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1995 Supreme(Mad) 267
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S. M. ALI MOHAMMED
T.S.R. and Company - Appellant
Versus
District Forest Officer and Others - Respondents
Writ Petition No. 6689 of 1993
Decided On : 02 March 1995
A manufacturer who purchases goods for use in the manufacture of final products mentioned in Schedule I of the Tamil Nadu General Sales Tax Act is entitled to concessional rate of sales tax at 3% under section 3(3) of the Act.
Headnote:
{'KEYWORD': 'SALES TAX - CONCESSIONAL RATE - ENTITLEMENT - MANUFACTURER - PURCHASE OF GOODS FOR USE IN MANUFACTURE OF FINAL PRODUCTS MENTIONED IN SCHEDULE I - CONDITIONS OF TENDER - RELEVANCE.', 'SUBJECT': 'Concessional Rate of Sales Tax for Manufacturers', 'ACT SECTION LIST': ['Tamil Nadu General Sales Tax Act, 1959 - Section 2(g), Explanation (2), Section 3(3), Section 22(1)']}
Fact of the Case:
The petitioner, a registered dealer under the Tamil Nadu General Sales Tax Act, purchased saw dust and basolabukini from the Forest Department (first respondent) for use in the manufacture of soap and talcum powder. The petitioner claimed concessional rate of sales tax at 3% under section 3(3) of the Act, but the Forest Department demanded 8% sales tax as per the tender conditions.
Finding of the Court:
The court held that the petitioner was entitled to the concessional rate of sales tax at 3% under section 3(3) of the Act. The court found that the Forest Department was a 'dealer' by virtue of the deeming provisions of section 2(g), Explanation (2) of the Act and was bound to collect form XVII submitted by the petitioner for the purpose of paying sales tax at the concessional rate. The court also held that clause 25 of the tender conditions, which required the petitioner to pay sales tax at the rate of 8%, had to be read subject to the provisions of the Tamil Nadu General Sales Tax Act.
Issues: Whether the petitioner was entitled to concessional rate of sales tax at 3% under section 3(3) of the Tamil Nadu General Sales Tax Act.
Ratio Decidendi: The court held that the petitioner was entitled to the concessional rate of sales tax at 3% under section 3(3) of the Act because: * The petitioner was a registered dealer under the Tamil Nadu General Sales Tax Act. * The petitioner had purchased saw dust and basolabukini from the Forest Department for use in the manufacture of soap and talcum powder, which were final products mentioned in Schedule I of the Act. * The Forest Department was a 'dealer' by virtue of the deeming provisions of section 2(g), Explanation (2) of the Act and was bound to collect form XVII submitted by the petitioner for the purpose of paying sales tax at the concessional rate.
Final Decision: The court allowed the petition and directed the Forest Department to refund the excess sales tax collected from the petitioner.
S. M. ALI MOHAMMED, J.
The writ petitioner in his affidavit states that he is the sole proprietor of M/s. T.S.R. Company and he is carrying on business in manufacture and sale of sandal talcum powder and face powder as well as soap and states further he is the registered dealer under the Tamil Nadu General Sales Tax Act, 1959.
2. A counter-affidavit and an additional affidavit have been filed on behalf of the first and second respondents. It is stated that the Forest Department is not a registered dealer and therefore the Forest Department is not bound to accept form XVII and collect concessional rate. It is stated further in clause 25 of the tender as follows :
"The purchaser should pay to the Forest Department in the lump sum sales tax at the rates in force at the time of confirmation of the sales on the full purchase amount along with the first instalment of the purchase price."
It is stated that the petitioner is bound to pay 8 per cent sales tax and in any event, the commodities purchased by the petitioner do not fall under the First Schedule for the exemption and later in the additional counter, the stand is modified by stating that it is a timber falling under Schedule I, entry 84 and emphasis is made on the Explanation which reads as follows :
"Original entry :
Timber and bamboo
Explanation. - For the purpose of this item, in the case of timber and bamboo purchased by the forest contractors in the auction of forest coups conducted by the Forest Department of the Government, the sale by such contractors of such timber and bamboo in any form or size shall be deemed to be the first sale and the sale by the Forest Department in such auction of forest coups shall not be the first sale."
Entry from March 23, 1987 :
(i) Timber
(ii) Bamboo
Explanation. - For the purpose of this item, in the case of timber and bamboo purchased by the forest contractors in the auction of forest coups conducted by the Forest Department of the Government, the sale by such contractors of such timber and bamboo, in any form or size shall be deemed to be the first sale and the sale by the Forest Department in such auction of forest coupes shall not be deemed to be the first sale.
"It is further stated that the District Forest Officer is not a dealer and as such, he does not require to accept form XVII and that the District Forest Officer is not the competent authority to pass orders and grant refund under the Tamil Nadu General Sales Tax Act.
3. Mr. Chandran, learned counsel for the petitioner submitted that as per section 2(g). Explanation (2), the first respondent is a dealer by the deeming provision and does not come under the definition of section 2(m), registered dealer, as the Government departments are exempt from registering themselves as a dealer and in this connection the learned counsel referred to section22 of the Tamil Nadu General Sales Tax Act wherein the Explanation states that the State Government shall be deemed to be the registered dealer, and submitted that the contention of the first respondent that he is not a registered dealer, that therefore he is not bound to accept form XVII and allow the petitioner to pay concessional rate is untenable. He, further submitted that the petitioner complies with the provision of section3(3) of the Tamil Nadu General Sales Tax Act as he has purchased the goods from the first respondent and he has utilised the same for the manufacture of the final products, viz., soap and talcum powder and both soap and talcum powder are found in Schedule I, entry 37 and entry 51 respectively. The learned counsel further submitted that the first respondent being a department of the State Government was bound by the provisions of the Tamil Nadu General Sales Tax Act and he was bound to accept the form XVII and allow the petitioner to pay the concessional rate of sales tax at the rate of 3 per cent. He further submitted that the clause 25 of the tender condition has to be read, subject to the Tamil Nadu General Sa
