2005 (3) TMI 745 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Continued exemption on inter-State sales of processed cereal-wheat under the Central Sales Tax Act, 1956.
2. Jurisdiction of the Commercial Taxes Officer (Anti Evasion) to reopen assessments.
3. Validity of reassessment notices and orders issued under the Rajasthan Sales Tax Act, 1994 read with the Central Sales Tax Act, 1956.
4. Impact of the repeal of State legislation on notifications issued under the Central Sales Tax Act.

Detailed Analysis:

1. Continued Exemption on Inter-State Sales of Processed Cereal-Wheat:
The petitioner, a dealer under the Rajasthan Sales Tax Act and the Central Sales Tax Act, claimed exemption on inter-State sales of processed cereal-wheat under a notification dated March 6, 1978, issued under section 8(5) of the CST Act. The exemption was granted by the State Government as a delegate of Parliament and was not withdrawn. The petitioner held a recommendation certificate from the Khadi and Gramodhyog Board, Rajasthan. The Commercial Taxes Officer (Anti Evasion) issued notices for reopening assessments, arguing that the exemption was only for products manufactured in the State, not processed cereals.

2. Jurisdiction of the Commercial Taxes Officer (Anti Evasion):
The petitioner challenged the jurisdiction of the Commercial Taxes Officer (Anti Evasion) to reopen assessments, arguing that the officer was not the assessing authority and that the basis for reopening assessments was non-existent. The notices were issued under section 30 of the RST Act read with section 9 of the CST Act. The petitioner contended that unless the notification under section 8(5) of the CST Act was withdrawn, the exemption could not be denied.

3. Validity of Reassessment Notices and Orders:
The reassessment notices were based on a notification dated March 27, 1995, under the RST Act, which exempted products manufactured in the State. The Commercial Taxes Officer (Anti Evasion) assumed that the exemption under the CST Act was also withdrawn. The court held that the officer acted in haste and without jurisdiction, as the notification under the CST Act was still in force. The reassessment orders were passed during the pendency of the writ petition and were not served on the petitioner until the court issued a show cause notice.

4. Impact of the Repeal of State Legislation:
The court emphasized that the repeal of a State legislation does not automatically repeal a notification issued under the CST Act. The State Government acts as a delegate of Parliament under the CST Act, and any exemption or concession granted under the CST Act can only be withdrawn by a notification issued under the same provision. The court referred to the case of M. Ishwarlal & Co. v. State of Madras, which held that the repeal of a State notification does not affect a notification issued under the CST Act. The court also cited the cases of State of Rajasthan v. Gopal Oil Mills and State of Rajasthan v. Mahaveer Oil Industries to support its conclusion.

Conclusion:
The court concluded that the reassessment notices and orders were invalid as they were based on non-existent facts and issued without jurisdiction. The notification under the CST Act granting exemption on inter-State sales of processed cereals was still in force, and the withdrawal of a notification under the RST Act did not affect it. The special appeal was allowed, the judgment under appeal was set aside, and the writ petition was allowed. The reassessment notices and orders were quashed.