1997 (12) TMI 619 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the Tribunal's order granting exemption under section 6(2) of the Central Sales Tax Act, 1956 (CSTA) based on the non-production of "C" forms is sustainable in law.

Detailed Analysis:

Background:
The case involves an appeal by an assessee-dealer against the assessment made by the Deputy Commercial Tax Officer regarding the turnover of sales of paper during the assessment year 1986-87. The assessee-dealers claimed exemption for transit sales of paper, but the assessing officer rejected the claim, leading to appeals before the Appellate Assistant Commissioner (AAC) and subsequently the Tribunal.

Tribunal's Decision and Rationale:
The Tribunal allowed the appeal, holding that the assessee-dealers were entitled to claim exemption under section 6(2) of the CSTA despite not producing "C" forms from dealers in other States to whom the transit sales were made. The Tribunal relied on two decisions from the Madhya Pradesh High Court, emphasizing that the production of "E1" forms alone is sufficient to claim exemption under section 6(2) of the CSTA.

Legal Analysis:
The High Court analyzed the provisions of section 6(2) of the CSTA, which exempts subsequent sales in the course of inter-State trade subject to certain conditions, including the production of valid "C" and "E1" forms. The Court highlighted the importance of the substituted sub-section (2) of section 6, effective from April 1, 1973, which necessitates the filing of both "E1" and "C" forms to claim exemption.

Court's Decision:
The Court found that the Tribunal's reliance on "C" forms from other transactions to conclude that the purchasers were registered dealers was impermissible under the law. The Court noted that the AAC correctly considered the impact of the substituted sub-section (2) of section 6, which the Tribunal failed to address. Consequently, the Court held that the Tribunal's order was unsustainable in law and set it aside, restoring the AAC's order confirming the assessing officer's assessment.

Conclusion:
The High Court allowed the tax case (revision), setting aside the Tribunal's order and reinstating the AAC's decision regarding the transactions in question. The Court emphasized the legal requirement of producing both "E1" and "C" forms to claim exemption under section 6(2) of the CSTA, highlighting the significance of compliance with statutory provisions in tax assessments.