1975 (3) TMI 127 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Applicability of Section 6(2) of the Central Sales Tax Act for exemption on second inter-State sales.
2. Applicability of the proviso to Section 9(1) of the Central Sales Tax Act.
3. Liability for Central Sales Tax under Section 8(2A) of the Central Sales Tax Act.
4. Restrictions under Section 15 of the Central Sales Tax Act on taxing declared goods.

Detailed Analysis:

Issue 1: Applicability of Section 6(2) for Exemption on Second Inter-State Sales
The petitioners, dealers in cotton yarn, claimed exemption on a turnover of Rs. 2,50,439.17, arguing these were second inter-State sales effected by transfer of documents of title during the goods' movement from one State to another. The assessing officer rejected this claim, stating that the second inter-State sales were to purchasers who were not registered dealers, making Section 6(2) inapplicable. This view was upheld by the Appellate Assistant Commissioner and the Tribunal.

Issue 2: Applicability of the Proviso to Section 9(1)
The petitioners contended that the proviso to Section 9(1) was not applicable, arguing they could not have obtained the declaration form under Section 8(4)(a) as they were not registered dealers. The assessing officer and subsequent appellate authorities disagreed, holding that the proviso to Section 9(1) was indeed applicable, and the State of Tamil Nadu was entitled to levy and collect the tax.

Issue 3: Liability for Central Sales Tax under Section 8(2A)
The assessing officer held that since the rate for local sales of cotton yarn under the Tamil Nadu General Sales Tax Act was lower than that prescribed for declared goods under the Central Sales Tax Act, the turnover was liable to be taxed at one percent under Section 8(2A). This view was confirmed by both the Appellate Assistant Commissioner and the Tribunal. The petitioners argued that Section 8(2A) is an independent provision and should not be read in conjunction with Section 8(1). However, the court held that Section 8(2A) acts as a proviso to Section 8(1) and both must be read together.

Issue 4: Restrictions under Section 15 on Taxing Declared Goods
The petitioners argued that the second inter-State sales should not be taxed under Section 15, which restricts the imposition of tax on declared goods at more than one stage. The court found this argument unpersuasive, stating that Section 15 applies to State laws and not to the Central Sales Tax Act. Both the first and second inter-State sales were taxed under the Central Sales Tax Act, not under the State law. Therefore, the restriction under Section 15 was not violated.

Conclusion:
The court dismissed the revision petition, holding that the petitioners were liable to pay Central sales tax on both disputed turnovers. The court affirmed the applicability of the proviso to Section 9(1) and Section 8(2A) of the Central Sales Tax Act, and found no violation of Section 15 concerning the restrictions on taxing declared goods. The petitioners were also held liable to be taxed by the State of Tamil Nadu under the Central Sales Tax Act for the second inter-State sales. The revision petition was dismissed with costs.