Back
2013 Supreme(Mad) 1785
High Court of Judicature at Madras
R. SUDHAKAR, J.
Sakthi Masala (P) Ltd.Rep. by its Managing Director P.C. Duraiswamy Erode & Another
Versus
The Assistant Commissioner (CT) Perundurai
W.P.Nos. 8526 to 8529 of 2012
Decided on : 29-04-2013
For the Petitioners: N. Inbarajan, Advoate.
For the Respondents:Arvind Pandian, Additional Advocate General Assisted by A.R. Jayaprathap Assisted by Adithya Reddy Assisted by Manohar Sundaram, Government Advocates (Taxes).
The goods, namely powder form of chilly, turmeric, and coriander, continue to enjoy the benefit of exemption despite their being a specific omission of the powder form from 1.1.2007 to 31.3.2008.
Headnote:
The Court held that the goods, namely powder form of chilly, turmeric, and coriander, continue to enjoy the benefit of exemption despite their being a specific omission of the powder form from 1.1.2007 to 31.3.2008. The benefit of exemption granted based on returns filed is in order.
Fact of the Case:
The petitioners, engaged in the business of manufacture and sale of masala powder, turmeric powder, chilly powder, and coriander powder, filed these writ petitions seeking issuance of a writ of Certiorari to call for the records on the file of the respondent in TIN No.33032922200/2006-07, TIN No.33032922200/ 2007-08, TIN No.33172922996/2006-07, and TIN No.33172922996/ 2007-08 respectively, all dated 19.3.2012 and quash the same inasmuch as the impugned orders are inconsistent with Section 88(3)(i) of the Tamil Nadu Value Added Tax Act, 2006.
Finding of the Court:
The Court held that the goods, namely powder form of chilly, turmeric, and coriander, continue to enjoy the benefit of exemption despite their being a specific omission of the powder form from 1.1.2007 to 31.3.2008. The benefit of exemption granted based on returns filed is in order.
Issues: Whether the goods, namely powder form of chilly, turmeric, and coriander, continue to enjoy the benefit of exemption despite their being a specific omission of the powder form from 1.1.2007 to 31.3.2008.
Ratio Decidendi: The Court held that the goods, namely powder form of chilly, turmeric, and coriander, continue to enjoy the benefit of exemption despite their being a specific omission of the powder form from 1.1.2007 to 31.3.2008. The benefit of exemption granted based on returns filed is in order. The Court relied on the following principles: * The Full Bench of the Kerala High Court and the Supreme Court have held that chilly and chilly powder, coriander and coriander powder, and turmeric and turmeric powder are one and the same goods. * The Government of Tamil Nadu, in G.O.(D) No.383, Commercial Taxes Department, dated 22.10.1998, and the clarification issued on 9.12.2002 under Section 28-A of the TNGST Act, has also treated chilly and chilly powder, coriander and coriander powder, and turmeric and turmeric powder as one and the same goods. * The substitution of Serial No.18 of Part B of the Fourth Schedule to Act 32/2006 by Act 32/2008 has the effect of replacing the old Serial No.18 of Part-B of Fourth Schedule of Act 32/2006 and the substitution will therefore entail goods described in Serial No.18 of Part-B of Fourth Schedule of Amending Act 32/2008 the benefit of exemption as is applicable from the inception of Act 32/2006. * The decision of the Division Bench of this Court in State of Tamil Nadu v. Arihant Plastic House, (2010) 27 VST 192 (Madras), applies to the facts of the present case and on this plea also the petitioners are entitled to succeed, as the pre-revision notice and the proceedings consequent thereon, which are under challenge, fall foul of the plea of escaped assessment.
Final Decision: The Court allowed the writ petitions and quashed the impugned orders.
1. The petitioners have filed these writ petitions seeking issuance of writ of Certiorari to call for the records on the file of the respondent in TIN No.33032922200/2006-07, TIN No.33032922200/ 2007-08, TIN No.33172922996/2006-07 and TIN No.33172922996/ 2007-08 respectively, all dated 19.3.2012 and quash the same inasmuch as the impugned orders are inconsistent with Section 88(3)(i) of the Tamil Nadu Value Added Tax Act, 2006.
2. While the petitioner in W.P.Nos.8526 and 8527 of 2012 is engaged in the business of manufacture and sale of masala powder, turmeric powder, chilli powder and coriander powder within the State of Tamil Nadu as well as by inter-State sales, the petitioner in W.P.Nos.8528 and 8529 of 2012 is engaged in the business of buying and selling of masala powder, turmeric powder, chilli powder and coriander powder from the manufacturers inside the State of Tamil Nadu.
3. Under the provisions of the Tamil Nadu General Sales Tax Act, 1959 (for brevity, "the TNGST Act"), chilly, coriander and turmeric were exempted goods falling under Serial No.16 of Part B of the Third Schedule to the TNGST Act with effect from 17.7.1996. However, chilly power, coriander powder and turmeric powder did not fall within the purview of the Third Schedule to the TNGST Act.
4. The Madras Chillies Merchants Association requested the Government of Tamil Nadu to clarify whether chilly powder, pepper powder and coriander powder are taxable or not consequent to withdrawal of levy of tax on the sale of chilly, turmeric and coriander. This was considered by the Government of Tamil Nadu and on the basis of several decisions of the Courts, namely (i) Rajasthan Roller Flour Mills v. State of Rajasthan, 91 STC 403 (SC); (ii) Krishna Chander Dutta (Spice) Private Limited v. Commercial Tax Officer and others, 93 STC 180 (SC); and (iii) Namputhiris Pickle Industries v. State of Kerala and another, 92 STC 1 (Full Bench of Kerala High Court), it was concluded that mere change into powder does not change the essential nature of the commodity or its substantial identity and that when the above goods are powdered there is only a change in the form. Therefore, the Government was of the view that chilly, pepper and coriander would include the powder form also. Thus, by G.O.(D) No.383, Commercial Taxes Department, dated 22.10.1998, the Government granted exemption to chilly powder, pepper powder and coriander powder in the following manner:
"4. The Government consider that the Chillies Powder, Pepper Powder, Corriander Powder etc. are not taxable since the chilly, pepper and coriander etc. are exempted from the payment of tax under Tamil Nadu General Sales Tax Act."
5. As a consequence, the dealers of chilly, turmeric and coriander powders enjoyed the benefit of exemption in terms of G.O.(D) No.383, Commercial Taxes Department, dated 22.10.1998. The matter was further clarified by the Sales Tax Department in exercise of power under Section 28-A of the TNGST Act. The clarification which was issued on 9.12.2002 reads as under:
"Clarification in D.Dis. Cell/II 88685/2001, dated 9.12.2002
sale by any dealer whose total turnover in respect of turmeric powder, Coriander powder and chilli powder does not exceed Rs.300 Crores in a year is exempt from tax liability under Serial No.16 in Part B of the Third Schedule to the TNGST Act, 1959.'"
The dealers, including the petitioners, enjoyed the above benefit without any restrain, as the goods chilly, coriander and turmeric and its powder form were treated as one and the same goods.
6. Thereafter, the Government of Tamil Nadu brought in the Tamil Nadu Value Added Tax Act, 2006 (for brevity, "Act 32/2006") with effect from 1.1.2007. Under Act 32/2006, the exempted goods were specified under Fourth Schedule, erstwhile Third Schedule. What was Serial No.16 of Part B of the Third Schedule to the TNGST Act was incorporated as Serial No.18 of Part B of the Fourth Schedule to Act 32/2006 and both the entries are
