2011 (7) TMI 1058 - HC - VAT and Sales Tax

Whether there is repugnancy between section 4A of the Pondicherry General Sales Tax Act and section 14(iv) and section 15 of the Central Sales Tax Act? Held that - As the notification issued by the Pondicherry Administration is perfectly constitutional and there is no repugnancy between the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and the notification issued by virtue of section 19(1) of the Pondicherry General Sales Tax Act. Going by the definition of total turnover as defined under section 4A of the Pondicherry General Sales Tax Act, we have no hesitation in rejecting the plea of the petitioner.

Summary

Issues Involved:
1. Timeliness of filing forms C and F.
2. Exemption under Section 9 of the Pondicherry General Sales Tax Act.
3. Repugnancy between state and central tax laws.
4. Constitutionality of the turnover tax levy under Section 4A of the Pondicherry General Sales Tax Act.
5. Validity of the notification issued under Section 19 of the Pondicherry General Sales Tax Act.

Detailed Analysis:

1. Timeliness of Filing Forms C and F:
The revisionist company failed to submit forms C and F within the stipulated time as required by Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957. Despite practical difficulties in obtaining these forms from branch offices and consignment agents located outside the state, the assessing authority treated the stock transfer as Central sales due to the delayed submission. The Commissioner of Trade Tax had issued circulars allowing extensions for filing forms if reasonable grounds were provided, but the revisionist's application for extension was not accepted.

2. Exemption under Section 9 of the Pondicherry General Sales Tax Act:
The assessee argued that cigarettes, being a product of tobacco listed under the Third Schedule, should be exempt from turnover tax under Section 9. However, the court noted that Section 9 provides exemptions subject to conditions and restrictions prescribed by notifications under Section 19. The court held that the exemption is not absolute and must be read in conjunction with the conditions specified in the notification.

3. Repugnancy between State and Central Tax Laws:
The assessee contended that the levy of turnover tax on cigarettes, which are subject to additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, was unconstitutional. The court found no repugnancy between the state and central laws. It noted that the Additional Duties of Excise Act does not bar states from levying their own taxes but only affects the state's entitlement to a share of the central excise collections.

4. Constitutionality of the Turnover Tax Levy under Section 4A:
The court upheld the constitutionality of the turnover tax levy under Section 4A. It emphasized that Section 4A, which starts with a non obstante clause, mandates every dealer to pay turnover tax on the total turnover, excluding certain specified transactions. The definition of "total turnover" includes all transactions, whether or not they are liable to tax under the general sales tax provisions. The court rejected the argument that the levy under Section 4A was unconstitutional.

5. Validity of the Notification Issued under Section 19:
The court examined the notification issued under Section 19, which grants exemptions or reductions in tax rates subject to conditions. It found that the state has the legislative competence to issue such notifications in public interest. The court referred to previous judgments and concluded that the notification was valid and not repugnant to the provisions of the Pondicherry General Sales Tax Act or the Constitution.

Conclusion:
The court dismissed the writ petitions and the writ appeal, upholding the validity of the notification and the constitutionality of the turnover tax levy under Section 4A. The court granted the assessee four weeks to file an appeal against the assessment order if desired.