1996 (1) TMI 394 - HC - VAT and Sales Tax

Summary

Issues:
1. Refusal to grant remission of tax and interest to the petitioner.
2. Recovery of disputed tax and interest.
3. Interpretation of exemption from tax on export sales under article 286(1)(b) of the Constitution.
4. Application of the decision in Mod. Serajuddin v. State of Orissa [1975] 36 STC 136.
5. Rejection of petitioner's appeal against assessment under the Central Sales Tax Act.
6. Rejection of petitioner's representations for remission of tax, interest, and penalties.
7. Invocation of article 14 of the Constitution of India for exemption.
8. Comparison of remission granted to shoe dealers with the petitioner's case.

Analysis:
The writ petition challenged the orders refusing remission of tax and interest to the petitioner, as well as the recovery of disputed payments. The petitioner, a limited liability company manufacturing and selling brushes, exported goods through the State Trading Corporation (S.T.C.) under tripartite agreements. The sales tax authorities initially considered the export sales exempt from tax under article 286(1)(b) of the Constitution. However, following the Supreme Court's decision in Mod. Serajuddin v. State of Orissa, it was held that only the final sales to foreign buyers via S.T.C. were tax-exempt. Consequently, the petitioner was assessed under the Central Sales Tax Act, treating the sales as inter-State. Despite appeals, the orders were upheld, leading to the petitioner seeking remission of tax, interest, and penalties, which were repeatedly rejected.

The petitioner contended that since shoe dealers in Agra were granted exemption, they should also be granted the same to avoid violating article 14 of the Constitution. The court disagreed, stating that different industries could not automatically expect the same concessions. The court emphasized that tax matters allow the government more discretion, and benefits granted to one industry did not necessitate the same treatment for others. The court highlighted that the remission for shoe dealers was due to their specific tax burden, which was not shown to apply to the brush industry. Therefore, the invocation of article 14 was deemed inappropriate in this case, leading to the dismissal of the petition and the vacating of the interim order.

In conclusion, the court dismissed the petition, emphasizing that the petitioner manufacturing brushes could not claim the same remission as shoe dealers based on article 14 of the Constitution. The court upheld the authorities' decisions regarding tax assessment and remission, highlighting the differential treatment based on specific industry circumstances. The dismissal of the petition and the vacation of the interim order marked the conclusion of the judgment.