1997 (12) TMI 622 - HC - VAT and Sales Tax

Summary

Issues:
1. Exemption under the Central Sales Tax Act, 1956 for inter-State sales of vermicelli.
2. Validity of notifications granting exemptions under the Tamil Nadu General Sales Tax Act, 1959.
3. Retrospective vs. prospective effect of notifications under the TNGST Act.
4. Interpretation of section 17 of the TNGST Act regarding the power to grant exemptions.

Analysis:
1. The assessee, a dealer in vermicelli, contested an order by the Tamil Nadu Sales Tax Appellate Tribunal regarding the assessment year 1988-89 under the Central Sales Tax Act, 1956. The issue arose due to the assessee not filing declarations for inter-State sales of vermicelli.
2. The Government of Tamil Nadu issued notifications granting exemptions for sales of certain products, including vermicelli, under the Tamil Nadu General Sales Tax Act, 1959. Amendments were made to these exemptions, setting turnover limits for eligibility.
3. A key contention was the retrospective effect of a notification dated October 7, 1988, under the TNGST Act, which limited the exemption for vermicelli sales to a turnover of Rs. 3,00,000. The assessee argued against the retrospective application of this notification.
4. The interpretation of section 17 of the TNGST Act was crucial in determining the validity of notifications and their prospective or retrospective effect. The court referred to a previous judgment highlighting that notifications canceling or varying exemptions can only have prospective application.
5. The court held that the notification dated October 7, 1988, could only have prospective effect from that date and not from April 1, 1988. Consequently, the inter-State sales of vermicelli between April 1, 1988, and October 6, 1988, were exempt from tax, while those between October 7, 1988, and March 31, 1989, were taxable based on the production of "C" forms.
6. The court set aside the orders of tax authorities and remitted the matter to the assessing officer for quantifying the turnover of inter-State sales during the relevant periods to determine the tax liability accurately. The case was disposed of without costs.