1996 (10) TMI 445 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the exemption for footwears up to the value of Rs. 20 under the old RST Act was a general exemption as contemplated under section 8(2A) of the CST Act.
2. Whether the levy of interest on the unpaid tax was justified and from which date.
3. Whether the applicant should be allowed to furnish "C" forms at a later stage.

Detailed Analysis:

Issue 1: General Exemption under CST Act
The primary issue was whether the exemption for footwears up to the value of Rs. 20 under the Rajasthan Sales Tax Act (RST Act) could be considered a general exemption under section 8(2A) of the Central Sales Tax Act (CST Act). The Tribunal examined the Supreme Court's decision in Pine Chemicals [1995] 96 STC 355, which clarified that an exemption must be general and not conditional to qualify under section 8(2A) of the CST Act. The Tribunal noted that the exemption under the RST Act was conditional as it applied only to footwear costing less than Rs. 20 and not manufactured or marketed by large or medium-scale industries. Therefore, this exemption was not considered general, and inter-State sales of such footwear were subject to tax under the CST Act.

Issue 2: Levy of Interest
The Tribunal upheld the Board's decision that the levy of interest on the unpaid tax was justified. The liability to pay interest arose automatically by operation of law under section 11B of the old RST Act. The Tribunal rejected the applicant's contention that interest should be levied only from the date of the Supreme Court's decision in Pine Chemicals [1995] 96 STC 355 or from the date of quantification. The Tribunal emphasized that the liability to pay tax existed from the date the tax was due under the CST Act, and interest was payable from that date.

Issue 3: Furnishing "C" Forms
The Tribunal addressed the applicant's request to furnish "C" forms at a later stage to avail of the concessional rate of tax. The Tribunal noted that the first appellate authority had allowed the applicant three months to furnish "C" forms, but the applicant failed to do so. However, in the interest of justice and given the bona fides of the applicant, the Tribunal allowed the applicant an additional 90 days from the receipt of the judgment to furnish the "C" forms. Upon furnishing the "C" forms, the applicant would be permitted to avail of the concessional rate of tax at 4%, and the quantum of interest would be recalculated accordingly.

Conclusion:
1. The sale and purchase of footwear up to the value of Rs. 20, manufactured by small-scale industries, and not manufactured or marketed by large or medium-scale industries, exempted under section 4(2) of the old RST Act, cannot be deemed exempt from tax generally under section 8(2A) of the CST Act.
2. The liability to pay interest arises from the date the tax was required to be paid under the RST Act.
3. The applicant is allowed 90 days to furnish "C" forms to avail of the concessional tax rate, and the interest will be recalculated based on the concessional rate.

Disposition:
The applications for revision were disposed of with no order as to costs.