Dismissed

M/S. Pothys v. the State of Tamil Nadu

Madras HC10 Aug 2021WP/41195/2006

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition challenging levy of entry tax and penalty on imported refrigerating equipment and cooling towers. The Court held that under constructive interpretation, such goods used for air conditioning fall within the Schedule's definition of 'air-conditioners' and are taxable.

What did the court decide?

Writ of Certiorari rejected; petition dismissed with no order as to costs; prosecution at liberty to seek penalty reduction.

M/S. Pothys Vs the State of Tamil Nadu — Writ and Judicial Review | Madras HC (2021)

¶1

IN THE HIGH COURT OF JUDICATURE AT MADRAS

¶2

DATED : 10-08-2021

¶3

CORAM

¶4

THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM

¶5

WP No.41195 of 2006 And MP No.1 of 2006

¶6

M/s.Pothys, No.15, Nageswara Roa Road, T.Nagar, Chennai-600 017. ..Petitioner

¶7

vs.

¶8

The State of Tamil Nadu, Represented by its Secretary, Commercial Taxes Department, Fort St. George, Chennai. 2. The Special Commissioner of Commissioner of Commercial Taxes, Ezhilagam, Chepauk, Chennai-5. 3. The Commercial Tax Officer, T.Nagar (South) Asst. Circle, No.46, Greenways Road, Chennai-28. .. Respondents Prayer:-

¶9

Writ Petition is filed under Article 226 of the Constitution of India, praying for the issuance of a Writ of Certiorari, calling for the impugned records of the third respondent in TNGST No.1541708/2004-2005/ENTRY Tax 1/2004-2005 and to quash the impugned order dated 28.08.2006 as the levy of entry tax and penalty on imported goods is outside the purview of Entry Tax Act in view of the judgment of this Court in WP No.8738 of 1999 and the judgment of the Division Bench of the Kerala High Court reported in 115 STC 591 and also in view of the fact that the “3

¶10

https://hcservices.ecourts.gov.in/hcservices/

¶11

Nos 217 Tons Refrigerating Equipment of Compression type with screw compressor and water cooled heat exchanger condenser” and “Marley SR 175 Cooling Towers 3 Nos.” imported by the petitioner are not goods specified in the Schedule to the Tamil Nadu Entry of Goods Act into Local Areas Act, 2001 and therefore, the levy of entry tax on the above goods is without jurisdiction.

¶12

For Petitioner : Mr.P.Rajkumar

¶13

For Respondents : Mr.V.Nanmaran,

¶14

O R D E R

¶15

The writ on hand is filed questioning the assessment order passed by the authority in proceedings dated 28.08.2016 in respect of assessment year 2004-2005.

¶16

2. The petitioner is a dealer in Textiles and a registered dealer on the files of the third respondent under the provisions of the Tamil Nadu General Sales Tax Act and also under the provisions of the Central Sales Tax Act. Since Textiles are exempted from the levy of sales tax, the entire turnover of the petitioner was claimed exemption and the same was also allowed.

¶17

3. During the assessment year 2004-2005, the petitioner had imported '3 Nos.217 tons refrigerating equipment of compression type with screw compressor and water cooled heat exchanger condenser' and 'Marley SR 175 cooling towers 3 Nos.', from Trane India Ltd., U.S.A. for a total value of 140,000.00 US Dollars.

¶18

4. The value under the Indian Currency was Rs.73,43,356/-. The petitioner also paid the Customs Duty of Rs.31,10,171/- for the goods imported and installed in the petitioner's show room.

¶19

5. The learned counsel for the petitioner states that the above goods are not notified anywhere in the Schedule to the Tamil Nadu Tax on Entry of Goods into Local Areas Act, 2001. The petitioner did not report the same to the Department and also did not remit the entry tax. But, however, the Enforcement Wing Officials attached to the Commercial Taxes Department inspected the petitioner's place of business and they alleged that the refrigerating equipments and the cooling towers imported by the petitioner are liable for entry tax and the demand notice was issued to the petitioner and the petitioner also under protest paid the tax demanded.

¶20

6. The third respondent issued notice on 06.02.2006,

¶21

https://hcservices.ecourts.gov.in/hcservices/

¶22

proposing to levy entry tax and penalty under Section 10(2) read with Section 12(3)(b) of the Tamil Nadu General Sales Tax Act at 150% of the tax on the ground that the 'refrigerating equipments' and 'cooling towers' imported by the petitioner are liable for entry tax. The petitioner filed its detailed objections, however, the said objections were rejected by the third respondent.

¶23

7. The only question to be considered is whether the cooling equipments imported by the petitioner are exempted from payment of entry tax under the provisions of the Tamil Nadu Tax on Entry of Goods into Local Areas Act, 2001.

¶24

8. The learned counsel for the petitioner drawn the attention of this Court with reference to the Scheduled Goods in respect of Section 2(j) of the Tamil Nadu Tax on Entry of Goods into Local Areas Act, 2001, wherein refrigerators and airconditioners are mentioned under the description of goods. In Serial No.11, parts and accessories, including compressors of window and non-ducted split air conditioners and domestic refrigerators are included by way of an Amendment Act No.51 of 2002 with effect from 1 st July, 2002.

