Sri Rajalakshmi Enterprises v. The State of Tamil Nadu

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 02.07.2009C O R A M:THE HONOURABLE MR.JUSTICE F.M.IBRAHIM KALIFULLAandTHE HONOURABLE MR.JUSTICE B.RAJENDRANTax Case No.1980 of 2006 Sri Rajalakshmi Enterprises, Tirunelveli Town. .. Petitioner-Vs.-The State of Tamil Nadu representedby the Joint Commissioner (CT),Chennai. ... RespondentTax Case Revision under Section 37 of the T.N.G.S.T. Act, 1959against the order of the Joint Commissioner of Commercial Taxes III,dated 11.09.1996 in Ref. No.F1/F2/48053/94 SMR No.138/95. agaisnt theorder of the Appellant Assistant Commissioner (CT), Thirunelveli, dated 23.2.94 in Appeal No.91/94 and against the order of the DeputyCommercial Tax Officer, Tirunelveli Town dated 13.12.93 in AmenmentNo.and year TNGST.798404/91-92. For Petitioner :Mr.B.Bharath BooshanFor Respondent :Mr.Haja Nazaruddin Spl.G.P. (Taxes)- - - - -

O R D E R(Order of the Court was made by B.RAJENDRAN, J.)The assessee is the appellant herein. The assessee ismanufacturer and seller of paper cones, reported a total and taxableturnover of Rs.9,05,085/- and Rs.6,79,270.85/- respectively in the"A1" returns filed for the year 1991-92. The Assessing Officer byrelying upon G.O.P.No.1316/CT & RE dated 07.10.1988, stated that thesale by any dealer of textile machinery spares in which Bobbin, Conesand Tubes were used, were given concessional rate of tax from 8% to4% was not applicable as the assessee has stated that it is a merepackaging material.

Aggrieved against the same, the petitioner preferred theappeal before the Appellate Assistant Commissioner and the AppellateAssistant Commissioner in his order found that the sale made by the https://hcservices.ecourts.gov.in/hcservices/ assessee would clearly come under the provisions of G.O.P.No.1316/CT& RE dated 07.10.1988 and granted the exemption by allowing theappeal of the assessee.

The Joint Commissioner on suo motto action negatived thecontention of the Appellant Assistant Commissioner in invoking theG.O.P.No.1316/CT & RE, dated 07.10.1988 and gave a finding thatthough the sale was made to the spinning mill or usage of the cones, the Joint Commissioner only found that the material which is suppliedis not a metallic cone and it is only a paper cone and it was usedonly as a packaging material and not as mentioned for the purpose ofspinning mill and negatived the contention of the exemption grantedin G.O.P.No.1316/CT & RE, dated 07.10.1988.

Setting aside the order of the Appellate AssistantCommissioner and treating it as paper cones sold by a dealer fallingunder the general goods, levied the tax. Aggrieved against the saidsuo motto revision made by the Joint Commissioner, the assesseepreferred the appeal.

The appellant pleaded mainly on the two questions of lawviz.,"(a) Was the Joint Commissioner of CommercialTaxes justified in not considering the fact thatG.O.P.No.1316/88 dated 7.10.88 applied to the appellant?(b) Did not the Joint Commissioner make amistake in failing to consider that the term "cones"was wide enough to include all types of cones used inspinning mills irrespective of the materials with whichthey were made?"

The appellant has specifically pleaded that G.O.P.No.1316/CT& RE, dated 07.10.1988, has brought in the cones in the list of 12items for which reduction has been ordered. The learned counselbrought to our notice the very G.O. which reads as follows: "634. Sale by any dealer of textile machinery spareslisted below:-Textile spares:-(1) Rings and Ring travellers,(2) Shuttle and Picker,(3) Spindles, Spindle tapes and Spindle bolster,(4) Card cans,(5) Pirns,(6) Beams,(7) Loom frames,(8) Cots and Aprons,(9) Bobbin, Cones and Tubes(10) Top arms,(11) Cear Boxes, and(12) Card clothingsReduced from 8% to 4% with effect from 7th October, 1988:No.II(1)/CTRE/144(1)/88-G.O.P.No.1316, dated 7th October, https://hcservices.ecourts.gov.in/hcservices/ 1988 (Gazette Entry, dated 7th March, 1993 and becometaxable under item D-35 of First Schedule from 12th March,1993 but the rate of tax was reduced from that date of 4%by notification"

According to the appellant, the item of cones sold by theappellant to the spinning mills is only utilised for the purpose ofmanufacture and it is for the textile machinery and it is squarelycovered as item No.9 under the caption "

Bobbin, Cones and Tubes".The said G.O. in which exemption is granted was very much prevalentand available for that assessment year which is extracted from theG.O.8. The appellant also pointed out that the assumption of the Joint Commissioner that paper cones will not come under the provisionof the G.O. and it is only for wrapping is without any basis. 9. On a careful reading of the said G.O., a specific recitalhas been made for granting this exemption, whereby it is clearlystated that sale by any dealer of Textile machinery spares listedbelow are given the exemption. The Government has clearly grantedthis exemption to those dealers who are dealing in textile machineryand spares. They also clearly included various items specifyingthose items to be either spares/accessories for machinery for thepurpose of textile industry. In this particular case under ClauseNo.9 the words used is only Bobbin, Cones and Tubes and it is clearlyadmitted by the Assessing Officer as well as the RevisionaryAuthority that the cones alone was supplied and it is not denied. The assessee is able to establish that what was manufactured andsupplied is inconsonance with the said G.O. viz. Cones and therecannot be any interpretation made by the Joint Commissioner on suomotto application stating that the cones are only paper cones andsuch paper cones could not be used for manufacturing purpose or inthe alternative that cones could have been only used for packagingmaterials are unwarranted and unjustified.

Even otherwise, in the suo motto revision, the authorityhas not placed any record or placed reliance or inspection or anyother mode known to law to give a drastic conclusion without readingthe provisions as envisaged in the G.O. The G.O. can only beinterpreted in the strict sense since any sale of cones madeespecially to a spinning mill which is a textile industry has to bedeemed to be an accessory or spare part. The incorrect way in whichthe Revisionary Authority went to interpret the provision is notpermitted in law.