1999 (2) TMI 635 - AT - VAT and Sales Tax

Issues Involved:
1. Validity of G.O. Ms. No. 96, CT & RE dated April 7, 1995.
2. Validity of G.O. Ms. No. 423, CT & RE dated December 31, 1993.
3. Validity of assessment orders based on the aforementioned Government Orders.
4. Interpretation of Section 6(2)(b) of the Central Sales Tax Act, 1956.
5. Whether the benefit granted by Section 6(2)(b) can be limited or reduced by the State Government Orders.

Detailed Analysis:

1. Validity of G.O. Ms. No. 96, CT & RE dated April 7, 1995:
The petitioners sought a declaration that the notification issued in G.O. Ms. No. 96, CT & RE dated April 7, 1995, is ultra vires section 6(2)(b) of the Central Sales Tax Act, 1956. The Tribunal noted that this Government Order was similar to an earlier notification and provided a grace period of 40 days for completing formalities related to the transfer of documents. The Tribunal concluded that the Government Order was not ultra vires as it did not abridge the scope of Section 6(2)(b) but extended the time for compliance.

2. Validity of G.O. Ms. No. 423, CT & RE dated December 31, 1993:
The petitioners challenged the validity of G.O. Ms. No. 423, CT & RE dated December 31, 1993, and related assessment orders. The Tribunal referred to the Delhi High Court judgment in Arjan Dass Gupta & Bros. v. Commissioner of Sales Tax, which stated that sales by transfer of documents after the arrival of goods should be treated as local sales. The Madras High Court had upheld this Government Order, stating it was for a beneficial purpose to provide relief to assessees affected by the Delhi High Court judgment. The Tribunal agreed with this interpretation and concluded that the Government Order was valid.

3. Validity of Assessment Orders Based on the Government Orders:
The Tribunal examined the assessment orders challenged by the petitioners, which disallowed claims of exemption on transit sales effected after the 40-day grace period. The Tribunal held that the assessment orders were valid and could not be set aside. However, it allowed the petitioners the liberty to file appeals and prove that their sales were within the ambit of Section 6(2) read with Section 3(b) of the Central Sales Tax Act.

4. Interpretation of Section 6(2)(b) of the Central Sales Tax Act, 1956:
The Tribunal analyzed Section 6(2)(b) of the Central Sales Tax Act, which provides an exemption for subsequent sales during the movement of goods from one State to another if effected by a transfer of documents of title. The Tribunal emphasized that the movement of goods terminates when delivery is taken from the carrier, as explained in Explanation 1 to Section 3(b). The Tribunal noted that the Government Orders provided an extended period for compliance but did not abridge the statutory provisions.

5. Whether the Benefit Granted by Section 6(2)(b) Can Be Limited or Reduced by the State Government Orders:
The petitioners contended that the benefit granted by Section 6(2)(b) could not be limited or reduced by the State Government Orders. The Tribunal referred to the Madras High Court judgment in Shri Hariharan Paper Trader v. Deputy Commercial Tax Officer, which held that the Government Orders were intended to extend the time for compliance and not to restrict the statutory benefit. The Tribunal concluded that the Government Orders were not ultra vires and did not diminish the statutory benefit.

Conclusion:
The Tribunal dismissed all the petitions, holding that the impugned Government Orders were not ultra vires of the Central Sales Tax Act. It allowed the petitioners the liberty to file appeals and prove their sales were within the ambit of Section 6(2) read with Section 3(b) of the Central Sales Tax Act. All interim orders were vacated.

Order:
The Tribunal ordered that this judgment be observed and executed by all concerned. The petitions were dismissed with the above observations.

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