1985 (7) TMI 345 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of the rate of tax on packing material sold along with cereals.
2. Application of relevant provisions of the Rajasthan Sales Tax Act, 1954 and the Central Sales Tax Act, 1956.

The judgment of the Rajasthan High Court involved an application under section 15(2)(b) of the Rajasthan Sales Tax Act, 1954, read with section 9 of the Central Sales Tax Act, 1956. The Commercial Taxes Officer filed the application seeking a reference of questions of law arising from an order passed by the Board of Revenue. The dispute centered around the rate of tax on packing material sold with cereals, specifically whether it should be taxed at 10% or lower rates without C forms. The court noted that a recent amendment deemed pending applications as revisions under the Act. The court analyzed the relevant provisions of the Acts and the facts of the case involving a dealer assessed for selling "bardana" in inter-State trade. Various appellate orders had modified the tax rates, leading to the current application before the High Court.

The court examined Section 5 of the Rajasthan Sales Tax Act, particularly the proviso related to the tax on packing materials sold with goods. The assessing authority argued that this proviso did not apply as the packing material was not separately charged. Additionally, Section 8 of the Central Sales Tax Act was scrutinized, focusing on the rates of tax for inter-State transactions. The court highlighted the elements required for the application of sub-sections (1) and (2) of Section 8, emphasizing the higher tax rate between 10% and the State rate. Section 8(2A) was discussed as a proviso regarding tax rates, especially for goods exempt from State tax.

The court concluded that the proviso to Section 5 of the Act applied to the case, leading to the concessional tax rate on the sale of "bardana" for assessment under the CST Act. It clarified that the exemption under the CST Act depended on the exemption under the State Act, with specific conditions outlined for exemption from Central sales tax. The Division Bench's decision on the applicable tax rates was upheld, affirming that the rate of tax on "bardana" should be 2% and 1% based on the goods packed therein. Consequently, the court dismissed the application under section 15(2)(b) as a revision under the amended Act, without costs, thereby upholding the Board's decision.

In summary, the judgment delved into the interpretation of tax rates on packing material and the application of relevant provisions of the Acts to determine the appropriate tax liability for the dealer in inter-State transactions, ultimately upholding the Board's decision on the applicable tax rates.