KODAL INDUSTRIES LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) IN T.C. (R) No. 2427 of 1997, the facts are as follows :

(2.) TWO appeals were preferred before the first appellate authority, one in respect of a turnover of Rs. 1,00,000 and the levy of penalties (A.P. 342/91) and another appeal (A.P. 1/91) related to the levy of additional sales tax of Rs. 29,490. Before the first appellate authority, it was argued that the machinery moved from the assessees' business place to the lessees' place of business in Maharashtra. The deed of lease was made on February 1, 1988 at Tamil Nadu only. Two arguments were raised, namely, that the movement of the machinery from Tamil Nadu to Maharashtra was on the basis of the lease and therefore, it is an inter -State transaction. Secondly, it was contended that the situs of the transaction was totally outside Tamil Nadu and therefore, the assessment under Section 3 -A of the Tamil Nadu General Sales Tax Act, was illegal. In respect of A.P. 1/91, which relates to the additional sales tax of Rs. 29,490 the contention was that if the turnover of Rs. 1,00,000 on account of lease of machinery is deleted, then the entire turnover falls below Rs. 1,00,00,000 and the rate of additional sales tax will be only 1.6 per cent reducing the additional sales tax to Rs. 1,46,502 instead of Rs. 1,75,992 as imposed by the assessing authority. The appellate authority rejected the contention on the ground that the lessor/assessee was within Tamil Nadu and he had also received the lease amount in Tamil Nadu. No clear finding was given on the question of inter -State sale. He confirmed the levy of penalties and dismissed the appeals.

(3.) THE petitioner has filed only one tax revision case against the order of the Appellate Tribunal in M.T.A. No. 20/92, but has indicated that it is a common order for M.T.A. Nos. 20 and 21/92. In fact, in the grounds of revision, the levy of additional sales tax at an enhanced rate is also disputed on the ground that the total turnover will be reduced below rupees one crore and therefore, the additional sales tax can be levied only at 1.5 per cent. The main dispute in this tax revision case is, therefore, whether the lease of machinery to the party in Maharashtra, is taxable under Section 3 -A of the Tamil Nadu General Sales Tax Act, 1959.