¶25

9. Relying on the said provisions, the learned counsel for the petitioner reiterated that the refrigerators and the airconditioners mentioned in the Schedule are relating to the home appliances and therefore, the equipments imported by the petitioner are not covered under the Schedule. Thus, the exemption would be applicable.

¶26

10. This Court has to consider whether the description contemplated as air-conditioners under the Schedule would include large scale air-conditioning equipments or to be restricted to the Home Appliances i.e., the air-conditioners normally used in residences and other places.

¶27

11. The dictionary meaning of the 'Air-Conditioner' as per Oxford Advanced Learner's Dictionary is that “a machine that cools and dries air”. Therefore, the equipments utilised for the purpose of conditioning the air to be included within the term of 'air-conditioners' for the purpose of imposing the entry tax under the provisions of the Act.

¶28

12. In such cases, the purposive and constructive interpretations are imminent, so as to reach the object of the Act. The various equipments are named by the manufacturers in a different style for different purposes either if the said parts or equipments are utilised for conditioning the air as airconditioner, then it is to be brought under the entry tax net work.

¶29

https://hcservices.ecourts.gov.in/hcservices/

¶30

13. Practically, it may not be possible for the State to incorporate all such parts, which all are utilised for the purpose of air conditioning in a building or in any place. However, if any such equipments are utilised for the purpose of conditioning the air, then it is to be construed that the entry tax under the provisions of the Act is leviable.

¶31

14. In the event of any other interpretation, the manufacturers or the importer of such goods or parts of the airconditioners will escape from the clutches of the Entry Tax Act. The purpose of the Act is to ensure that the parts of the airconditioners as well as the equipments of air-conditioners are liable for levy of entry tax.

¶32

15. This being the purpose and the object of the Act, the word 'Air-Conditioner' contemplated under the Schedule must be interpreted constructively, so as to ensure that the equipments, which all are utilised for the purpose of conditioning the air is that the air-conditioners and such equipments even if imported are liable for entry tax.

¶33

16. In the present case, admittedly, the petitioner has imported 3 Nos.217 tons refrigerating equipment of compression type with screw compressor, the Compressor has already incorporated in the Amendment Act No.51 of 2002 and water cool and exchanger compressor and Marley SR 175 cooling towers 3 Nos., the word 'Air-Conditioner' is not mentioned in the invoice and that will not dis-entitle the State from imposing entry tax in accordance with the provisions of the said Act.

¶34

17. Though the word 'air-conditioner' is not mentioned in the invoice issued by the manufacturers, the equipments and the utilisation of the equipments are only for air conditioning the business premises of the petitioner, who is running a Textile Shop. Therefore, the equipments imported, admittedly, are installed or commissioned and utilised for the purpose of air conditioning the business premises and therefore for all purpose, the equipments imported are the air-conditioners, within the meaning of Scheduled Goods under the Entry Tax Act.

¶35

18. In view of the said fact, the petitioner is liable to pay entry tax. However, the learned counsel for the petitioner states that the entry tax as demanded had been paid. In view of the belated payment of tax, penalty was also imposed. However, the petitioner is at liberty to approach the Competent Authority if they are otherwise eligible for reduction or waiver of penalty under the provisions of the Act.

¶36

19. With the above observations, the writ petition stands

¶37

https://hcservices.ecourts.gov.in/hcservices/

¶38

dismissed. However, there shall be no order as to costs. Consequently, connected miscellaneous petition is also dismissed.

¶39

Sd/-

¶40

Assistant Registrar(CS IV)

¶41

//True Copy//

¶42

Sub Assistant Registrar

¶43

Svn

¶44

¶45

The Secretary, State of Tamil Nadu, Commercial Taxes Department, Fort St. George, Chennai.

¶46

The Special Commissioner of Commissioner of Commercial Taxes, Ezhilagam, Chepauk, Chennai-5.

¶47

The Commercial Tax Officer, T.Nagar (South) Asst. Circle, No.46, Greenways Road, Chennai-28.

¶48

+1cc to Mr.P.Rajkumar, Advocate, S.R.No.39876 +1cc to the Government Pleader,(Taxes) S.R.No.40128

¶49

WP 41195 of 2006

¶50

KSM(CO) CT/03/09/2021

¶51

https://hcservices.ecourts.gov.in/hcservices/

M/S. Pothys v. the State of Tamil Nadu

Case brief

What is this about?

What did the court decide?

M/S. Pothys v. the State of Tamil Nadu

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

M/s.Cotton Tex Vs Tax Recovery officer-3

Kr.Solaimuthu, Vs the Commissioner

M/s.Dorma India Pvt. Ltd. Vs Deputy Commissioner of Income

V.R. Murthy Vs the Commissioner of Income

M/s.Cognizant Technology Vs The Deputy Commissioner of

Vetri Vikaas Girls Higher Vs State of Tamilnadu