India Pvt.Ltd. Vs. Commercial Tax Officer & ANR.  INSC 488 (5 March
APPELLATE JURISDICTION CIVIL APPEAL NOS. 1591-1592 OF 2009 (Arising out of
S.L.P.(C) Nos.24422-24423/2007) M/s Sony India Pvt. Ltd. ...Appellant(s) Versus
Commercial Tax Officer & Anr. ...Respondent(s) ORDER Leave granted.
had a factory at Dharuhera, Haryana wherein it was manufacturing, inter alia,
Televisions, Audio systems, Walkman-Pocket size Radio Cassette Player, which
apart from being sold locally, were branch transferred to various States
wherein local sales were made. They also imported certain items from abroad
either at New Delhi or at Mumbai and after filing Bills of Entry for home
consumption, paid customs duty and cleared the goods. The goods were thereafter
branch transferred to their warehouses located in different parts of the
country including Tamil Nadu. Prior to the period in question, appellant's
products, both indigenously produced as well as those imported from outside
India, were assessed under Entry 14(vi) and (viii) of Part D of the First
Schedule to the Tamil Nadu General Sales Tax Act, 1959. They were, accordingly,
taxed at 12% at the point of first sale in the State of Tamil Nadu. However, in
2002, an amendment was made for the first time and 'imported' goods falling in
Part D of the First Schedule of the Act 1 were sought to be taxed at enhanced
rate of 20%. Appellant sought a clarification from the Commissioner under
Section 28-A of the Act. While the clarification was pending, the appellant
challenged the said amendment vide O.P.Nos.969-970/2002 before the Tamil Nadu
Taxation Special Tribunal constituted under the Tamil Nadu Taxation Special
Tribunal Act, 1992 in terms of Article 323B of the Constitution.
the grounds of challenge was that there was no distinction between imported
goods and indigenously manufactured goods particularly when they answer the
same description, more so since the goods after import became part of the
landmass of India. The appellant also alleged that identical goods manufactured
by multinational corporations like LG, Samsung etc. were also subjected to levy
of 12% only, since the said multinationals (who were competitors of the
appellant) produced those goods in India. The Tribunal dismissed the O.Ps.
against which Writ Petitions were filed by the appellant which were also dismissed
by the High Court by the impugned judgment, hence these Civil Appeals.
repeatedly observed by this Court, in tax matters, each word in the Entry
requires a factual foundation to be established. In the present case,
therefore, we need to look at the subject Entries.
hereinbelow Part-D of the First Schedule to the Act - Sl.No.14 (vi):
DESCRIPTION OF GOODS Point of Rate of Tax Levy in the No. State 2 14 (vi) Audio
and video cassettes, CDs, corresponding First Sale 12% w.e.f recorders and players,
Gramophones of all kinds 27.03.2002 including record players, radio
gramophones, gramophone records, matrices for records and record changers,
sound recording and reproducing equipments including dicta-phones, car cassette
players, tape-decks, tape players, compact disc players (including a
combination of any of them) with or without wireless reception instrument and
pagers[xxx]@. @ 'Cellular telephones' have been taken as item 1 of Part DD from
21st March 2003 - See that Part of this Schedule. Before this transfer, the
rate of tax on their sales was reduced from 12% to 4% from 24th December 2002
by Notification No.II(I)/CT/74(d)/2002 of that date.
quote hereinbelow from the same Part Sl.No.14(viii), which reads as under:
DESCRIPTION OF GOODS Point of Rate of Tax Levy in the No. State 14 (viii)
Television sets, antenna, television and video First Sale 12% w.e.f cameras,
projectors, teleprompters, dish antenna and 27.03.2002 boosters, all electronic
toys and games (The previous rates could not be indicated as the groupings of
the goods varied from time to time) We also quote hereinbelow, item 9 of the
11th Schedule, which reads as under:
DESCRIPTION OF GOODS Point of Rate of Tax Levy No. 9 Imported cigarettes,
medium density fibre boards, First Sale 20% textile and other items falling in
Parts D and E of the First Schedule The controversy has arisen because some of
the times are imported from Japan by the Assessee whereas others are
manufactured in India. As far as items 3 manufactured locally in India, there
is no dispute. The tax is levied at 12%. The dispute is basically confined to
imported items in which the rate of tax is 20% (after 27.03.2002).
O.P. filed before the Tribunal, it was urged that once the importation stands completed,
then the goods lose their character of imported goods and, consequently, there
would be no difference between the locally manufactured goods and imported
goods (see page 54 of the SLP Paper Book). One more contention raised by the
assessee in its Original Petition before the Tribunal was:
is submitted that similar goods manufactured in India and sold by other dealer
like Samsung, LG etc. in Tamil Nadu are being taxed at 12% after 27.03.2002.
However, the petitioners (assessee) herein alone are now required to pay tax at
20%. Presently, the Act imposes a higher rate of 20% on sales tax whereas other
similar goods suffer sales tax at 12%."
We do not
wish to comment about the above contentions. Suffice it to state that these
contentions would require adjudication, which has not taken place in the
present case. Against the assessment orders, the assessee chose to move the
Tribunal without exhausting statutory remedy under the Act. In our view,
looking to the contentions advanced by the assessee, they ought to have
proceeded to file appeals for each assessment year before the First Appellate
Authority under the Act which they have failed to do. However, since an
important question of law arises for determination and since the liability is
likely to recur in future, we direct the appellant-assessee herein to prefer
statutory appeal(s) within a period of four weeks.
made clear that the First Appellate Authority will decide the said appeal(s) 4
within a period of six months, uninfluenced by the observations made by the
Tribunal as well as by the High Court in the impugned judgment. We express no
opinion on the merits of the case. Whatever is stated hereinabove is only in
the support of our order remitting the matter to the First Appellate Authority
and that Authority shall not be bound by any of our observations mentioned
Appellate Authority shall decide the matter on merits and it shall condone the
delay, if any, in filing the appeals.
Appeals are disposed of accordingly.
as to costs.
...................J. (S.H. KAPADIA)
...................J. (H.L. DATTU)
March 05, 2009.