M/S Sony India Pvt.Ltd vs Commercial Tax Officer & Anr

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.

Appellant 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.

One of 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.

As 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.

We quote hereinbelow Part-D of the First Schedule to the Act - Sl.No.14

(vi):

Sl. 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.

We also quote hereinbelow from the same Part Sl.No.14(viii), which reads

as under:

Sl. 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:

Sl. 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).

In the 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:

"It 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.

It is 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 hereinabove.

The First Appellate Authority shall decide the matter on merits and it shall condone

the delay, if any, in filing the appeals.

Civil Appeals are disposed of accordingly.

No order as to costs.

...................J. (S.H. KAPADIA)

...................J. (H.L. DATTU) New Delhi, March 05, 2009.

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