Judgment · High Court

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 18.02.2010CORAMTHE HONOURABLE MR.JUSTICE D.MURUGESANANDTHE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJAW.P.No.15660 of 2000M/s Ziptex Fasteners Pvt. Ltd.,80, Aspiran Garden2nd Street, Chennai 600 010.. Petitioner-Vs-1. The Commercial Tax Officer Ponneri Assessment Circle Ponneri2. The Appellate Assistant Commissioner (CT) V Kancheepuram3. The Joint Commissioner III (SMR) of Commercial Taxes Commissioner of Commercial Taxes Chepauk, Chennai-5..RespondentsPetition under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorarified Mandamus, to callfor the records of the third respondent in his impugned proceedingsin S.M.R.No.176/97 Ref. No.M1/T2/22544/95 and quash the order dated24.5.2000 on the ground that the same is ultra vires the expressprovisions of Sec.5(3) of the CST Act, 1956 and contrary to theratio of the decision of this Hon'ble Court reported in 113 STC 384and 110 STC 151 and further direct the first respondent to giveeffect to order of the Appellate Authority in A.P.No.250 dated21.1.1994 in accordance with law. For Petitioner:: Mr.V.Sundareswaran forMr.K.VenkatasubramaniamFor Respondents::Mr.Haja NaziruddinSpecial Government Pleader (T) ORDER (Order of the Court was delivered by D.MURUGESAN, J.)The petitioner is a dealer supplying poly-zips to itscustomers having export agreements for being used in the plasticbags. The petitioner reported a total and taxable turnover of https://hcservices.ecourts.gov.in/hcservices/ Rs.6,96,341.82 and Rs.4,54,783.45 respectively under the CentralSales Tax Act, 1956 for the assessment year 1990-91. However, theassessing officer determined the total and taxable turnover ofRs.5,48,087.00 and excluded a sum of Rs.1,58,185.00. For the restof the total turnover, wherever Form-H was filed, the petitionerwas given exemption under Section 5(3) of the Central Sales TaxAct, 1956 (for short, "the Act") and wherever Form-H was not filedor was defective, such exemption was not granted. This order wastaken before the appellate authority, who passed certain ordersmodifying the order of the assessing officer.

It appears that the Joint Commissioner of Commercial Taxes, in exercise of the power under Section 34 of the Act, had suo moturevised the order of the assessing officer on the ground that theexclusion of a sum of Rs.1,58,185.00 by the assessing officer isprejudicial to the interest of the revenue and consequentlyconfirmed the proposal for levy of tax for that amount as well. Questioning the above, the present writ petition is filed.

We have heard Mr.V.Sundareswaran, learned counsel for thepetitioner and Mr.Haja Naziruddin, learned Special GovernmentPleader (Taxes) for the respondents.

For entitlement to the benefit of tax exemption under Section 5(3) of the Act, the petitioner has filed Form-Hdeclarations with further details as to the export obligation ofits customers and also the proof that the products sold to itscustomers were in fact exported. Even in the pre-assessment noticedated 31.1.92, the assessing officer has observed that the assesseehad filed valid Form-H declarations for the amount ofRs.1,58,185.00 and the sales have been effected to exportersagainst pre-existing export orders and that the goods were in factexported by the buyers. On a show cause notice being issued priorto the order passed by the Joint Commissioner, the petitioner-assessee has filed its objections, wherein it is specificallystated that the poly-zips were sold by the assessee to the actualexporter who used the same as such and exported the goods and thesaid exporter furnished Form-H declarations and export documentssuch as Airway Bill copies along with a declaration confirming thatthe zips purchased have been used in the final product which hasbeen exported. It was also stated that the actual exporter hadprocured the zips exclusively for export purposes and the said zipshave been procured to suit the particular colour of the goodsproposed to be exported. It was also stated that specific colouredzips have been used as such without any change in their identity bythe actual exporter. These factors have not at all been consideredby the Joint Commissioner while passing the revisional order, whoproceeded to hold that the petitioner is liable for payment of taxsolely on the ground that what was exported was plastic bags, cushion covers and not zips.