M R TILES Vs. STATE OF TAMILNADU

JUDGEMENT

(1.) This Tax Case Revision by the assessee is directed against the order passed by the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madras in T.A.No.870 of 2001, dated 24.02.2003, for the assessment year 1986-87.

(2.) This Tax Case (Revision) has been admitted on the following substantial question of law:-

(3.) The assessee was engaged in the business of manufacture of mosaic tiles under the name and style of M.R.Tiles and reported a total and taxable turnover of Rs.2,93,913.13/- and Rs.Nil respectively and claimed exemption of the entire turnover reported by him in the annual return filed on 28.01.1998 for the year 1986-87 under the provisions of the Tamil Nadu General Sales Tax Act, 1959, (TNGST Act). The claim for exemption of the above turnover was on the ground that the amount represented the value of Hydraulic Pressed Mosaic Tiles, the assessee had manufactured in his business place, carried them to sites of the customers, to lay and polish them and the work carried on by the assessee was therefore, a works contract in mosaic tiles. The Assessing Officer after going through the invoices as well as the works contract bill, which were produced by the assessee, found that the invoice was for supplying, laying and polishing of hydraulic pressed mosaic tiles and in the trading account, the assessee had shown the payment of labour wages for Rs.49,497.50/-, and these wages related to both for manufacturing mosaic tiles in his business place and for laying and polishing of such tiles in the place of his customers. Therefore, in the absence of separate details for payment of such wages towards manufacturing of mosaic tiles and for laying and polishing in the site of the customers, the Assessing Officer proposed to adopt 50% for manufacturing process and another 50% for laying and polishing. Accordingly, the total and taxable turnover of the assessee for the year 1986-87, was proposed to be determined at Rs.2,80,676/-. Apart from that, penalty was also proposed under Section 12(3) of the TNGST Act. The assessee was put on notice, however he did not raise any objection and the Assessing Officer confirmed the proposal and assessed the appellant to tax and levied penalty. Challenging the same, the assessee filed an appeal before the Appellate Assistant Commissioner (CT) III, Chennai, raising the same contention as raised before the Assessing Officer and contented that they are entitled for exemption under Section 3B(2)(b) of the TNGST Act. The first Appellate Authority, by order dated 04.07.2000, dismissed the appeal agreeing with the findings recorded by the Assessing Officer and observed that separate accounts maintained by the assessee is of no avail, since the raw materials had not been used in the laying and polishing of materials as such, but out of those raw materials, the assessee had manufactured mosaic tiles, which had not suffered tax earlier in the State and transferred to the customers. By relying upon the decision of a Division Bench of this court in W.A.Nos.982, 1043 to 1047 of 1994, dated 24.02.1995, filed by the Tamil Nadu Mosaic Tiles Manufacturers Association, the first Appellate Authority rejected the appeal and held that the Assessing Officer was fully justified in levying tax on 70% of the receipts by granting exemption on 30% as per Section 3B(2)(e) of the TNGST Act. Aggrieved by such order, the assessee preferred an appeal to the Tamil Nadu Sales Tax Appellate Tribunal (Tribunal).