Madras High Court Upholds Rejection of Tax Exemption Claim for Mingled Gingelly Seeds
Judicial Review Limited to Process as Court Confirms Sales Tax Tribunal's Decision Against M/s Sivakumar and Co.
In a significant ruling, the Madras High Court has dismissed the writ petition filed by M/s Sivakumar and Co., seeking exemption from sales tax for inter-State sales of gingelly seeds that suffered tax at the point of first sale within Tamil Nadu. The company had claimed exemption under a Government Order dating back to 1963, which was ultimately rejected by the Tamil Nadu Sales Tax Appellate Tribunal.
During the assessment year 1994-95, M/s Sivakumar and Co. attempted to avail the exemption for a turnover of Rs. 40,48,080, submitting purchase bills and stock books to support their claim. However, during an inspection conducted by the Commercial Tax Officer on July 20, 1994, the gingelly seeds were found to be mingled with other stocks, which led to the rejection of the exemption claim.
The company initially succeeded in appealing the decision before the Appellate Assistant Commissioner (Commercial Tax), who overturned the assessing authority's order. Yet, the State appealed to the Sales Tax Appellate Tribunal, which reinstated the original rejection, citing the mingling of stocks despite separate stock accounts maintained by the petitioner.
The High Court, led by Justices S.M. Subramaniam and C. Saravanan, emphasized the limited scope of judicial review under Article 226 of the Constitution, focusing on the decision-making process rather than the decision itself. The bench noted that the physical verification during inspection confirmed the mingling of goods, rendering the claim for exemption unjustifiable.
The court upheld the findings of the Sales Tax Appellate Tribunal, stating that the mere maintenance of stock records was insufficient to prove the separation of inter-State and local purchases when physical inspection showed otherwise.
In conclusion, the High Court confirmed the orders passed by both the assessing authority and the Sales Tax Appellate Tribunal, affirming that the petitioner was not entitled to the claimed exemption. The writ petition was thereby dismissed, emphasizing the importance of adherence to procedural rules and statutory provisions in taxation matters.
Bottom Line:
Sales Tax - Exemption under G.O.No.3602, Revenue, dated 28.12.1963 - Inter-State sale of tax suffered gingelly seeds - Claim for exemption rejected due to mingling of goods from within the State and inter-State - Judicial review under Article 226 of the Constitution limited to process, not decision itself.
Statutory provision(s): Article 226 of the Constitution of India, G.O.No.3602 Revenue dated 28.12.1963
