implication relating to payment of additional sales tax as was applicable up to July 31, 1996 and after August 1, 1996, when we examine the order of the assessing authority dated January 28, 1998, in the case on hand, we find that the taxable turnover of the respondent-assessee was Rs. 54,97,880 up to July 31, 1996. The taxable turnover for the financial year is stated to have exceeded rupees one crore. But for the purpose of calculation of additional sales tax, since for the whole of the financial year, the taxable turnover did not exceed one hundred crores, there would be no necessity to make any further calculation for the period beyond July 31, 1996. The assessing authority calculated the additional sales tax at the rate of two per cent, on the taxable turnover for the whole of the year.

The learned Special Government Pleader fairly pointed out that since the unamended provision was very much in force up to July 31, 1996, the calculation of additional sales tax would have to be made by the assessing authority for the taxable turnover which was prevailing only up to the period July 31, 1996 and for the period subsequent to August 1, 1996, the liability would have been assessed, if at all the taxable turnover up to the end of the financial year exceeded one hundred crores of rupees and not otherwise. Consequently, the rate of tax applied, viz., two per cent, was not in consonance with the statutory provision as was prevailing as on July 31, 1996. Since the taxable turnover did not cross Rs. 100 crores during the said financial year, in the case of the respondent-assessee, the liability of additional sales tax will have to be calculated only for the period up to July 31, 1996 and not beyond and that too, on the taxable turnover that was available up to that date, viz., July 31, 1996.

Having regard to the said position, the impugned order of the Tribunal as well as that of the assessing authority are liable to be set aside. While setting aside the order of the assessing authority, we direct the assessing authority to pass fresh orders by keeping the taxable turnover of the respondent-assessee up to July 31, 1996 in a sum of Rs. 54,97,880 and calculate the tax at the rate of 1.5 per cent, on the sum of Rs. 44,97,880 (i.e.), after deducting the first ten lakhs as provided under the proviso to sub-clause (i) of section 2(1)(a).

The learned counsel for the respondent states that a Samadhan Scheme has been announced and prevalent as on date and the same will be in force up to August 15, 2010. The assessing authority, is therefore, directed to ensure that revised orders of assessment as directed in this order is passed before August 10, 2010.

In the light of the above, the orders of the Tribunal as well as that of the appellate authority are liable to be set aside and accordingly, they are set aside and the matter is remitted back to the assessing officer for passing order afresh in terms of the Division Bench judgment of this court, extracted supra. The tax case (revision) is disposed of accordingly. However, there is no order as to costs.