1968 (9) TMI 99 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of provisions of Central Sales Tax Act and Mysore Sales Tax Act in relation to inter-State sales of arecanut. Assessment of sales tax under Central Sales Tax Act for inter-State sales. Rectification of assessments under rule 38 of Mysore Sales Tax Rules. Refund of tax collected under Central Sales Tax Act.

Analysis:
The judgment dealt with the interpretation of provisions of the Central Sales Tax Act and the Mysore Sales Tax Act concerning inter-State sales of arecanut. The petitioners, traders in arecanut, were assessed for sales tax under the Central Sales Tax Act for the assessment year 1959-60 and subsequent years. The key issue was whether the tax under the Central Sales Tax Act was payable only if the sales tax would have been payable under the State Sales Tax Act if the transaction had occurred intra-State. The Supreme Court's decision in a previous case clarified that tax under the Central Sales Tax Act is payable by a dealer who would have been liable under the State Sales Tax Act if the sale had been intra-State.

The petitioners sought rectification of their assessments under the Central Sales Tax Act based on the Supreme Court's interpretation. The Court examined the relevant provisions of the Central Sales Tax Act, particularly sections 8 and 9, both before and after their amendment. It was noted that the amendments did not change the fundamental principle established by the Supreme Court that tax under the Central Sales Tax Act is payable only if sales tax would have been payable under the State Sales Tax Act for intra-State sales. The Court emphasized the importance of section 9 in determining the levy and collection of tax on inter-State sales.

The Court highlighted the continuity in the provisions of section 9 before and after the amendment, emphasizing that the levy and collection of tax on inter-State sales remained consistent. The judgment concluded that the petitioners were not liable to pay tax under the Central Sales Tax Act for their inter-State sales of arecanut since they would not have been liable under the State Sales Tax Act for intra-State sales. Therefore, the assessments made by the Commercial Tax Officer were deemed incorrect, and the petitioners were entitled to seek rectification and refund of the tax collected under the Central Sales Tax Act.

In light of the above analysis, the Court allowed the writ petitions, quashed the assessments made by the Commercial Tax Officer under the Central Sales Tax Act, and directed a refund of the tax collected from the petitioners. The judgment clarified the legal principles governing the taxation of inter-State sales and affirmed the petitioners' right to rectification and refund in accordance with the law.