The Madras High Court 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 in the claims made by the petitioner, Judge SM Subramaniam said while dismissing a written petition from the city of Radel Electronics Private Limited on September 3.
The 2008 petition sought to quash a notification 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, consequently, liable to be declared null and void. He also sought to quash subsequent clarifications issued in 2007 and 2008. The claimant argued that he had requested an exemption on the sale of Indian musical instruments under an earlier GO dated February 12, 2004 and that he had obtained the exemption. This notification granting the exemption was replaced by the disputed GO of December 2006, argued the applicant.
Government attorney argued that the exemption was only granted to traditional and handmade musical instruments in order to encourage poor artisans engaged in making these instruments from generation to generation, who normally live in insecurity. The exemption was granted to bring the instruments within the reach of poor and needy artisans, in order to develop to the maximum the traditional Indian music, which is synonymous with Indian culture and tradition. In that case, the applicant company, having its manufacturing plant in Bangalore, produced and sold electronic musical instruments. All the musical instruments manufactured and sold by the petitioner were electronically controlled and therefore the petitioner, under the guise of selling musical instruments, only marketed the mass-produced electronic instruments with the aim of making a profit in the market. ‘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 for 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.
This aside, where the tax liability has been set for electronic instruments, it should be interpreted that Indian electrically manufactured musical instruments are to 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 subsequent classification of electric instruments and cannot be interpreted as a traditionally made Indian musical instrument, for which an exemption was granted with the specific intention of granting relief to poor craftsmen, who have all been engaged in making these instruments from generation to generation and living in misery of State. The judge noted that the exemptions granted by invoking Sec. 17 of TNGST remains unchanged with respect to Indian musical instruments and the disputed notification of December 2006 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 could not be interpreted as the cancellation of the exemption already granted. In addition, no writ for “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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