The State Of Tamil Nadu vs. Tvl.Cethar Vessels LTD.
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The State of Tamil Nadu, represented by the Deputy Commissioner of Commercial Taxes, filed a Tax Case Revision challenging an order of the Tamil Nadu Sales Tax Appellate Tribunal. The respondent, TVL. Cethar Vessels Ltd., a manufacturer of fluidized bed boilers, was assessed for tax under the TNGST Act and CST Act for the assessment years 1987-88, 1988-89, and 1989-90, with penalties imposed. The Appellate Assistant Commissioner partly modified and remanded the appeals. The Tribunal subsequently allowed the respondent's appeal, granting exemption from tax. The State's revision petition is based on the argument that high-efficiency boilers, as defined by G.O.P.No.645, should be taxed, and the Tribunal erred in not considering this.
Held
The Court held that the subject boilers are liable to be taxed. The Court noted that G.O.P.No.645, issued in 1986, explicitly revoked the exemption for high-efficiency boilers and brought them under the taxable category with retrospective effect. This meant that any exemption available under earlier orders, such as G.O.P.No.554, was no longer applicable after the new notification came into force. The Court found the Tribunal's decision to grant an exemption despite the retrospective cancellation under G.O.P.No.645 to be incorrect, as it failed to recognize the binding effect of the subsequent government order. The respondent's boilers met the criteria of high-efficiency boilers under G.O.P.No.645, making them liable for tax. Consequently, the penalties imposed under Section 12(5)(iii) of the TNGST Act and Section 9(2-A) of the CST Act for non-payment of tax were justified. The revision petition was allowed, and the Tribunal's order was set aside.
Key Issues
1. Whether the fluidized bed boilers manufactured by the respondent are liable to be taxed under the TNGST Act and CST Act for the assessment years 1987-88, 1988-89, and 1989-90, considering the applicability of G.O.P.No.554 and G.O.P.No.645? Petitioner's Arguments: The petitioner (Revenue) argued that as per G.O.P.No.645, dated 30.06.1986, fluidized bed boilers with thermal efficiency exceeding 75% (coal-fired) or 80% (oil/gas-fired) are classified as high-efficiency boilers and are liable to tax. They contended that the Appellate Authority and the Tribunal failed to consider this, and that earlier G.O.Ps. were withdrawn by subsequent ones. The Tribunal's liberal interpretation of the notification in favor of the dealer was also challenged. Respondent's Arguments: The respondent argued that they complied with legal provisions and relied on the exemption under G.O.P.No.554, which was in force from 01.04.1984 to 31.03.1987. They contended that applying G.O.P.No.645, issued in 1986, to cancel the exemption retrospectively was unjust, and therefore, the penalties should be set aside and the Tribunal's order upheld.
Sections Cited
Section 12(5)(iii), Section 9(2-A)
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Before: AND
(Order of the Court was made by P.VELMURUGAN, J.) This Tax Case Revision is filed challenging the order passed by the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madurai in M.T.A. No.511/95 and M.T.M.P. No. 131/03 dated 14.07.2003. 2. The respondent, a manufacturer of fluidized bed boilers located in Trichy, was assessed for tax under both the Tamil Nadu Goods and Services Tax Act (TNGST Act) and the Central Sales Tax Act (CST Act) for the Assessment Years 1987-88, 1988-89, and 1989-90 and penalties were imposed under Section 12(5)(iii) of the TNGST Act and Section 9(2-A) of the CST Act, by proceedings dated 25.01.1991. 3. Aggrieved by the assessment order, dated 25.01.1991, the respondent, filed an appeal before the Appellate Assistant Commissioner (CT), who, in an order dated 31.03.1995, partly modified and partly remanded the appeals.
Dissatisfied with the order dated 31.03.1995, the respondent filed further appeals before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench) at Madurai. The Tribunal allowed the appeal filed by the respondent and dismissed the enhancement petitions filed by the State, granting exemption from tax. https://www.mhc.tn.gov.in/judis
Aggrieved by the same, the State has filed the present Tax Case Revision.
