J.Kanakaraj, J. (Chairman) - (1.) IN T.C. (R) No. 2427 of 1997, the facts are as follows : The petitioner/assessee reported a total turnover of Rs. 1,39,93,476.59 and taxable turnover of Rs. 1,00,20,985.27. In this return, the petitioner included a turnover of Rs. 1,00,000 being the hire on lease of machinery at 3 per cent. Later, he filed a revised turnover claiming that the said turnover of Rs. 1,00,000 is not exigible to tax, because the machinery was leased out to a flour mill situate outside the State of Tamil Nadu. This contention was not accepted by the assessing authority and he proceeded to include the said sum of Rs. 1,00,000 as assessable at 3 per cent. He also levied penalty of Rs. 1,572 on account of short payment of surcharge. A further penalty of Rs. 10,734 was imposed under Section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959 read with the Tamil Nadu Additional Sales Tax Act, 1970, for failure to submit correct return and adopting a lesser rate of additional sales tax. A sum of Rs. 120 was levied as penalty under Section 22(2) of the Tamil Nadu General Sales Tax Act, for collection of excess surcharge.
(2.) TWO appeals were preferred before the first appellate authority, one in respect of a turnover of Rs. 1,00,000 and the levy of penalties (A.P. 342/91) and another appeal (A.P. 1/91) related to the levy of additional sales tax of Rs. 29,490. Before the first appellate authority, it was argued that the machinery moved from the assessees' business place to the lessees' place of business in Maharashtra. The deed of lease was made on February 1, 1988 at Tamil Nadu only. Two arguments were raised, namely, that the movement of the machinery from Tamil Nadu to Maharashtra was on the basis of the lease and therefore, it is an inter -State transaction. Secondly, it was contended that the situs of the transaction was totally outside Tamil Nadu and therefore, the assessment under Section 3 -A of the Tamil Nadu General Sales Tax Act, was illegal. In respect of A.P. 1/91, which relates to the additional sales tax of Rs. 29,490 the contention was that if the turnover of Rs. 1,00,000 on account of lease of machinery is deleted, then the entire turnover falls below Rs. 1,00,00,000 and the rate of additional sales tax will be only 1.6 per cent reducing the additional sales tax to Rs. 1,46,502 instead of Rs. 1,75,992 as imposed by the assessing authority. The appellate authority rejected the contention on the ground that the lessor/assessee was within Tamil Nadu and he had also received the lease amount in Tamil Nadu. No clear finding was given on the question of inter -State sale. He confirmed the levy of penalties and dismissed the appeals. Two second appeals were preferred before the Sales Tax Appellate Tribunal, namely, M.T.A. Nos. 20 and 21/92 against the orders of the Appellate Assistant Commissioner. Before the Appellate Tribunal, the very same arguments were pressed. The second appellate authority also held that inasmuch as the agreement was entered into between the parties in Tamil Nadu and the fact that the lessor was in Tamil Nadu, gave jurisdiction to the authorities to levy tax under Section 3 -A of the Tamil Nadu General Sales Tax Act. The Appellate Tribunal, however, agreed that the machineries were moved to Maharashtra State, but observed that on that account, it cannot be stated that the assessment is to be made under the Central Sales Tax Act. The reasoning of the Appellate Tribunal is not very clear on the question of inter -State sale, because it only observes that no sale of goods is effected to attract Section 3(a) of the Central Sales Tax Act. The Appellate Tribunal also observed that the machinery was leased out to the lessee in Maharashtra and the goods were brought back to Tamil Nadu after its use. The Appellate Tribunal also confirmed the levy of penalty, except the levy of penalty under Section 22(2) of the Tamil Nadu General Sales Tax Act, which was deleted. Consequently, the Appellate Tribunal dismissed both the appeals.
(3.) THE petitioner has filed only one tax revision case against the order of the Appellate Tribunal in M.T.A. No. 20/92, but has indicated that it is a common order for M.T.A. Nos. 20 and 21/92. In fact, in the grounds of revision, the levy of additional sales tax at an enhanced rate is also disputed on the ground that the total turnover will be reduced below rupees one crore and therefore, the additional sales tax can be levied only at 1.5 per cent. The main dispute in this tax revision case is, therefore, whether the lease of machinery to the party in Maharashtra, is taxable under Section 3 -A of the Tamil Nadu General Sales Tax Act, 1959.;