IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

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)

O R D E R

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

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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.

No.

DESCRIPTION OF GOODS Point of Levy in the State

Rate of Tax

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14 (vi)  Audio  and video  cassettes,  CDs,  corresponding recorders  and  players,  Gramophones  of  all  kinds 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]@.

First Sale 12%  w.e.f 27.03.2002

@ '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.

No.

DESCRIPTION OF GOODS Point of Levy in the State

Rate of Tax

14 (viii)  Television  sets,  antenna,  television  and  video cameras, projectors, teleprompters, dish antenna and boosters, all electronic toys and games (The previous rates could not be indicated as the groupings of the goods varied from time to time)

First Sale 12%  w.e.f 27.03.2002

We also quote hereinbelow, item 9 of the 11th Schedule, which reads as under:

Sl.

No.

DESCRIPTION OF GOODS Point of Levy

Rate of Tax

9 Imported cigarettes,  medium  density  fibre  boards, textile and other items falling in Parts D and E of the First Schedule

First Sale 20%

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

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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)

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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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