1968 (6) TMI 52 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to tax demand on watery coconuts under Central Sales Tax Act based on exemption history and amendments.

Analysis:
The petitioners challenge a tax demand on watery coconuts under the Central Sales Tax Act for the period of August-September, 1966. The dispute arises from the exemption history of watery coconuts under various Government Orders. Initially exempt, watery coconuts later became liable to tax at the first sale under subsequent orders. The petitioners argue that inter-State sales during August and September 1966 should not be taxed due to amendments exempting watery coconuts. They cite a Supreme Court decision emphasizing consistency in tax levies under State and Central Acts.

The Government Pleader argues that the Central Act empowers tax levy even on goods exempt under specified conditions. The history of tax levy on watery coconuts is traced back to a court decision distinguishing them from other coconuts. Subsequent Government Orders exempted watery coconuts from multi-point taxation, imposing tax only at the first sale. Amendments further clarified the tax points and rates for watery coconuts, distinguishing them from tender coconuts exempted for drinking purposes.

The judgment clarifies that the legislative amendments have prospective effect, ratifying past transactions falling within specified periods. The Court rejects the argument that the amendments lack validity due to lack of legislative ratification. The judgment emphasizes the specific tax points and rates applicable to watery coconuts during different periods, ensuring clarity in tax imposition.

Regarding the applicability of tax under the Central Sales Tax Act on inter-State transactions, the Court examines the provisions of section 8(2A). The Court rejects the argument that section 8 alters the tax levy, emphasizing its role in determining tax rates. The judgment upholds the principle that tax levies under the Central Act should align with State Act provisions. The Court directs the assessing authority to make the final assessment considering the petitioner's status as an exporter and the specific tax points applicable to watery coconuts.

In conclusion, the writ petition challenging the tax demand on watery coconuts is disposed of with observations on the historical context, legislative amendments, and the alignment of tax levies under State and Central Acts. The assessing authority is directed to make the final assessment within a month, refraining from tax collection during this period.