1993 (5) TMI 168 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of telegram directing exemption of taxes on certain goods under Assam Finance (Sales Tax) Act, 1956.
2. Authority of State Government to grant tax exemptions through executive orders.
3. Interpretation of Assam General Sales Tax Act, 1993 and its impact on tax liabilities.

Analysis:
1. The petitioner, an advocate and member of the Assam Legislative Assembly, sought to quash a telegram (annexure 2) issued by the Commissioner of Taxes, Government of Assam, directing exemption of taxes on specific goods. The telegram was based on an order (annexure 3) issued by the Finance Department. The Court noted that the Assam Finance (Sales Tax) Act, 1956 does not empower the State Government or Commissioner of Taxes to exempt goods from tax payment. The Act only allows for additions to the taxable goods schedule, not exemptions. The Court found the telegram legally ineffective as it preempted the statutory process for tax exemptions.

2. The Advocate-General argued that the direction in annexure 3 was based on a promise made by the Finance Minister in the Legislative Assembly to exempt certain articles from tax liability under the 1956 Act. Additionally, the Assam General Sales Tax Act, 1993 had been passed, repealing previous tax Acts. Section 7(1) of the 1993 Act specified that goods not listed in Schedule I would be taxable. As the goods in question were in Schedule I, they would cease to be taxable under the new Act. The Court emphasized that tax exemptions must be implemented through proper legislative channels, not executive orders.

3. The Court clarified that even if the intention was not to impose sales or turnover tax on the goods mentioned in the annexures, such exemptions must be formalized through the Assam General Sales Tax Act, 1993 or amendments to the 1956 Act. The judgment declared the annexures issued by the Commissioner of Taxes and Finance Secretary as legally ineffective. It allowed for lawful tax exemptions to be obtained in accordance with the law, emphasizing the importance of statutory procedures in granting tax relief. The writ petition was allowed without costs, affirming the need for legal compliance in tax matters.