1998 (9) TMI 513 - SC - VAT and Sales Tax

Whether the word tax in section 4-AA includes turnover tax levied under section 4-AAA of the West Bengal Sales Tax Act, 1954? Held that - Appeal dismissed. From a perusal of the notification No. 1809-F.T.-Ist April, 1976, it is evident that the expression used here is, the Governor is pleased to direct that no tax shall be payable by a dealer under the said Act which obviously refers to the tax under section 4 but not to turnover tax imposed under section 4-AAA. In this view of the matter it is held that a small-scale industrial unit was not entitled to exemption from payment of turnover tax during the period of the validity of the eligibility certificate by virtue of notification issued under section 4-AA of the Act.

Summary

Issues: Interpretation of the term "tax" in section 4-AA of the West Bengal Sales Tax Act, 1954.

Analysis:
1. The case involved the interpretation of whether the term "tax" in section 4-AA includes "turnover tax" levied under section 4-AAA of the West Bengal Sales Tax Act, 1954.

2. The appellant, a company engaged in the manufacture of lubricating oil and grease, was granted an exemption from sales tax but was assessed for turnover tax and penalty despite holding an eligibility certificate for exemption.

3. The appellant argued that the exemption under section 4-AA should apply to both tax and additional tax, as the burden of additional tax cannot be passed on to the purchaser, contrary to the burden of tax under section 4.

4. However, the Court rejected this argument based on a plain reading and literal interpretation of sections 4(1) and 4-AAA(1). The legislature differentiated between "tax" in section 4 and "turnover tax" in section 4-AAA, maintaining consistent nomenclature throughout the Act.

5. Section 4-AA, despite a non obstante clause, empowers the State Government to exempt dealers from paying "tax" under section 4, as evident from a notification issued under the same section. The notification specifically referred to "no tax" payable by a dealer, indicating exemption from tax under section 4.

6. The Court overruled a previous judgment and upheld the conclusion that a small-scale industrial unit was not entitled to exemption from turnover tax during the validity of the eligibility certificate issued under section 4-AA. The appeal was dismissed without costs.

Conclusion:
The Supreme Court clarified that the term "tax" in section 4-AA of the West Bengal Sales Tax Act, 1954, does not include "turnover tax" levied under section 4-AAA. The Court upheld that the exemption granted under section 4-AA applies to tax under section 4 and not to additional turnover tax under section 4-AAA, based on a strict interpretation of the relevant provisions.