O.M.Chandrasekar, Member (J) - (1.) THE prayer in the Original Petition No. 569 of 2003 is to quash the revised order of assessment dated March 13, 2003 made in TNGST No. 6060579/1999 -2000, wherein the respondent has assessed the transactions in respect of sale of paper cones against form XVII, under Section 3(2) of the TNGST Act, 1959 under entry 76, Part B of the First Schedule to the TNGST Act at four per cent. The petitioner claims that the sale of paper cones to spinning mills for winding of yarn on it, is eligible for concessional levy at three per cent as packing material. Against this impugned order, the petitioner has also preferred an appeal and the same is pending.
(2.) THE prayer in the Original Petition No. 649 of 2003 is to quash the order of assessment made in TNGST No. 2020320/2001 -2002 dated May 16, 2003, wherein the respondent has assessed the transactions pertaining to sale of paper cones against form XVII, under Section 3(2) of the TNGST Act at four per cent. In this case also, the petitioner claims that the sale of paper cones to spinning mills for winding of yarn on it, is eligible for concessional levy at three per cent as packing material. Since the question involved in these cases are common and arguments have been advanced by both the counsels in common, the original petitions are disposed of by this common order.
(3.) WITH reference to the O.P. No. 649 of 2003, the learned counsel for the petitioner argued that the petitioner is engaged in the manufacture and sale of paper cones and paper tubes and they are used by the textile mills to wind the yarn as a primary packing material. Paper cone is essential to hold the yarn wound on it and sold in the cone form only and paper tube is used by the paper mills for rolling the paper and by the pump manufacturer for packing submersible pumps. Paper cones were sold as packing materials taxable at the concessional rate of 3 per cent under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 against issue of form XVII. Earlier, by notification issued in G.O.P. No. 1316 dated October 7, 1988, the tax payable on the sale of textile machinery spares, which included cones and tubes, was reduced from eight per cent to four per cent and this was also clarified by the Commissioner of Commercial Taxes in his clarification dated November 19, 1990. Subsequently, the paper cones were treated as packing materials in the clarifications issued on October 8, 1992, January 25, 1993, December 3, 1996 and March 27, 1997. With reference to the notification issued on October 7, 1988, this Special Tribunal has already decided the similar issue in T.C. (A). No. 18 of 1996 dated September 17, 1996 (Lena Paper Tubes and Cones v. State of Tamil Nadu) that paper cones were to be treated as textile machinery spares entitled to concessional levy at four per cent, as there was no restriction in the said Government notification to treat metallic cones alone as parts of textile machinery, as held by the Joint Commissioner in that case. A further appeal to the Supreme Court by the State was also dismissed on August 4, 1997. ([1997] 107 STC (Journal) 3). But, in the clarification issued on January 10, 2002, paper cones were clarified by the Commissioner as textile machinery spare parts taxable at four per cent, falling under entry 76 in Part B of the First Schedule to the TNGST Act. In such circumstances, when the petitioner is claiming concessional levy at three per cent under Section 3(3) of the TNTST Act on the sale of paper cones to the spinning mills as primary packing materials for their use in the manufacture of yarn wound on it, against issue of form XVII, based on the earlier various clarifications issued by the Commissioner of Commercial Taxes that paper cones would be the packing materials eligible for concessional levy, the respondent has passed the impugned assessment order treating the paper cones sold to spinning mills against issue of form XVII as parts of textile machinery liable to tax at four per cent under Section 3(2) of the Act read with entry 76, Part B of the First Schedule to the Act.;