1997 (8) TMI 492 - AT - VAT and Sales Tax

Issues Involved:

1. Concession or partial exemption under section 4(2) of the Rajasthan Sales Tax Act, 1954.
2. Applicability of notifications dated December 30, 1985, and December 26, 1986.
3. Situs of sales in the course of inter-State trade.
4. Violation of Article 304 of the Constitution of India.
5. Retrospective effect and clarificatory nature of notifications.
6. Relevance of precedents and judicial interpretations.

Detailed Analysis:

1. Concession or partial exemption under section 4(2) of the Rajasthan Sales Tax Act, 1954:

The petitioner contended that the partial exemption granted under section 4(2) of the Act could not be restricted to sales within the State, arguing that such a restriction was unconstitutional. The petitioner relied on various cases, including Loharn Steel Industries Ltd. v. State of Andhra Pradesh and State of Uttar Pradesh v. Laxmi Paper Mart, to support the argument that inter-State sales and export sales had situs within the State, thus qualifying for partial exemption. The Tribunal, however, held that section 4(2) deals with exemption from tax on the sale or purchase of goods within the State, and the State Government has no power to grant exemption for inter-State sales under these provisions.

2. Applicability of notifications dated December 30, 1985, and December 26, 1986:

The department contended that the notifications were issued under different sections of different Acts and were independent of each other. Notification dated December 30, 1985, was confined to intra-State sales, while the notification dated December 26, 1986, was confined to inter-State sales. The Tribunal agreed, stating that the first notification could not be applied to inter-State sales, and the second notification was not clarificatory in nature but issued under section 8(5) of the Central Sales Tax Act, 1956.

3. Situs of sales in the course of inter-State trade:

The Tribunal discussed the relevance of the situs of sales in the context of inter-State trade. It referred to the Supreme Court's observations in Gannon Dunkerley & Co. v. State of Rajasthan, which clarified that the situs of sale is irrelevant for determining the inter-State character of a sale. The Tribunal concluded that the notification dated December 30, 1985, was not applicable to inter-State sales, regardless of the situs being in Rajasthan.

4. Violation of Article 304 of the Constitution of India:

The petitioner argued that the restriction imposed by the notification dated December 30, 1985, violated Article 304 of the Constitution, which prohibits discrimination between goods imported from other States and those manufactured locally. The Tribunal found no violation of Article 304, as the notifications dealt with partial exemptions and not the imposition of tax. The Tribunal also noted that concessions cannot be claimed as a right and are subject to the discretion of the State Government.

5. Retrospective effect and clarificatory nature of notifications:

The petitioner argued that the notification dated December 26, 1986, was clarificatory and should have retrospective effect. The Tribunal rejected this argument, stating that the notification was issued under a different Act and could not be considered clarificatory. The Tribunal also noted that the State Government has the discretion to issue notifications with prospective effect.

6. Relevance of precedents and judicial interpretations:

The Tribunal discussed various precedents, including Onkarlal Nandlal v. State of Rajasthan and Gannon Dunkerley & Co. v. State of Rajasthan. The Tribunal distinguished the present case from these precedents, noting that the issue in the current case was not addressed in the cited cases. The Tribunal concluded that the petitioner could not rely on these precedents to claim partial exemption for inter-State sales under the notification dated December 30, 1985.

Separate Judgments:

The Tribunal's judgment was not unanimous. The Technical Member, R.K. Nair, disagreed with the majority opinion, arguing that the Tribunal erred in dismissing the writ petition and failed to consider the law as laid down by the Supreme Court in Onkarlal Nandlal v. State of Rajasthan. Nair contended that the partial exemption should apply to inter-State sales if the situs of the sale is within the State. The Judicial Member, J.P. Bansal, concurred with Nair's conclusion and reasoning.

Conclusion:

The review application was allowed by the majority opinion, setting aside the Tribunal's earlier judgment. The impugned assessment orders were quashed, and the matter was remanded to the Commercial Taxes Officer for redetermination in light of the Tribunal's observations. The petitioner was entitled to claim a set-off on account of partial exemption if the situs of the sales was in Rajasthan.

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