1963 (4) TMI 50 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 15 of the Central Sales Tax Act, 1956 in relation to the quarter ending 30th June, 1958.

Analysis:
The case involved questions referred to the Orissa High Court under section 24(1) of the Orissa Sales Tax Act, 1947. The first issue was whether the Tribunal was correct in reducing the tax rate from 7% or 5% to 2% for the quarter ending 30th June, 1958. The second issue was whether the Tribunal was right in finding that the restrictions and conditions specified in section 15 of the Central Sales Tax Act, 1956, would apply to the same quarter, even though the section came into force on 1st October, 1958, after the quarter in question.

The Central Sales Tax Act, 1956, was enacted on 21st December, 1956, with different provisions coming into force on different dates. Section 15 of the Act, which limited the tax on declared goods to 2%, only became effective on 1st October, 1958. However, another Act, the Additional Duties of Excise (Goods of Special Importance) Act, 1957, declared certain goods, including cotton fabrics, as of special importance in inter-State trade from 1st April, 1958, subject to the restrictions of section 15 of the Central Sales Tax Act.

The Sales Tax Department argued that since section 15 of the Central Sales Tax Act only came into force on 1st October, 1958, the restrictions specified in the Additional Duties of Excise Act, 1957, were not applicable to the reduction of sales tax on cotton fabrics for the quarter ending 30th June, 1958. However, the Court held that the Parliament's intention was clear when enacting the Additional Duties of Excise Act, 1957, and the restrictions of section 15 were meant to apply from 1st April, 1958, regardless of the actual commencement date of the Central Sales Tax Act.

The Court upheld the Tribunal's decision, stating that the Sales Tax Department's argument was untenable. Therefore, the Tribunal was correct in reducing the tax rate to 2% for the quarter ending 30th June, 1958, and in applying the restrictions of section 15 of the Central Sales Tax Act to declared goods for the same quarter. The reference was answered in favor of the Tribunal, and the petitioner was directed to pay costs to the opposite party, with a hearing fee assessed at Rs. 50.