1997 (7) TMI 632 - HC - VAT and Sales Tax

Summary

Issues:
Challenge against notice under section 21 of the Central Sales Tax Act for the assessment year 1980-81 regarding the sale of raw skin for export being exempt from sales tax.

Analysis:
The petitioners contested a notice issued under section 21 of the Central Sales Tax Act for the assessment year 1980-81, arguing that the sale of raw skin for export is exempt from sales tax. The notice indicated that raw and dressed skins are considered different commercial items under section 14 of the Act, leading to the reopening of assessment proceedings. The petitioners relied on legal opinions and previous court decisions to support their claim that raw skin sold for export should be exempt from tax.

The petitioners highlighted that under the Central Sales Tax Act, certain sales to exporters are tax-exempt, subject to the submission of prescribed forms. The notice to reopen assessment was based on a letter from the Commissioner of Trade Tax, U.P., referencing a Supreme Court decision. The petitioners argued that hides and skins, whether raw or dressed, should be treated as one item under the Act, citing relevant legal provisions and court decisions to support their stance.

The court examined the provisions of the Central Sales Tax Act, emphasizing that raw and dressed skins are considered a single item for taxation purposes. The petitioners referenced a Supreme Court decision and various High Court judgments to assert that raw skins sold for export, even if dressed by the purchaser, should be tax-exempt. They contended that the notice to reopen assessment lacked any new facts or developments, amounting to a mere change of opinion based on existing material.

The court agreed with the petitioners, ruling in their favor and quashing the notice under section 21 of the Central Sales Tax Act. The judgment emphasized that raw and dressed skins are to be treated as one commercial item for taxation purposes, aligning with the legal interpretations provided by the Supreme Court and various High Courts. The court found that the reopening of assessment proceedings based on a change of opinion without new material was impermissible under the law.

In conclusion, the writ petition was allowed, and the notice under section 21 of the Central Sales Tax Act was quashed, with no order as to costs. The judgment reaffirmed the legal position that raw skins sold for export, even if dressed before export, should be considered a single commercial item exempt from Central sales tax, based on relevant legal provisions and court precedents.