1974 (1) TMI 101 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of Government notification under Central Sales Tax Act for exemption claim in inter-State trade or commerce.

Analysis:
The petitioner, a dealer in hides and skins, sought exemption from Central sales tax under a State Government notification issued under section 8(5) of the Central Sales Tax Act. The notification stated that no tax under the Central Act would be payable if certain conditions were met, including proof of tax collection under the State Act and no claim for refund under section 15(b) of the Central Act. The assessing officer initially disbelieved the petitioner's claim and levied Central sales tax, but the appellate authority vacated this decision. The petitioner contended that the assessment under the Central Act was improper and sought a refund of tax paid under the State Act. The main issue was whether the petitioner was entitled to benefit from the Government notification and to what extent his tax liability was affected by it and section 15(b) of the Central Act.

The Central Act mandates only one set of tax for declared goods, with a maximum rate of 3% and not to be levied at more than one stage. The State Government's notification, issued under section 8(5) of the Central Act, aimed to exempt dealers from Central sales tax if specific conditions were met. The High Court noted that the purpose was to ensure only one tax set is imposed on declared goods, refunding State tax if the goods are also taxed under the Central Act. The notification was intended to prevent double taxation and ensure a concessional rate as per the Central Act.

The notification's effect was to exempt dealers from Central sales tax in inter-State trade or commerce if tax under the State Act was collected and not refunded, as per section 15(b) of the Central Act. However, the Court found the notification to be misconceived as it contradicted the Central Act's provisions, specifically section 15(b). Refund under the Central Act is for the tax levied under the State Act, and the notification's conditions did not align with this statutory requirement. Therefore, the Court held the notification unenforceable and quashed the assessment order and the appellate decision.

In conclusion, the Court ruled in favor of the petitioner, quashing the assessment order and directing a reassessment under the Central Act. The notification's conditions were found to be contrary to the statutory provisions of the Central Act, rendering it unenforceable. The application was allowed with costs, and the hearing fee was assessed at Rs. 100.