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1992 (1) TMI 303 - SC - VAT and Sales TaxWhether the additional tax levied under the Kerala Additional Sales Tax Act is also to be considered as sales tax under the sales tax law of the State? Held that - Appeal allowed. There were no notifications under section 8(5) of the Central Sales Tax Act and simply the applicability of section 8(2-A) of the Central Sales Tax Act alone is involved. The orders of the High Court are set aside and the respective assessment orders are restored.
Issues Involved:
1. Inclusion of additional sales tax levy in inter-State sales. 2. Interpretation of "sales tax law of the appropriate State" under Section 8(2-A) of the Central Sales Tax Act. 3. Impact of Kerala Additional Sales Tax Act on Central Sales Tax assessments. 4. Validity of High Court's reliance on previous judgments. Detailed Analysis: Issue 1: Inclusion of additional sales tax levy in inter-State sales. The appellants, the State of Kerala, sought to levy additional sales tax on inter-State sales under the Kerala Additional Sales Tax Act, 1978. The respondents, registered dealers under both the Kerala General Sales Tax Act, 1963, and the Central Sales Tax Act, 1956, contested this inclusion. They argued that the additional levy should not be considered under the "sales tax law of the appropriate State" as per Section 8(2-A) of the Central Act. The Supreme Court held that the additional sales tax levied under the Kerala Additional Sales Tax Act is of the same category as the original Act. The Court concluded that the additional tax should indeed be considered when calculating the tax on inter-State sales, thus affirming the State's position. Issue 2: Interpretation of "sales tax law of the appropriate State" under Section 8(2-A) of the Central Sales Tax Act. The respondents contended that the phrase "under the sales tax law of the appropriate State" should only refer to the Kerala General Sales Tax Act, 1963, and not the Kerala Additional Sales Tax Act, 1978. The Supreme Court rejected this argument, stating that the definition of "sales tax law" in Section 2(i) of the Central Sales Tax Act includes any law in force that provides for the levy of taxes on the sale or purchase of goods. The Court emphasized that the additional sales tax, although imposed under a separate Act, is still a form of sales tax and should be included in the tax calculations for inter-State sales. Issue 3: Impact of Kerala Additional Sales Tax Act on Central Sales Tax assessments. The Kerala Additional Sales Tax Act increased the tax rates by 10% for various goods. The Supreme Court clarified that this additional tax should be considered when determining the rate of tax for inter-State sales under the Central Sales Tax Act. The Court explained that the amendment of the local Act, even if it involves a separate statute, affects the rate applicable under the Central Act. Therefore, the increased rates due to the additional sales tax must be reflected in the assessments of inter-State sales. Issue 4: Validity of High Court's reliance on previous judgments. The High Court of Kerala had relied on the judgment in Assistant Commissioner (Assessment), Sales Tax v. Janatha Expeller Co. [1987] 64 STC 435, which held that the additional sales tax should not be included in the tax rate for inter-State sales. The Supreme Court disagreed with this reliance, stating that the High Court's interpretation was incorrect. The Court noted that the Janatha Expeller Co. case involved a notification under Section 8(5) of the Central Sales Tax Act, which was not applicable in the present cases. The Supreme Court clarified that in the absence of such a notification, the additional sales tax must be considered under Section 8(2-A) of the Central Sales Tax Act. Conclusion: The Supreme Court allowed the appeals, set aside the High Court's orders, and restored the respective assessment orders, affirming the inclusion of additional sales tax in the rate applicable for inter-State sales. The Court emphasized that the additional sales tax levied under the Kerala Additional Sales Tax Act is part of the "sales tax law of the appropriate State" and must be considered in the tax calculations for inter-State sales under the Central Sales Tax Act. Appeals allowed.
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