1998 (7) TMI 673 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the constitutionality of sections 6(2), 8(2), 8(1)(c), 7AA, and 19(1) of the M.P. General Sales Tax Act, 1958. Claim for set-off of Rs. 6,98,676 under section 8(1)(c) of the Act.

Analysis:

Constitutionality Challenge:
The petitioner sought a declaration that certain sections of the M.P. General Sales Tax Act, 1958 were ultra vires the Constitution. The petitioner specifically challenged sections 6(2), 8(2), 8(1)(c), 7AA, and 19(1) of the Act. The crux of the issue revolved around the petitioner's entitlement to a set-off amounting to Rs. 6,98,676. The petitioner, a public limited company, operated in Madhya Pradesh and was registered under the Act. The dispute arose during the assessment period from August 1, 1985, to July 31, 1986, when the petitioner was reassessed under section 19(1) of the Act. The primary contention was the denial of set-off under section 8(1)(c) of the Act, leading to the challenge of the provision's validity.

Entitlement to Set-Off:
The petitioner, represented by Senior Advocate Shri Nema, contended that they were entitled to a set-off of additional tax under section 8(2) of the Act. The crux of the argument was that the petitioner had purchased raw materials after paying full tax to the selling dealer, thereby justifying their claim for set-off. However, the respondents cited section 8(2) of the Act, which specified exceptions to the application of set-off provisions. The respondents argued that since the petitioner held a recognition certificate under section 16-C of the Act, the benefit of section 8(1) was not available to them.

Judicial Analysis:
The Court analyzed the submissions and emphasized that if a dealer had already availed concessions under section 6(2) of the Act, the benefit under section 8(1) would not be accessible. The crucial determination was whether the petitioner had availed the concessional rate of tax. The Court highlighted that even with a recognition certificate under section 16-C, if the petitioner had not availed the concession on purchased goods, they should not be denied the benefit of section 8(1). The Court directed the authorities to re-examine the issue, leaving it to them to verify if the goods purchased had received benefits under section 6(2) by virtue of the recognition certificate.

Conclusion:
The Court refrained from delving into the question of additional tax as it was not raised during arguments. Ultimately, the authorities were instructed to re-evaluate the matter based on the Court's observations. The petition was disposed of without any costs, with a directive for a thorough re-examination of the petitioner's entitlement to set-off in accordance with the provisions of the Act.