2002 (11) TMI 766 - HC - VAT and Sales Tax

Issues Involved:
1. Entitlement to concessional rate of tax on the sale of tyres under Notification S.R.O. No. 453/1983.
2. Effect of supersession of Notification S.R.O. No. 453/1983 by S.R.O. No. 1716/1987.
3. Interpretation of the term "supersession" in the context of tax notifications.

Issue-wise Detailed Analysis:

1. Entitlement to Concessional Rate of Tax on the Sale of Tyres under Notification S.R.O. No. 453/1983:
The assessee had collected and remitted tax at the concessional rate of 10% on the sale of tyres based on Notification S.R.O. No. 453/1983, which reduced the tax rate from 15% to 10%. The assessing authority initially accepted this rate. However, the Deputy Commissioner later initiated proceedings stating that the concessional rate was not applicable after the issuance of S.R.O. No. 1716/1987, which superseded S.R.O. No. 453/1983. The Tribunal, relying on the Supreme Court's decision in Titaghur Paper Mills case and the explanatory note to S.R.O. No. 1716/1987, held that the concessional rate continued for items not explicitly mentioned in S.R.O. No. 1716/1987.

2. Effect of Supersession of Notification S.R.O. No. 453/1983 by S.R.O. No. 1716/1987:
The department contended that S.R.O. No. 453/1983 was rendered non-existent by S.R.O. No. 1716/1987, and the concessional rate of tax was only available for items specified in the latter notification. The Tribunal, however, interpreted that the supersession did not affect items (ii), (iii), and (iv) of S.R.O. No. 453/1983, which were not mentioned in S.R.O. No. 1716/1987. The Tribunal's decision was based on the interpretation that "supersession" meant "repeal and replacement" and did not cancel the concessional rates for items not covered by the new notification.

3. Interpretation of the Term "Supersession" in the Context of Tax Notifications:
The Supreme Court in Titaghur Paper Mills case defined "supersession" as "repeal and replacement," meaning that the earlier notification is annulled and replaced by the new one. The High Court noted that the effect of supersession is to cancel the earlier notification and replace it with the new one, making the earlier notification inoperative from the date of the new notification. The court emphasized that the term "supersession" in a notification context means cancellation and replacement, and the earlier notification does not survive post-supersession.

Conclusion:
The High Court concluded that the Tribunal erred in holding that Notification S.R.O. No. 453/1983 continued to be in effect for the sale of tyres after the issuance of S.R.O. No. 1716/1987. The court clarified that the supersession of S.R.O. No. 453/1983 by S.R.O. No. 1716/1987 meant that the concessional rate of tax on tyres was not applicable from December 26, 1987, to March 31, 1988. The court set aside the Tribunal's order and restored the assessing authority's order, affirming that the concessional rate was not available during the specified period.

Final Judgment:
The tax revision case was allowed, and the Tribunal's order was set aside. The assessing authority's decision, as affirmed by the first appellate authority, was restored, confirming that the concessional rate of tax on the sale of tyres was not applicable after the supersession of S.R.O. No. 453/1983 by S.R.O. No. 1716/1987.

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