1990 (4) TMI 272 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Liability of turnover tax and purchase tax for a small-scale industrial unit with an eligibility certificate.
2. Interpretation of relevant sections and notifications under the West Bengal Sales Tax Act, 1954.

Detailed Analysis:

Issue 1: Liability of Turnover Tax and Purchase Tax
The primary issue is whether a small-scale industrial unit, holding an eligibility certificate for tax exemption, is liable to pay turnover tax and purchase tax under sections 4, 4AA, and 4AAA of the West Bengal Sales Tax Act, 1954, in conjunction with Notification No. 1177-F.T. dated March 31, 1983.

The applicants argued that they were exempt from paying turnover tax and purchase tax during the period covered by their eligibility certificate. They based their claim on Notification No. 1177-F.T., which provided tax exemption for newly set up small-scale industries. They contended that the term "tax" in the notification should include turnover tax under section 4AAA.

Issue 2: Interpretation of Sections and Notification
The court examined the relevant sections of the West Bengal Sales Tax Act, 1954:
- Section 4: Imposes a general tax on the turnover of dealers.
- Section 4AA: Allows the State Government to exempt certain dealers from paying tax.
- Section 4AAA: Specifically addresses the liability for turnover tax, including conditions and exemptions.

The court noted that Section 4AAA begins with a non obstante clause, indicating that it operates independently of other sections, including Section 4AA. This section provides a comprehensive code for turnover tax, specifying circumstances and deductions applicable to turnover tax.

Court's Findings:
1. Non-Applicability of Notification No. 1177-F.T. to Turnover Tax:
- The court held that the notification issued under Section 4AA does not cover turnover tax as contemplated by Section 4AAA. The non obstante clause in Section 4AAA precludes any interpretation that would exempt turnover tax based on the notification.
- The notification was intended to provide exemption from general sales tax under Section 4, not turnover tax under Section 4AAA.

2. Purchase Tax Liability:
- The court found that the notification explicitly exempts sales by newly set up small-scale industries but does not mention purchase tax. Therefore, the applicants are liable to pay purchase tax on their purchases from unregistered dealers.

3. Rejection of Applicants' Claims:
- The court rejected the applicants' claim for refund of the turnover tax and purchase tax paid, as well as the interest collected for delayed payments. It concluded that the applicants were liable for these taxes during the period of their eligibility certificate.

4. Reference to Case Law:
- The court distinguished its decision from a single bench decision of the Calcutta High Court in ABN Food & Beverage Private Ltd. v. Assistant Commissioner of Commercial Taxes, which had held that turnover tax is included in the general tax exemption. The court did not find this interpretation persuasive, emphasizing the self-contained nature of Section 4AAA.

Conclusion:
The court dismissed the application, holding that the applicants are liable to pay both turnover tax and purchase tax under the West Bengal Sales Tax Act, 1954, despite holding an eligibility certificate for tax exemption. The notification under Section 4AA does not extend to turnover tax under Section 4AAA. The demand for refund of taxes paid was found untenable, and the application was dismissed with no order for costs.