The Madras High Court has upheld notifications from the Trade Tax Department levying and collecting General Sales Tax on the sale of electronically manufactured Indian musical instruments.
There is no basis to the claims raised by the petitioner, Judge SM Subramaniam said while denying a motion for writ from the city-based Radel Electronics Private Limited on September 3.
The petition filed in 2008 sought to set aside a notice dated December 30, 2006 from the Trade Tax Department as ultra vires Section 17 of the TNGST Act and Sections 14, 19(1)(g) and 265 of the Constitution and , therefore, liable to be declared null and void. He also sought to rescind subsequent clarifications issued in 2007 and 2008. The petitioner argued that he had applied for an exemption on the sale of Indian musical instruments under an earlier GO dated February 12, 2004 and obtained the ‘exemption. This notification granting the exemption was superseded by the contested OG of December 2006, claimed the applicant.
The government lawyer argued that the exemption was only granted to traditional and handmade musical instruments to encourage poor craftsmen engaged in making these instruments from generation to generation, who normally live in poor living conditions. of poverty. The exemption was granted to bring the instruments within the reach of poor and needy craftsmen, in order to develop Indian traditional music as much as possible, synonymous with Indian culture and tradition. In the present case, the applicant company, having its manufacturing plant in Bangalore, produced and sold electronic musical instruments. All of the musical instruments manufactured and sold by the petitioner were electronically operated and therefore the petitioner, under the guise of selling musical instruments, was only marketing the mass-produced electronic instruments for the purpose of making a profit in the ‘business.
Therefore, the authority correctly addressed the issue by issuing pre-review notices. The judge said the state did not intend to grant an exemption to large-scale manufacturers of Indian electrically-made musical instruments. These Indian musical instruments, using electronic technologies, were to be classified as electronic instruments, which would fall squarely under Section 14(iv) of Part D of the First Schedule of the TNGST Act of 1959.
Apart from this, where the tax liability has been fixed for electronic instruments, it should be interpreted that electrically manufactured Indian musical instruments should be classified as electronic instruments. Initially, whether it is Indian musical instruments or any other instrument, if it is an electronic instrument, it would fall under the additional classification of electric instruments and cannot be construed as traditionally made Indian musical instruments, for which an exemption has been granted. with the specific intention of granting relief to the poor craftsmen, who were all occupied in the manufacture of these instruments from generation to generation and lived in the misery of the state. The judge noted that the exemptions granted on the basis of s. 17 of the TNGST Act remains unchanged with respect to Indian musical instruments and the disputed December 2006 notification was issued to clarify Indian musical instruments, all of which fell under the exemption clause notified in the February 2004 notification Therefore, the subsequent notification was of a clarifying nature and cannot be construed as a reversal of the exemption already granted. Further, no writ against “notice” was to be routinely received. If the petitioner was aggrieved, he could raise his objections with the documents and evidence, the judge said and dismissed the petition.
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