STATE OF TAMIL NADU Vs. CHORDIA ELECTRICALS

JUDGEMENT

(1.) THIS tax case revision is filed against the order of the tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Madras, passed in T. A. No. 750 of 1983 dated April 18, 1985. The respondent-dealer carrying on business in the name and style M/s. Chordia Electricals, 104, Audiappa Naicken Street, Madras-1 (hereinafter to be referred to as "the assessee-dealer"), is a dealer in electrical goods. We are, in the tax case revision, concerned with two items of the turnover for the assessment year 1979-80. The first item is with reference to the turnover of a sum of Rs. 12, 320, relating to an inter-State sale which the assessee-dealer claimed that it was not assessable to tax in this State. The second item is with reference to the turnover of a sum of Rs. 14, 441 relating to the sale made by the assessee-dealer to the Commissioner, coimbatore Municipality.

(2.) IN so far as the first item of dispute is concerned, the said turnover is covered by the bill No. 1373 dated March 19, 1979, but the turnover is not covered by the declaration in form C. The Deputy Commercial Tax officer, Peddunaickenpet (South) Circle, Madras-1, proposed to assess the said turnover at 10 per cent on the ground that the sale was not covered by the necessary declaration in form C, and after granting opportunity to the assessee for the production of C form and after hearing the assessee-dealer brought to tax the said turnover at the rate of 10 per cent. The assessee preferred an appeal to the Appellate Assistant Commissioner (CT) II, Madras, against the levy of tax at the rate of 10 per cent on the said turnover. The Appellate assistant Commissioner found that the assessing officer had given sufficient time to the assessee-dealer for the production of C form, and the assessee-dealer did not respond to anyone of the notices issued by the assessing officer for the production of C form nor did the assessee-dealer filed the C form for claiming the exemption. The Appellate Assistant commissioner, therefore, held that the order of the assessment made by the assessing officer did not call for any interference. The assessee then carried the matter in appeal before the Tamil Nadu Sales Tax Appellate Tribunal, madras-104 (Main Bench) (hereinafter to be referred to as "the Appellate tribunal") and the Appellate Tribunal found that the assessee-dealer had purchased the goods from a dealer in Delhi and transferred the goods to a dealer at Andhra Pradesh. On a perusal of purchase invoice, sale invoice and e-1 form the Appellate Tribunal held that since the sale had not taken place in the territory of Tamil Nadu, the sales tax authorities in Tamil Nadu have no jurisdiction over the transaction. IN so far as the second item of dispute is concerned, it relates to the turnover of a sum of Rs. 14, 441 and the assessing officer found that the turnover was covered by the bill No. 1281, dated september 26, 1979, but the turnover was not covered by the declaration in form c and therefore, he brought to tax the said turnover of Rs. 14, 441 at 10 per cent on the said turnover which was confirmed on appeal by the Appellate assistant Commissioner on the ground that the assessee-dealer failed to produce c form in spite of several opportunities granted by the assessing officer. The appellate Tribunal, on appeal by the assessee-dealer, found that the rate of tax would be 3 per cent and therefore, it was necessary to produce D form under the proviso to section 6 (2) of the Central Sales Tax Act, 1956 (hereinafter to be referred to as "the CST Act" ). The Appellate Tribunal also found that on the basis of the letter of the assessee-dealer dated March 21, 1979 to the Commissioner of Coimbatore Municipality and the letter dated February 21, 1980 of the Commissioner of Coimbatore Municipality to the assessee-dealer, the supply was only to a electricity undertaking of the local body, viz. , the coimbatore Municipality and therefore, it held that the sale was exempt under section 17 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter to be referred to as "the TNGST Act" ). IN this view of the matter, the appellate Tribunal held that the assessee-dealer was not liable to be taxed on the disputed turnover of Rs. 12, 320 as well as on Rs. 14, 441 and allowed the appeal preferred by the assessee-dealer to that extent. The Revenue has challenged the findings of the Appellate Tribunal with reference to two items in the present tax case revision.

(3.) A similar view was taken by the Rajasthan High Court in commercial Taxes Officer v. Raj. Small Industries Corporation. S. C. Agrawal, j. , (as His Lordship then was), after noticing the decision of this Court in K. Nandagopal Chetty's case, as well as the Central Sales Tax (Amendment) Act, 1969, which was inserted with retrospective effect from the date of commencement of the Central Sales Tax Act, 1956, held as under : "the proviso to sub-section (1) of section 9 deals with a sale of goods during their movement from one State to another which is a sale subsequent to the first sale in respect of the same goods and which does not fall within sub-section (2) of section 6 and provides that the tax shall be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or, as the case may be, could have obtained, the form prescribed for the purpose of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods. . . . In State of Madras v. K. Nandagopal Chetty, the learned judges of the Madras High Court have observed that there was a lacuna in the proviso to sub-section (1) of section 9 inasmuch as the jurisdiction of the taxing State was dependent upon the act or failure on the part of the subsequent seller, and there was nothing in the Act which obliged the seller to obtain form C and the language of the said proviso did not cover a case where dealer fails to obtain declaration in form C. The defect that was pointed out by the Madras High Court in the aforesaid decision was removed by the Central sales Tax (Amendment) Act, 1969 whereby proviso to sub-section (1) of section 9 was substituted with retrospective effect. In the amended provision the words 'or, as the case may be, could have obtained'have been inserted. As a result of this amendment the proviso to sub-section (1) of section 9 would cover a situation where the declaration in form C could have been obtained by the dealer and he has not obtained such a declaration. "