Sumangalam Steels Pvt. Ltd. and Another vs State of Tamil Nadu and Others

R. Jayasimha Babu, J.—Counsel contends that reduction in the rate effected by a notification issued u/s 17 of the Tamil Nadu General Sales

Tax Act, 1959 will have the effect of relieving the dealer who can claim the benefit of that notification from any liability for payment of tax under the

Tamil Nadu Additional Sales Tax Act, 1970.

The notification on which the petitioner relies makes no reference at all to the Tamil Nadu Additional Sales Tax Act, 1970. All that it does say ia

that the tax payable by a dealer on the sale of raw materials falling under item 4 of the Second Schedule to the Act to steel re-rolling mills, or in the

course of inter-State trade or commerce, shall be limited to 2 per cent subject to certain other conditions stipulated in that notification being

complied with. The notification there, clearly does not contemplate any immunity being conferred on the dealer from liability under the Tamil Nadu

Additional Sales Tax Act.

The Tamil Nadu Additional Sales Tax Act is an independent piece of legislation which provides for the levy of additional tax on dealers whose

turnover exceeds the limits which are graded in Section 2(aa) of that Act. Dealers, whose turnover fall below the lowest limit specified in that

section, are not required to pay additional sales tax, while dealer whose turnover exceeds the levels set out in the different sub-clauses therein are

required to pay additional tax at higher rates. The Act also contains a proviso, which is, in the context of the facts of this case, significant. It states

that,-- ""Provided that where in respect of declared goods as defined in clause (h) of Section 2 of the said Act, the tax payable by such dealer

under the said Act, together with the additional tax payable under this sub-section, exceeds four per cent of the sale or purchase price thereof, the

rate of additional tax in respect of such goods shall be reduced to such an extent that the tax and the additional tax together shall not exceed four

per cent of the sale or purchase price of such goods.

The tax levied under the Tamil Nadu Additional Sales Tax Act is indeed what the title to the Act sets out. It is an addition to the sales tax levied

and payable under the principal Act. Care has been taken to provide that the aggregate of the two does not exceed the permissible limit of 4 per

cent in respect of declared goods. A concession granted under the principal Act clearly does not have the effect of relieving the beneficiary from

liability under the Tamil Nadu Additional Sales Tax Act. In fact, the Tamil Nadu Additional Sales Tax Act does not contain any provision for

reducing the rates or for providing exemptions.

It is obvious that in all cases where a dealer whose turnover exceeds the minimum prescribed in the Tamil Nadu Additional Sales Tax Act is

required to pay tax under the principal Act, whether at a concessional rate or without any concessional such dealer is also required to pay Tamil

Nadu additional sales tax in accordance with the provisions of that Act. The concession, if any, granted by the State is limited to a reduction in the

liability of the assessee under the principal Act, and no more.

Learned counsel for the assessee submitted that the Tamil Nadu Additional Sales Tax Act, though independent law is still part of the general

sales tax law of the State, and that the notification issued under the principal Act should be read as prescribing the maximum extent of the liability of

the dealer. The fallacy of this argument is evident. If one were to look at a dealer who cannot claim any benefit under any notification granting

concession, such a dealer would have to pay the tax at the rates specified in the principal Act, and also pay the additional sales tax at the rates

prescribed in the Tamil Nadu Additional Sales Tax Act. That position does not change when a concession is under the principal Act by a

notification issued u/s 17 of that Act.

Counsel sought to support his submission by referring to certain observations of the Supreme Court in the case of Deputy Commissioner of

Sales Tax v. Aysha Hosiery Factory (P.) Ltd. [1992] 85 STC 106. The court there was concerned with a notification issued under the provisions

of the Central Sales Tax Act, 1956, and considered the scope of the expression ""general sales tax law"" in Section 2(1) of the Central Sales Tax

Act, 1956. It was in that context that the court held that a tax levied under the Kerala Additional Sales Tax Act was as much sales tax as was the

tax levied under the Kerala General Sales Tax Act. That decision is of no assistance to the petitioner. The court, in that case, in fact, held that the

dealer there was required to pay tax under both the enactments.

We do not find any merit in the writ petitions, and the same are dismissed.