1998 (1) TMI 496 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of a notification regarding sales tax rates on two wheelers sold through canteen stores.
2. Application of the notification to goods sold in the open market.
3. Effectiveness of a subsequent amendment to the notification.

Detailed Analysis:

Issue 1: The primary issue in this case revolves around the interpretation of a notification issued by the Government regarding the sales tax rates applicable to two wheelers sold through canteen stores. The appellant contended that they were only liable to pay tax at the rate of 4 per cent as per the notification issued by the Government. However, the assessing authority held that the notification applied only to two wheelers sold from canteen stores and not those sold in the open market.

Issue 2: The crux of the matter lies in determining whether the notification imposes a 4 per cent tax solely on two wheelers sold through canteen stores or if it extends to two wheelers sold in the open market as well. The court analyzed the language of the notification dated March 27, 1991, which specified the deletion of certain goods from the Fifth Schedule and reduced the sales tax on specified goods, including two wheelers, to 4 per cent. The court concluded that once goods were deleted from the Fifth Schedule, they became liable for tax at 4 per cent, irrespective of the sales channel.

Issue 3: Further complicating the matter was a subsequent amendment issued by the Government on March 30, 1992, clarifying that goods sold through canteen stores were liable for a 4 per cent tax. The court emphasized that this amendment came into effect from April 1, 1992, indicating that the original notification did not exclusively mandate a 4 per cent tax on two wheelers sold through canteen stores before this amendment. The court cited a Supreme Court case to support the principle that exemptions in notifications operate from the date specified in the notification.

In conclusion, the court held that the original notification did not restrict the 4 per cent tax rate to goods sold through canteen stores only. The subsequent amendment clarified this aspect, leading to the allowance of the petition and the quashing of the impugned orders. The judgment underscores the importance of strict interpretation of fiscal statutes and the need to consider subsequent amendments for a comprehensive understanding of tax implications.