2008 (9) TMI 904 - HC - VAT and Sales Tax

Whether the exemption Notification No. 1490 dated September 17, 2001 S.O. No. 183 issued under section 15 of the Rajasthan Sales Tax Act, 1994 exempting sale or purchase of all kinds of man-made fibers and man-made yarn to which the rate of tax in respect thereof exceeds two per cent also covered the turnover tax imposed on the petitioner-assessee under section 13A of the RST Act, 1994 or the said exemption is limited to the individual sale or purchase of the specified commodities in the said notification? Held that - This court finds no force in the contentions raised by the learned counsel for the assessee that the turnover tax imposed upon the assessee should also be deemed to have been exempted under the notification dated September 17, 2001 and nothing beyond two per cent on sale of all kinds of man made fibers and yarn could be imposed in the face of the said notification. The said notification, in the considered opinion of this court, does not cover and exempt turnover tax leviable under section 13A of the Act and the said turnover tax imposed at 0.25 per cent under notification dated March 30, 2000 is neither hit nor eclipsed nor cut by the subsequent notification dated September 17, 2001. Against assessee.

Issues Involved:

1. Interpretation of Exemption Notification No. 1490 dated September 17, 2001.
2. Applicability of Turnover Tax under Section 13A of the Rajasthan Sales Tax Act, 1994.
3. Relationship between Exemption Notification and Turnover Tax Notification.
4. Legal definitions and scope of 'tax' and 'turnover tax'.
5. Judicial precedents and their relevance to the present case.

Issue-Wise Detailed Analysis:

1. Interpretation of Exemption Notification No. 1490 dated September 17, 2001:
The core issue was whether the exemption notification dated September 17, 2001, which exempted the sale or purchase of man-made fibers and yarn from tax exceeding two percent, also covered the turnover tax imposed under Section 13A. The court analyzed the language of the notification and concluded that it specifically pertained to individual transactions of sale or purchase and did not extend to turnover tax. The notification required that the commodities be used as raw material for fabric manufacturing in Rajasthan and a certificate to that effect be issued, indicating its limited scope.

2. Applicability of Turnover Tax under Section 13A of the Rajasthan Sales Tax Act, 1994:
Section 13A imposes a turnover tax on dealers with gross annual turnover exceeding a specified limit. The court noted that turnover tax is levied on the aggregate turnover and not on individual transactions. The exemption notification did not explicitly mention turnover tax, and thus, the court held that turnover tax under Section 13A remained applicable.

3. Relationship between Exemption Notification and Turnover Tax Notification:
The court examined whether the subsequent exemption notification dated September 17, 2001, had an overriding effect on the earlier turnover tax notification dated March 30, 2000. It was determined that the exemption notification did not implicitly or explicitly exempt turnover tax. The court emphasized that the two notifications operated in different fields, with the exemption notification addressing individual transactions and the turnover tax notification addressing gross annual turnover.

4. Legal Definitions and Scope of 'Tax' and 'Turnover Tax':
The court discussed the definitions of 'tax' and 'turnover tax' under the Act. 'Tax' was broadly defined, but turnover tax had a specific application under Section 13A. The court referenced judicial precedents to affirm that turnover tax is a distinct levy on the gross turnover and not merely an additional rate of tax on individual transactions.

5. Judicial Precedents and Their Relevance to the Present Case:
The court referred to several precedents, including:
- S. Kodar v. State of Kerala: Affirmed that turnover tax is a tax on the aggregate turnover.
- Sun Oil Company (P) Ltd. v. State of West Bengal: Distinguished between tax on individual transactions and turnover tax.
- Mangalore Chemicals & Fertilizers Limited v. Deputy Commissioner of Commercial Taxes and Union of India v. Wood Papers Ltd.: Emphasized the need for strict interpretation of exemption notifications.

The court found that these precedents supported the view that the exemption notification did not cover turnover tax.

Conclusion:
The court concluded that the exemption notification dated September 17, 2001, did not exempt the petitioner from turnover tax under Section 13A. The turnover tax imposed at 0.25 percent under the notification dated March 30, 2000, remained valid and applicable. The revision petition was dismissed, and no costs were awarded.

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