2012 (9) TMI 911 - HC - VAT and Sales Tax

Levy of tax on sale of goods in course of inter-state trade and commerce - Claim of concessional rate under the Notification No. S.O. 27 dated January 30, 1993 rejected Whether the notification has exempted sales covered under sub-section (1) or under sub-section (2) or both - Held that - The petitioner s contented that the sale in question was the sale in the course of inter-State trade or commerce, of the articles which have been notified in the notification dated January 30, 1993 - Notification No. S.O. 40, dated February 26, 1992 nowhere has restricted itself to either of the provisions under sub-section (1) or (2) of section 8 and this notification in an unambiguous and clear language declared that the reduced rate of tax will be applicable to the sales in the course of inter-State trade or commerce of the articles mentioned in the notification - the State also could not dispute this position and fairly admitted that this notification applies to sub-sections (1) and (2) both. The Tribunal, instead of reading the notification as such and finding out what is the effect of the notification, proceeded astray and tried to find out what the notification should have contained - when the statute, rule or any notification is unambiguously clear in its language, then there was no need to look into other aspect as to how the notification should have been framed in State of Rajasthan and Another Versus Sarvotam Vegetables Products (and other appeals) 1996 (4) TMI 405 - SUPREME COURT OF INDIA it has been held that Sub-section (5) of section 8 confers the power of exemption upon the State Government - As is well-known, almost every taxing enactment contains such a provision - The exemption under section 8(5) can be granted either with reference to dealers or class of dealers or with reference to goods or classes of goods. The exemption can be total or partial - It can also be subject to such condition as may be prescribed in that behalf - there is no condition in the notification and there could not have been any condition of producing form C or D for sales covered under sub-section (2) - petitioner s sale is not falling under sub-section (1) of section 8 and is falling under sub-section (2) of section 8 and since the notification applies to the sales under sub-section (2) of section 8 fully, then in that situation the petitioner s sale/transaction is fully covered by the notification dated January 30, 1993 and the petitioner was liable to pay tax as provided by the notification and was liable to pay tax at four per cent only and not as levied by the impugned order thus, the order of the ACIT, In-charge, Jamshedpur Division is set aside Decided in favour of petitioner.

Summary

Issues Involved:

1. Interpretation of the notification dated January 30, 1993, under Section 8(5) of the Central Sales Tax Act, 1956.
2. Requirement of submission of forms C and D for claiming concessional tax rates.
3. Applicability of sub-sections (1) and (2) of Section 8 of the Central Sales Tax Act, 1956, to the notification.
4. Legal precedents and their interpretation concerning the notification.

Issue-wise Detailed Analysis:

1. Interpretation of the Notification dated January 30, 1993:

The petitioner challenged the tax levied at 10% and 14.43% on inter-State sales, claiming a concessional rate of 4% under Notification No. S.O. 27 dated January 30, 1993. The notification was issued by the State Government under Section 8(5) of the Central Sales Tax Act, 1956. The petitioner argued that the notification applied to all inter-State sales of specified goods, regardless of the buyer's status (government, registered dealer, or unregistered dealer). However, the authorities rejected this claim, stating that the petitioner needed to furnish form C to avail the concessional rate. The court held that the notification did not restrict itself to either sub-section (1) or (2) of Section 8, and applied to all inter-State sales of the specified goods.

2. Requirement of Submission of Forms C and D:

The authorities contended that to benefit from the notification, the petitioner had to submit forms C or D as per sub-section (4) of Section 8. The petitioner argued that forms C and D are required only for sales under sub-section (1) of Section 8, and not for sales under sub-section (2). The court agreed with the petitioner, stating that sub-section (4) applies only to sales covered under sub-section (1), and there is no requirement for forms C and D for sales under sub-section (2).

3. Applicability of Sub-sections (1) and (2) of Section 8:

The court analyzed sub-sections (1) and (2) of Section 8. Sub-section (1) applies to sales to the government or registered dealers, with a tax rate of 4%. Sub-section (2) applies to other sales, with higher tax rates. The notification dated January 30, 1993, did not specify which sub-section it applied to, leading the court to conclude that it covered both sub-sections. Thus, the petitioner's sale, falling under sub-section (2), was eligible for the concessional rate of 4%.

4. Legal Precedents and Their Interpretation:

The court examined various judgments, including the Supreme Court's decision in State of Rajasthan v. Sarvotam Vegetables Products and the Patna High Court's decision in Rameshwara Jute Mills v. State of Bihar. The Sarvotam case involved a notification that specifically required form C for concessional rates, which was not applicable in the present case. The Rameshwara Jute Mills case supported the petitioner's argument that in the absence of a requirement in the notification, no form C or D was needed for sales under sub-section (2). The court concluded that the Tribunal erred in interpreting the notification and the relevant judgments.

Conclusion:

The court allowed the petitioner's writ, set aside the impugned orders, and directed the assessing officer to recalculate the tax in accordance with the notification dated January 30, 1993. The petitioner was entitled to the concessional tax rate of 4% without the need to submit forms C or D for sales under sub-section (2) of Section 8.