2008 (8) TMI 821 - HC - VAT and Sales Tax

Violation of the provisions of the KGST Act and Rules - Non registration and filing of monthly returns - Held that - Rule 9(h) applies to unregistered dealers also and therefore such dealers are entitled to exemption on export sales, whether it be covered under section 5(1) or under section 5(3) of the CST Act. Sales evidenced either by sales bill or purchase bill are sufficient requirement of form 18A. So much so, we hold that form 18A obtained and produced by the petitioners are valid and are sufficient for granting sales tax exemption. We therefore allow the revision petitions by vacating the order of the Tribunal pertaining to disallowance of sales exemption under section 5(3) and directing the assessing officer to grant exemption based on form 18A produced by petitioners, if the same is supported by documents prescribed under section 5(3) of the CST Act

Summary

Issues:
Exemption under section 5(3) of the CST Act denied due to lack of registration under the KGST Act; Disallowance of sales tax exemption based on technical grounds; Validity of form 18A for claiming exemption; Requirement of sales bill numbers in form 18A for granting exemption.

Exemption under section 5(3) of the CST Act denied due to lack of registration under the KGST Act:
The petitioners, who manufactured jute products and sold them to an exporter for foreign buyers, were found to have violated the KGST Act by not registering and filing monthly returns. The Sales Tax Department disallowed exemption claimed under section 5(3) of the CST Act due to the petitioners' lack of registration under the KGST Act. The Tribunal confirmed this decision, leading to the filing of revisions.

Disallowance of sales tax exemption based on technical grounds:
The High Court held that the export exemption under section 5(3) of the CST Act cannot be denied on technical grounds. The exemption is based on a constitutional provision prohibiting tax on export sales within a State. The Court emphasized that there is no difference in sales tax liability under the KGST Act between registered and unregistered dealers.

Validity of form 18A for claiming exemption:
The Court analyzed the validity of form 18A for claiming exemption under section 5(3) of the CST Act. It was argued that the form was defective as it did not include sales bill numbers. However, the Court held that the form, which contained details of purchase bills issued by registered dealers, was valid for granting exemption on export sales.

Requirement of sales bill numbers in form 18A for granting exemption:
The Government Pleader contended that sales bill particulars should be included in form 18A for granting sales tax exemption. In contrast, the petitioners argued that details of purchase bills in form 18A were sufficient. The Court referred to a Supreme Court decision stating that even the filing of the wrong form is not a ground for disallowing export exemption. It concluded that the form furnished by the petitioners, which included necessary details, was valid and sufficient for granting sales tax exemption.

In conclusion, the High Court allowed the revision petitions, overturning the Tribunal's decision to disallow sales tax exemption under section 5(3) of the CST Act. The Court directed the assessing officer to grant the exemption based on form 18A, provided it is supported by the necessary documents prescribed under the CST Act.