1996 (10) TMI 466 - AT - VAT and Sales Tax

Summary

Issues:
- Quashing of assessment order and rectification application dismissal
- Claiming partial exemption under Rajasthan Sales Tax Act
- Recovery of tax and interest by respondents
- Clarificatory nature of notification dated December 26, 1986
- Situs of inter-State sale by petitioner-company

Analysis:

1. The petitioner sought to quash the assessment order and the dismissal of the rectification application, claiming partial exemption under sections 5C/5CC of the Rajasthan Sales Tax Act for purchases of raw wool used in manufacturing woollen carpet yarn sold in inter-State trade. The notification dated December 26, 1986, was crucial to their claim, asserting entitlement to benefits under the notification for inter-State sales and export sales from December 30, 1985. The petitioner argued that the notification discriminated between sales in the State and inter-State trade, violating Article 14 of the Constitution.

2. The respondents acknowledged issuing notifications and assessment orders but contended that the petitioner was not eligible for the concession under the notification from December 30, 1985, to December 26, 1986. They argued that concession availability for inter-State sales commenced only after the December 26, 1986 notification, emphasizing that concessions are not absolute rights but subject to specific terms and conditions.

3. The petitioner's counsel contended that the notification was discriminatory, citing relevant case laws. They also argued that the situs of inter-State sales was within the State, supporting their claim for benefits under the notification. In contrast, the department's counsel defended the validity of the assessment order, asserting compliance with notifications and dismissing the rectification application.

4. The Tribunal analyzed the notifications in question, noting the conditions for partial exemption under the Rajasthan Sales Tax Act and the Central Sales Tax Act. The Tribunal emphasized that concessions could not be claimed as absolute rights and were subject to the government's discretion. It concluded that the petitioner was not entitled to a refund of excess tax paid if they did not avail the concessional rates while purchasing raw wool.

5. Ultimately, the Tribunal dismissed the writ petition, upholding the assessment order's validity and the rejection of the rectification application. The petitioner's claims of discrimination and entitlement to benefits under the notifications were rejected, emphasizing the discretionary nature of concessions and the lack of grounds for refund. Costs were awarded to the respondents, quantified at Rs. 5,000.

In summary, the Tribunal's decision favored the respondents, emphasizing the discretionary nature of tax concessions and dismissing the petitioner's claims of discrimination and entitlement to benefits under the notifications. The judgment highlighted the importance of compliance with specific conditions for claiming partial exemptions under the relevant tax laws.