1976 (3) TMI 199 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of proviso to section 8(1) of Central Sales Tax Act, 1956 in relation to exemption of inter-State sales of motor spirit from tax under Bombay Sales Tax Act, 1953.

Detailed Analysis:
The case involved a reference under section 9(2) of the Central Sales Tax Act, 1956, read with section 34 of the Bombay Sales Tax Act, 1953. The question referred was whether inter-State sales of motor spirit amounting to Rs. 9,39,342 were exempt from tax under the Central Sales Tax Act, 1956. The assessees contended that the sales were exempt under the proviso to section 8(1) of the Central Sales Tax Act, as per the Bombay Sales Tax Act, 1953. The Sales Tax Tribunal had rejected the assessees' claim, leading to the reference before the High Court.

The main argument put forth by the assessees was that the sales of motor spirits were exempted from tax under the proviso to section 8(1) of the Central Sales Tax Act, based on the exemption granted under the Bombay Sales Tax Act, 1953. However, the Court held that the exemption under the proviso required that the goods should not be liable to tax under any sales tax law relating to specified goods. In this case, the sales of motor spirits were taxable under the Bombay Sales of Motor Spirit Taxation Act, 1946, which meant the exemption under the proviso was not applicable.

The Court delved into the legislative history to understand the rationale behind exempting the sales of motor spirits from the levy of sales tax under the Bombay Sales Tax Act, 1953. It was highlighted that the exemption was due to the sales being subject to a separate sales tax law, the Bombay Sales of Motor Spirit Taxation Act, 1946. This historical context clarified that the intention was not to exempt motor spirits from tax altogether but to provide exemption under the general sales tax law due to taxation under a specific law.

Ultimately, the Court answered the reference in the affirmative, stating that the assessees were not entitled to the exemption under the proviso to section 8(1) of the Central Sales Tax Act, and directed the assessees to pay the costs of the reference. The judgment corrected a typographical error in the penultimate paragraph of the previous judgment, ensuring clarity in the decision.

In conclusion, the High Court's detailed analysis of the provisions of the Central Sales Tax Act, 1956, and the Bombay Sales Tax Act, 1953, along with the legislative history, provided a comprehensive understanding of the issue at hand and clarified the applicability of the exemption in this particular case.