2010 (1) TMI 1138 - HC - VAT and Sales Tax

Summary

Issues: Claim of exemption under section 5(3) of the Central Sales Tax Act for printed labels and hang tags sold to exporters; Extent of exemption based on form H declaration; Imposition of penalty.

Claim of Exemption under Section 5(3): The petitioner, a manufacturer of printed labels and hang tags, sought exemption from tax for a turnover of Rs. 76,19,154 under section 5(3) of the Central Sales Tax Act. The authorities rejected the claim, stating that the goods cannot be considered as packing materials. The court agreed that the goods did not qualify as packing materials and upheld the rejection.

Extent of Exemption Based on Form H Declaration: The assessing officer acknowledged the form H declaration filed by the petitioner, which included details of exported goods. The court analyzed whether the goods, when attached to readymade garments, lost their identity, referencing a previous judgment. It was concluded that the goods retained their identity, making the petitioner eligible for exemption under section 5(3) based on the details provided in the form H declaration.

Imposition of Penalty: The court set aside the tax levied and remitted the matter to the assessing officer for reconsideration of the exemption claim. The imposition of penalty was deemed dependent on the revised orders by the assessing officer. As the tax orders were overturned, the penalty would be determined accordingly. The court allowed the writ petition, directing a reassessment based on the form H details provided by the petitioner.