K. Murugesan vs State of Tamil Nadu

K.A. Swami, C.J.—This tax appeal is preferred u/s 37 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as ""the

Act""), read with rule 30 of the Rules framed thereunder, against the order of the Joint Commissioner (SMR) (CT) dated November 17, 1992,

passed in reference No. T2/N3/33006/90.

The assessee sold certain articles to Kumbakonam Municipality. On the turnover, covering those sales, concessional rate of sales tax under the

Government Order P. No. 303, dated March 26, 1981 (with effect from April 1, 1981) is claimed, on the ground that municipality is no other than

the department of Government and therefore the sales to the municipality fall within the purview of the aforesaid notification. The Joint

Commissioner has negatived the contention. It has been held that the turnover of Rs. 53,475 relating to supply of electrical goods to Kumbakonam

Municipal Council is not eligible for concessional rate of tax at 4 per cent and the decision in Troks Pharmaceuticals Private Ltd. Vs. Excise and

Taxation Officer and Others, has no relevance.

Therefore, the question for consideration is as to whether the sales made to the Kumbakonam Municipal Council are eligible for concessional

rate of sales tax at 4 per cent ?

G.O.P. No. 303 dated March 26, 1981, reads thus :

In exercise of the powers conferred by sub-section (1) of section 17 of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of

1959), the Governor of Tamil Nadu hereby makes, -

(i) the reduction in the rate of tax to four per cent in respect of the tax payable by any dealer under the said Act on the sale of any goods except

petrol, diesel and cement specified in the Fifth Schedule and on the sale of any goods specified in the Fifth Schedule to the said Act which are

taxable at a rate higher than four per cent to the State and Central Government departments including Indian Railways, departments of other State

Governments in Tamil Nadu excluding the public sector undertakings, Government companies and autonomous undertaking like Neyveli Lignite

Corporation and Tamil Nadu Electricity Board.

The notification issued under sun-sections (1) and (3) of section 17 of the Act which is reproduced below does not cover Kumbakonam

Municipality, though it covers some of the local authorities in the State of Tamil Nadu; as such it does not help the dealer in question.

II(2)/CTRE/203/77 - G.O.P. No. 1356 dated September 6, 1977 (with effect from October 5, 1977). - In exercise of the powers conferred by

sub-sections (1) and (3) of section 17 of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959), and in supersession of the

previous notifications issued on the subject, the Governor of Tamil Nadu hereby directs that the rate of tax payable by any dealer under the said

Act on the sales of electrical goods falling under entries in items 41, 41-A, 41-B and 41-C of the First Schedule to the said Act, to electrical

undertakings in the State of Tamil Nadu, State and Central Government departments in the State of Tamil Nadu and the Indian Railways, shall be

reduced to the rate specified in sub-section (1) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956).

Explanation. - For the purposes of this notification, ''electrical undertakings'' shall mean the following public or private undertakings which are

engaged in the generation, transmission of electrical energy or distribution of electrical energy to the public, namely -

(i) The Tamil Nadu Electricity Board;

(ii) The following private company electrical undertakings, namely -

(1) Salem-Erode Electricity Distribution Company Limited, Salem;

(2) Tirunelveli-Tuticorin Electric Supply Company Limited, Tirunelveli;

(3) Kumbakonam Electric Supply Corporation Limited, Kumbakonam;

(4) Nagapattinam Electric Supply Company Limited, Nagapattinam;

(5) South Madras Electric Supply Corporation Limited, Tiruchirapalli;

(6) Vellore Electric Corporation Ltd., Madras 1.

(7) Shencottah Electric Supply Agency, Shencottah;

(8) Kumbakonam Rural Electric Co-operative Society Limited, Kumbakonam; and

(iii) The following local authority electrical undertakings, namely -

(1) Madurai;

(2) Coimbatore;

(3) Thanjavur;

(4) Pollachi; and

(5) Karur;

(iv) Neyveli Lignite Corporation Limited, Neyveli.

It is clear from the aforesaid Government Order dated March 26, 1981, that the public sector undertakings, Government companies and

autonomous undertakings like the Neyveli Lignite Corporation and Tamil Nadu Electricity Board are excluded. This goes to show that the State

Government never intended to include local authorities. It is not possible to agree with the contention that the municipal council is part of the

Government. It is relevant to notice that the Kumbakonam Municipal Council is governed by the Tamil Nadu District Municipalities Act. It is a

separate corporate body, having its own seal and personality, independent of the State Government. The fact that the State Government exercises

certain power over the municipality under the provisions of the Tamil Nadu District Municipalities Act does not by itself make the municipality as a

part of the Government or a department of the Government. The municipal council is constituted under the provisions of the Act. It is an elected

body, elected for a statutory period. Therefore, it is not possible to hold that it is a part of the Government or a department of the Government.

The decision in Troks Pharmaceuticals Private Ltd. Vs. Excise and Taxation Officer and Others, cannot be held to govern the case on hand. In

that case, it was found that the property in goods passed to the State Government, thus it was a sale to the State Government. That being so, the

said decision cannot be held to have laid down the law that the municipal council is a part of the State Government and the sale of a commodity to

the municipal council is a sale to the State Government, so as to attract the concession of tax granted under the Government order dated March

26, 1981 and notification, referred to above.

For the reasons stated above, we see no ground to entertain this tax case. It is accordingly rejected.

Petition dismissed.