1990 (3) TMI 341 - AT - VAT and Sales Tax

Summary

Issues:
Whether sweetmeat was exigible to sales tax prior to the West Bengal Taxation Laws (Amendment) Act, 1987.

Analysis:
The judgment revolved around the question of whether sweetmeats were subject to sales tax before the West Bengal Taxation Laws (Amendment) Act, 1987. The applicants, engaged in the sweetmeat business, had paid sales tax under a misconception of law. They challenged the demand for tax, arguing that there was no provision in the Act specifically taxing sweetmeats. The respondents contended that sweetmeats were taxable under entry 7 of Schedule I before 1987 and exempt under entry 101 post the 1987 amendment.

The Tribunal examined the relevant provisions of the law, particularly section 5 of the Act, which prescribed the rate of tax payable by dealers on their turnover. It was noted that sweetmeats became tax-free from June 1, 1987, as per entry 101 of Schedule I. The Tribunal also considered the constitutional aspect, citing article 265 which prohibits the levy or collection of tax except by authority of law.

The applicants argued that the demand for tax under the residuary clause of section 5(1)(e) was vague and not authorized by law. They relied on legal precedents emphasizing strict construction of taxing statutes. However, the Tribunal held that the levy of tax under the general rate provision was lawful, as the Act provided specific rates for certain items and a general rate for others, subject to exceptions in section 6 and Schedule I.

Further, the Tribunal analyzed the inconsistencies in the exemption provisions for sweetmeats pre and post the 1987 amendment. It was concluded that sales of sweetmeats were tax-free only from June 1, 1987, based on the clear language of the statute.

The Tribunal dismissed the applications, stating that sales post-June 1, 1987, were exempt, but there was a liability for the period before that date. The notices for the pre-1987 period were deemed valid, and there was no basis for a refund. The judgment was a comprehensive analysis of the legal provisions, precedents, and constitutional principles governing the taxation of sweetmeats in West Bengal.

The technical and judicial members of the Tribunal agreed with the Chairman's decision, and the applications were ultimately dismissed with no order as to costs.