1987 (7) TMI 568 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Liability of turnover involving sale of coal to Central sales tax in Rajasthan as inter-State sales under section 9 of the Central Sales Tax Act.
2. Applicability of section 15 of the Central Sales Tax Act.

Detailed Analysis:

Issue 1: Liability of turnover involving sale of coal to Central sales tax in Rajasthan as inter-State sales under section 9 of the Central Sales Tax Act.

The petitioner, Commercial Taxes Officer (Revision), Ajmer, challenged the orders passed by the Board of Revenue for Rajasthan regarding the assessment of M/s. Rajasthan Small Industries Corporation (the assessee). The assessee purchased coal from Bihar collieries and supplied it to allottees in Rajasthan. The Bihar collieries charged Central sales tax at 2%. The assessee endorsed railway receipts to allottees while the goods were in transit. The assessing authority imposed Central sales tax at 2% on these sales, considering them inter-State sales under section 3(b) of the Act. The Deputy Commissioner (Appeals-I) upheld this decision, rejecting the assessee's claim for exemption under section 6(2)(B) and section 15 of the Act.

The Board of Revenue reversed this decision, stating that section 3(b) was not applicable as the movement was within the same State and that section 15 limited the aggregate tax to 2%. The High Court, however, found that the sales were indeed inter-State under section 3(b) as the documents were transferred during the goods' movement from Bihar to Rajasthan. The Court held that the sales were taxable in Rajasthan under section 9(1) as the assessee could have obtained form C from Rajasthan. The Court rejected the reliance on the Madras High Court decision in State of Madras v. K. Nandagopal Chetty, noting the amendment to section 9(1) which addressed the earlier lacuna.

Issue 2: Applicability of section 15 of the Central Sales Tax Act.

Section 15 imposes restrictions on State legislative powers regarding tax on declared goods. The Court clarified that section 15 does not affect the levy and collection of Central sales tax. There is no prohibition against charging Central sales tax at multiple stages. The only limitation is in section 8(2), which prescribes a maximum rate for declared goods. For coal, the applicable rate was 4% (2% State tax and 2% Central tax). The Court found that the total tax did not exceed this limit, thus section 15 was not applicable.

Conclusion:

The High Court allowed the revision, setting aside the Board of Revenue's orders and restoring the assessing authority's decision to impose Central sales tax on the assessee. The Court concluded that:

1. The turnover involving the sale of coal was liable to Central sales tax in Rajasthan as inter-State sales under section 9, despite the tax already paid in Bihar.
2. Section 15 of the Central Sales Tax Act was not applicable in this case.

Petition allowed.