State of Tamil Nadu Vs. Ashoka Motors - Court Judgment

Excerpt:

.....the director should be enabled to exercise his power so as to effectuate the scheme of the act and to implement the purpose behind the act. the fact that the rule making authority has prescribed procedure in exercise of the powers under section 67 for making an application to the director does not mean that the suo motu power which is explicit in section 5(2) of the act is in any way curtailed or taken away. therefore, the contention of the respondent that making an application is sine qua non for invoking the power under section 5(2) of the act is not tenable. -- t.n. estates (abolition & conversion into ryotwari) act, 1948. sections 5(2) & 67; suo motu revisional powers held, on a bare reading of the provisions of section 5(2) of the act, it is clear that the power conferred on the director by section 5(2) to cancel or revise any of the orders, acts or proceedings of the settlement officer is very wide. in the first place, the director need not necessarily be moved by any party in that behalf, and the power could be exercised either on an application by an aggrieved person or suo motu. for example, if the director comes to know that contrary to the scheme of the act..........has come forward with this revision challenging the order of the tribunal dated april 7, 1995 passed in tribunal appeal no. 378 of 1993.2. the short facts are that the respondent herein purchased a chassis which suffered tax at that point of sale. the respondent, thereafter, erected a body over it and after using the complete unit, sold the new product, namely, the lorry to a third party, for which, the assessing authority, by its order dated january 31, 1992 determined the tax in a sum of rs. 36, 113, along with surcharge and additional surcharge. the contention of the respondent before the lower appellate authority was that the chassis purchased by it, having already suffered tax once, was not liable to be taxed again after the body was built over it. the tribunal having accepted the case of the respondent, the state has come forward with this appeal.3. in this context, the learned special government pleader appearing for the petitioner relied upon two division bench decisions of this court in south india automotive corporation private ltd. v. state of tamil nadu reported in [1990] 76 stc 115 and tamil nadu mosaic manufacturers association v. state of tamil nadu [1995] 97 stc.....

Judgment:

ORDER

F.M. Ibrahim Kalifulla, J.

1. The State has come forward with this revision challenging the order of the Tribunal dated April 7, 1995 passed in Tribunal Appeal No. 378 of 1993.

2. The short facts are that the respondent herein purchased a chassis which suffered tax at that point of sale. The respondent, thereafter, erected a body over it and after using the complete unit, sold the new product, namely, the lorry to a third party, for which, the assessing authority, by its order dated January 31, 1992 determined the tax in a sum of Rs. 36, 113, along with surcharge and additional surcharge. The contention of the respondent before the lower appellate authority was that the chassis purchased by it, having already suffered tax once, was not liable to be taxed again after the body was built over it. The Tribunal having accepted the case of the respondent, the State has come forward with this appeal.

3. In this context, the learned Special Government Pleader appearing for the petitioner relied upon two Division Bench decisions of this Court in South India Automotive Corporation Private Ltd. v. State of Tamil Nadu reported in [1990] 76 STC 115 and Tamil Nadu Mosaic Manufacturers Association v. State of Tamil Nadu [1995] 97 STC 503.

4. It would be appropriate to refer to the principle stated in Tamil Nadu Mosaic Manufacturers Association v. State of Tamil Nadu [1995] 97 STC 503 (Mad) to appreciate the stand of the petitioner herein. The Division Bench, as proposition of law, has laid down the ratio to the following effect (at page 514):. The settled position of law is that whenever a commercial commodity which has suffered sales tax is transformed into another distinct commercial commodity, it becomes a separate and distinct commercial commodity for the purposes of levy of sales tax and it can be taxed again and in such a case, Section 15(a) of the Central Sales Tax Act will have no application. When the dealer purchases a commercial commodity which has suffered sales tax and out of such commercial commodity purchased by the dealer, he manufactures another distinct commercial commodity and uses the same in the execution of works contract, the commercial commodity purchased by the dealer is not used in the execution of the works contract in the same form in which it is purchased and in such a case what is used in the execution of the works contract is a distinct and different commodity though manufactured out of the commodity purchased by him and which has suffered sales tax...

5. The decision referred to in South India Automotive Corporation Private Ltd. v. State of Tamil Nadu [1990] 76 STC 115 (Mad) is identical to the instant case. In the said case, the dealers in sale of three wheelers built a body over a chassis which had already suffered tax and when after the body was built as a three wheeler van, it was sold to a customer, the contention that no further tax liability would arise on the ultimate product of the three wheeler van was rejected in the following manner (page 118):

As rightly pointed out by the Tribunal, there are no materials to support the contention as advanced before us that the sale of the chassis and the construction of the body are two different transactions. Orders of the customers were only for finished vans. If, this be the factual position, the fact that the body had suffered tax earlier is of no consequence. The question is whether the sale was of the finished vehicle or that of two independent goods, namely, the chassis and the body...

6. Applying the ratio laid down in the above referred to decisions to the facts of this case, even though the respondent herein paid tax at the time of purchase of the chassis and thereafter built the body over it, having regard to the undisputed fact that what was sold by the respondent later was the lorry as a whole, the tax suffered on the chassis was immaterial, inasmuch as the product sold was the lorry, the value of which is liable to be taxed under the provisions of the Act.

7. We, therefore, find that the order of the Tribunal in having interfered with the order of the assessing authority is not justified. Accordingly, the Tribunal's order is set aside. The order of the assessing authority dated January 31, 1992 stands restored. The revision is allowed. No costs.