The State of Tamil Nadu vs Tvl. Sri Malar Dyeing Works

Chitra Venkataraman, J.—This Tax Case Revision, preferred at the instance of the Revenue, relates to the use of dyeing materials in the

course of works contract and the assessability under the provisions of Section 3-B of the Tamil Nadu General Sales Tax Act, 1959.

In T.C. Nos. 842, 817, 818, 819 to 823, 826, 841, 843, 849, 850, 870, 982, 987, 990, 1036, 1038 and 1040 of 2006, by order dated

1.7.2011 State of Tamil Nadu v. Tvl. Geetha Dyeing, Karur this Court followed the decision in T.C. No. 1661 of 2008 dated 25.8.2010 and

allowed a batch of Tax Cases, holding that the turnover was assessable to tax.

In T.C. No. 1661 of 2008, while considering the decisions reported in 2000 118 STC 9 (Rainbow Colour Lab and Anr. v. State of Madhya

Pradesh and others) and 2001 124 STC 59 (Associated Cement Companies Limited v. Commissioner of Customs), this Court held that after

introduction of Section 3-B and after the amendment made to the definition of ''sale'' u/s 2(n)(ii), the contention raised by the learned Counsel for

the Assessee could not be accepted, since, by operation of law, the transfer of goods involved in the works contract would amount to ''sale''

taxable u/s 3-B. Thus the dyes and chemicals used in the execution of works contract would attract levy of tax. The Assessee had purchased the

dyes and chemicals from outside the State. Consequently, this Court held that entire turnover was cancelled. However, as regards levy of penalty,

this Court set aside the levy since there was no suppression of sale in the turnover.

Following the said decision, the above tax case revision stands allowed thereby restoring the order of the Assessing Officer. However, it is

made clear that as regards levy of penalty, the same shall stand deleted, following the order dated 25.8.2010 made in T.C. No. 1661 of 2008.