Tvl. Velkailash Fine Arts vs. The Government Of Tamil Nadu

Facts

The petitioner, Tvl. Velkailash Fine Arts, challenged an assessment order dated 28.02.2022 passed by the Assistant Commissioner (GST)-II, Sivakasi, for the assessment year 2003-2004. Initially, the petitioner challenged the validity of Section 3 of the Tamil Nadu Tax on Entry of Goods into Local Area Act, 2001. However, following a Supreme Court judgment upholding the provision, the petitioner amended the prayer to focus solely on the assessment order. The petitioner argued that the levy of entry tax was discriminatory. For importing paper boards, the petitioner paid 4% GST and 10% entry tax, totaling 14%. A similarly placed local manufacturer faced only a 3% tax burden on such goods purchased within the state. The respondents contended that the assessment order was appealable and that no discrimination existed.

Held

The Court held that the differential tax treatment did not constitute discrimination. It relied on the Supreme Court's decision in Jindal Stainless Limited Vs. State of Haryana (2017) 12 SCC 1, which stated that granting concessions to a specified class of dealers for a limited period with specific objects would not amount to discrimination. The Court noted that the General Sales Tax on paper boards purchased within the State was 10%, and a special concession of 3% was given to manufacturers during the relevant year. This concession to a specific class of dealers was deemed not to be discriminatory. The Court found the petitioner's argument regarding discrimination unconvincing. However, the Court acknowledged that other contentions, such as limitation, were raised by the petitioner. These other contentions were left open to be argued before the appellate authority. The Court granted the petitioner four weeks to file an appeal before the appellate authority, with the appeal to be entertained without reference to limitation if filed within that period. The writ petition was disposed of accordingly.

Key Issues

1. Whether the levy of entry tax on the petitioner for the assessment year 2003-2004, in light of the tax burden faced by local manufacturers, constitutes hostile discrimination, violating Article 14 of the Constitution of India, as argued by the petitioner? 2. Whether the impugned assessment order dated 28.02.2022 passed by the Assistant Commissioner (GST)-II, Sivakasi, is liable to be quashed on grounds of discrimination, as contended by the petitioner? Petitioner's Arguments: The petitioner argued that the differential tax burden, where they paid 14% (4% GST + 10% entry tax) on imported paper boards while local manufacturers paid only 3%, amounted to hostile discrimination. They relied on the principle that similar goods and similarly placed persons should not be treated differently without a valid reason. Respondents' Arguments: The respondents argued that the differential treatment was not discriminatory and that the assessment order was appealable before the appellate authority, making the writ jurisdiction inappropriate. They also submitted that concessions granted to specific classes of dealers for limited periods with certain objects do not amount to discrimination, citing the Supreme Court's decision in Jindal Stainless Limited.