2011 (9) TMI 909 - HC - VAT and Sales Tax

Summary

Issues involved:
1. Imposition of tax at three per cent on the total turnover for a specific period.
2. Interpretation of turnover tax liability under section 6B.
3. Application of a notification reducing tax payable under section 6B to one per cent.
4. Retrospective or prospective effect of the notification reducing tax.

Detailed Analysis:
1. The appellant challenged the imposition of tax at three per cent on the total turnover for the period from April 1, 1999, to December 31, 1999. The appellant argued that the turnover for this period was less than 10 crores, making them liable to pay tax at two per cent instead of three per cent. The authorities contended that the total turnover for the whole assessment year was above 1000 lakh rupees, justifying the three per cent tax rate for the relevant period.

2. The interpretation of turnover tax liability under section 6B was crucial in this case. The appellant claimed that a notification issued on January 1, 2000, reducing the tax payable under section 6B to one per cent should apply for the entire assessment year. They argued that beneficial notifications should be applied retrospectively for the assessee's benefit. Conversely, the Revenue argued that the notification should be strictly construed, and since it expressly stated immediate effect from the date of issuance, it should not be applied retrospectively.

3. The application of the notification reducing tax to one per cent raised questions about its retrospective or prospective effect. The court referred to a judgment emphasizing the strict construction of notifications granting exemptions and reductions of taxes. The court held that the notification reducing tax had immediate effect from January 1, 2000, and should not be interpreted retrospectively. Therefore, the benefit of the reduced tax rate was available to the assessee only from the date of the notification till the end of the financial year.

4. The court examined the language of section 6B and the notification reducing tax to determine the correct application of the tax rates. It was concluded that the imposition of tax at three per cent on the total turnover for the year was proper based on the clear language of the statute. The court emphasized that notifications granting tax benefits must be strictly construed and cannot be extended beyond the legislative intent. Consequently, the court upheld the orders passed by the authorities as legally sound and dismissed the appeal.

In summary, the judgment upheld the imposition of tax at three per cent based on the total turnover for the year, clarified the interpretation of turnover tax liability under section 6B, and determined that the notification reducing tax to one per cent should not be applied retrospectively.