The learned Additional Government Pleader appearing for the petitioner/Revenue contended that as per G.O.P.No.645, dated 30.06.1986, fluidized bed boilers with thermal efficiency exceeding 75% in the case of coal-fired boilers and 80% in the case of oil/gas-fired boilers should be classified as high-efficiency boilers and thus are liable to be taxed. He further argued that the Appellate Authority and the Tribunal had failed to consider the same, and held that the earlier and subsequent G.O.P.s, which were introduced before and after, had withdrawn the exemption. The Tribunal, according to him, interpreted the notification in favor of the dealer in a liberal and favorable manner, which is not permissible in law. Therefore, the learned Additional Government Pleader prays for setting aside the order passed by the Tribunal.
Per contra, the learned counsel for the respondent submitted that the respondent had complied with all applicable legal provisions and had relied on the exemption granted under G.O.P.No.554, which was in force from 01.04.1984 to 31.03.1987. The learned counsel further argued that applying G.O.P.No.645, which was issued in 1986 and cancelled the exemption retrospectively, to deny the exemption was unjust. Therefore, the penalties https://www.mhc.tn.gov.in/judis imposed should be set aside, and the order of the Tribunal granting the exemption should be upheld.
Heard the learned counsel on either side and perused the materials placed on record.
Considering the facts, only one question arises to be dealt with in this case: whether the subject boilers are liable to be taxed?
A perusal of the records reveals that G.O.P.No.645, issued in 1986, explicitly revoked the exemption for high-efficiency boilers and brought them under the taxable category. The retrospective effect of this government order meant that any exemption available under earlier orders, such as G.O.P.No. 554, was no longer applicable after the new notification came into force. Hence, the findings of the Tribunal to grant an exemption despite the retrospective cancellation under G.O.P.No.645 were incorrect, as it failed to recognize the binding effect of the subsequent government order.
At this juncture, it would be useful to refer to paragraph No. 21 of the proceedings of the Appellate Assistant Commissioner (CT), Tiruchirappalli-1, wherein it has been stated as follows:
"
The appellants, being manufacturers of fluidized bed boilers, are eligible for exemption under the TNGST Act as per G.O.Ps.No.554, dated 26.05.1984 and in the said https://www.mhc.tn.gov.in/judis notification, it was clearly stated that this will be in force for three years between 01.04.1984 to 31.03.1987. But by another notification G.O.Ps. No. 645/CT & RE, dated 30.06.1986, in List II under item (a) in sub-item (iv), high-efficiency boilers (thermal efficiency higher than 75% in the case of coal-fired and 80% in the case of oil/gas-fired) was omitted with retrospective effect. As per G.O.Ps.No.645/CT & RE, dated 30.06.1986, the appellants cannot be denied the exemption cancelled cannot be given retrospective effect." From the above extracts, it is clearly seen that the respondent was eligible for an exemption under G.O.P.No.554 for the period from 01.04.1984 to 31.03.1987. However, by G.O.P. No.645, dated 30.06.1986, the Government retrospectively excluded high-efficiency boilers from the exemption list, specifically those with thermal efficiency exceeding 75% for coal-fired boilers and 80% for oil/gas-fired boilers.
In light of this, the respondent's boilers, which meet the criteria of high-efficiency boilers under G.O.P.No.645, are liable to be taxed under the TNGST and CST Acts for the relevant period. The penalties imposed under Section 12(5)(iii) of the TNGST Act and Section 9(2-A) of the CST Act for non- payment of tax are justified, as the respondent did not comply with the correct tax obligations under the law in force. https://www.mhc.tn.gov.in/judis
Therefore, the present Tax Case Revision filed by the State is allowed, and the order passed by the Tribunal is set aside. The penalties imposed by the authorities should also stand confirmed. There is no order as to costs. (P.V., J.) (K.K.R.K., J.) 18.10.2024 NCC:Yes/No Index:Yes/No Speaking/Non-speaking order mbi https://www.mhc.tn.gov.in/judis To 1.The Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madurai 2.The Section Officer, Vernacular Records Section, Madurai Bench of Madras High Court, Madurai. https://www.mhc.tn.gov.in/judis P.VELMURUGAN
, J.
and K.K.RAMAKRISHNAN, J. mbi
2024 https://www.mhc.tn.gov.in/judis
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.